On October 29th, Konica Minolta announced it’s financial results for Q3 2020. Due to the companies reporting cycle, this is the second fiscal quarter. These results show that revenues originating from the healthcare business contracted significantly during the quarter. Quarterly sales reached ¥19.1 bn, compared with ¥26.4 bn during Q3 2019, a decrease of approximately -28% year-on-year. This took cumulative 2020 sales revenue to ¥60.2 bn, compared with ¥74.8 bn during 2019, a decrease of approximately -20% year-on-year.
The sales contracting during the quarter was driven by lower demand for digital radiography (DR) and diagnostic ultrasound systems, particularly for surgical applications. The company reported a surge in demand for mobile x-ray systems during the second quarter, particularly within North America, although COVID related surge demand was not sufficient enough to offset declines elsewhere in the imaging portfolio. The demand for traditional x-ray film has been on a recovering trend since April-20 within China and this trend appears to have continued.
It is worthwhile noting that the Q3 2019 sales figure is a tougher comparable due to the surge demand ahead of the consumption tax hike in Japan last year. The companies healthcare portfolio has significant exposure to Japan, particularly for diagnostic ultrasound systems for orthopaedics and cassette-type DR systems as the company captures a dominate market share. Although this is the case, overall healthcare revenues were approximately -12% lower, relative to Q3 2018, indicating that the prior year surge demand in Japan may only account for circa 50% of the YoY sales contraction.
The Medical IT Segment
The medical IT segment, unfortunately, is no longer reported on an individual basis within the companies financial presentations. This segment encompasses the firms Acies picture archiving and communication system (PACS), as well as its service and support-related IT solutions. The company reported the sales of informity within Japan have been increasing while PACS sales have been decreasing due to the Coronavirus pandemic negatively impacting sales activities.
Recent developments within X-ray
- On September 15th, the company announced the latest release of AeroRemote® Insights, a cloud-based, business intelligence and analytics solution. This latest release is now compatible with Konica Minolta’s X-ray systems to deliver detailed information on asset utilisation, department efficiency, imaging system health and more.
- On June 2nd, the company announced the commercial launch of Dynamic Digital Radiography on the KDR Advanced U-Arm. DDR, or X-ray that Moves, provides a series of individual digital images acquired at high speed and low dose in order to capture patient movement within a single exam, empowering clinicians with enriched diagnostic information. The DDR solution originally received 510(k) FDA clearance during 2019 and combined Konica Minolta’s advanced imaging processing capabilities with Shimadzu’s RADspeed Pro radiographic imaging system. Since then, DDR has seen strong demand particularly within pulmonology and orthopaedic settings.
Recent developments within ultrasound
- On February 19th, the company announced a partnership with RegenLab USA. This partnership will see the distribution of the companies regenerative medicine portfolio in the United States and Canada. The bio-injectable line includes preparation devices for Platelet Rich Plasma (PRP) and other blood cell therapies, delivered using ultrasound guidance.
- On February 17th, Konica Minolta won the iF DESIGN AWARD 2020, for it’s diagnostic ultrasound system, the SONIMAGE MX1. This is the companies latest ultrasound systems which expands the firm’s coverage of POCUS clinical applications with use approved for small organ, abdomen, musculoskeletal, and peripheral vascular ultrasound procedures.
Sales declines expected to moderate and return to growth during FY H2 2020
On a fiscal year basis, cumulative sales are approximately -20% lower relative to the prior year. The company is projecting that sales from its healthcare business will reach ¥80bn by the end of its fiscal year (end of calendar Q1 2021), resulting in a decrease in sales of -9% year-on-year. This signals that the company believes that the recent contraction in sales will begin to moderate and return to growth in the coming two quarters. Assuming flat sales growth in fiscal Q3, sales growth would need to be +6.8% during fiscal Q4 in order to reach ¥80bn for the year.