U. SAUCON TWP., Pa. — Olympus Corporation released its fiscal year 2025 first quarter results and it looks like its strategic initiative, Elevate, introduced early in fiscal 2024, is beginning to have an impact. The company reported positive results across the board compared to the first quarter of fiscal 2024.
Leading the way in many areas, according to the company, was Olympus Corporation of America, which has headquarters in Upper Saucon Township, Lehigh County. Its performance in North America achieved +32% growth year-over-year with strong sales in all its strategic focus therapeutic areas: GI, Urology, and Respiratory.
The company recognized several trends in its overall business results. Olympus believes although the global economy continued to move towards recovery, the high interest rates in Europe and the U.S., the outlook for China’s economy, the situation in the Middle East region, and other matters need to be closely monitored.
At home in Japan, Olympus noted, notwithstanding a gradual improvement in business conditions, the Japanese economy was impacted by volatility in foreign exchange rates, and the outlook for the global economy also needs to be closely monitored. Despite this environment, the Olympus Group remarked it is continuing to work to transform into a global MedTech company by pursuing the three priorities of its Elevate initiative: “Patient safety and sustainability,” “Innovation for growth” and “Productivity.” The initiative involves focusing on specialties where the company believes it can have the greatest impact on elevating the standard of care. It sets tartgets for both growth and profitability.
Corporate operating results
In the past, the Olympus Group noted it had three reportable segments: Endoscopic Solutions, Therapeutic Solutions, and Other. However, since the Orthopedic Business was classified as a discontinued operation, the operations in Other apart from the Orthopedic Business have been excluded from the reportable segments as they were deemed by themselves relatively immaterial.
For this reason, from the first quarter ended June 30, 2024, the company said it changed to two reportable segments: Endoscopic Solutions and Therapeutic Solutions and has presented the information in the same manner for the three months ended June 30, 2023.
Stefan Kauffman, president and chief executive officer, told analysts, “I am glad to be able to start the earnings call of the first quarter on a positive note. In the first three months of fiscal year 2025, we have recovered as planned and have achieved solid growth in both ESD (Endoscopic Solutions Division) and TSD (Therapeutic Solutions Division).
“We have controlled SGA (Selling, General and Administrative) well and therefore our consolidated results are well on track and in line with our expectations,” he continued. “The EVIS X1 GI endoscopy system remains a strong growth driver, but we also see good momentum in GI EndoTherapy, Urology and Respiratory, especially in North America.”
Olympus Group said revenue increased by 15% on a consolidated basis year-over-year, accelerated by the depreciation of the yen. In Medical Service, it saw steady growth in all regions. It pointed out it has also continued to see strong growth in emerging markets, especially in ESD, achieving over 20% growth year-over-year. On the other hand, the market situation in China, which continues to be affected by an anticorruption campaign, volume-based procurement, and increasing local competition, seems to be more challenging and persistent than expected.
“We continue to maintain appropriate cost controls,” Kaufmann commented, “while continuing to invest strategically in strengthening our operational infrastructure, including QARA, R&D, and initiatives to improve productivity.”
Tatsuya Izumi, chief financial officer, provided more financial information about the fiscal 2025 first quarter. Adjusted operating profit increased by 32% year-over-year, with an adjusted operating margin improving 2.1 points to 15.9%. These financial results were largely supported by FX (foreign exchange), Olympus noted. However, even after adjusting for FX, revenue increased by 3% and adjusted operating profit increased by 14%.
Consolidated revenue increased by 15% year-over-year, Tatsuya noted, with yen depreciation serving as a tailwind. The Medical Business reached a record high for the first quarter, led by strong sales in North America, where EVIS X1 GI endoscopy system performed well.
Operating profit increased by 21% year-over-year due mainly to revenue growth and improvement of gross profit, despite increased expenses in R&D for the next-gen endoscopy system, and higher costs associated with Elevate, Tatsuya commented.
Segment results
In the Endoscopic Solutions Division revenue grew 16% year-over-year. Adjusted operating profit, excluding other income and expenses, significantly increased, with an adjusted operating margin of 22.1%, an improvement from the same period of the last fiscal year.
By sub-segment, Tatsuya explained, In GI Endoscopy, sales in North America grew 62%, led by strong sales of EVIS X1 GI endoscopy system. On the other hand, sales declined in China due to the impact of the anti-corruption campaign and other factors. In Surgical Endoscopy, sales declined in North America, while increasing in Europe. Sales of the surgical endoscopy system VISERA ELITE III remained solid. In Medical Service, Tatsuya said Olympus saw steady growth in all regions, especially in North America and Europe, due to stable revenue streams based on service contracts, including maintenance services, and an increase in new accounts.
In the Therapeutic Solutions Division, revenue grew 13% year-over-year. Adjusted operating profit, excluding other income and expenses, increased with an adjusted operating margin of 16.0%. In first quarter performance for each sub-segment, all three focus areas – GI EndoTherapy, Urology and Respiratory – grew, primarily in North America and Europe. In GI EndoTherapy, sales increased in hepato-pancreato-biliary (HPB) and hemostasis-related products. In Urology, the sales increase was led by SOLTIVE SuperPulsed Laser System for urinary tract stone management and resection electrodes for benign prostatic hyperplasia (BPH) treatments. In Respiratory, Olympus saw strong performance in the EBUS scopes and therapeutic devices mainly used for endobronchial ultrasound-guided transbronchial needle aspiration (EBUS-TBNA).
Fiscal year 2025 forecast
“Although we continue to carefully monitor the situation,” Kaufmann pointed out, “looking at the results achieved in the first quarter, we have not changed our guidance for fiscal year 2025 from our previous announcement. With a solid pipeline of growth drivers in our defined clinical focus areas and our proven business model, we anticipate a continued sound recovery and stable operations overall in fiscal year 2025.
Olympus said it expects revenue to increase 9.0% and operating profit to grow 242.4%. Adjusted operating profit is anticipated to increase 30.4% and pre-tax profits will grow a spectacular 289.9%.
Olympus Corporation of the Americas (OCA) – a wholly owned subsidiary of Olympus Corporation in Tokyo, Japan – was established in 1968 in Lake Success, New York. It is now headquartered in Center Valley, Lehigh County with more than 5,000 employees in locations throughout North and South America.
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Publish date : 2024-08-07 09:54:00
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