Osteopore to Acquire Multiple Medical Distribution Businesses & Become Vertically Integrated

Osteopore Limited (ASX: OSX) (“Osteopore” or the “Company”), a revenue-generating manufacturer and distributor of regenerative implants that empower natural tissue regeneration, is pleased to announce it has entered into a binding asset purchase deed (“Asset Purchase Deed”) with Mr Lim Jae Hoon (an unrelated party to the Company) (“Vendor”) to acquire (“Proposed Acquisition”) 100% of the Osteopore distribution businesses carried on by Lomic Korea Co., Ltd, 3D Aesthetic Solutions Pte Ltd, 3D Healthcare Solutions Co., Ltd and 3D Aesthetic Medical Equipment and Supplies Trading (“Target Businesses”).

Highlights:

Osteopore has entered into a binding asset purchase deed to acquire multiple medical distribution businesses that are currently responsible for approximately 40%-45% of Osteopore’s total sales globally.
The acquisition is a direct result of Osteopore’s strategy to supercharge revenue growth, become cash flow positive and profitable at a faster rate whilst maintaining steady organic growth.
The acquisition will transition Osteopore towards a vertically integrated business, controlling the entire process from manufacturing and marketing, through to direct retail sales.
By selling direct to customers (as opposed to via distributors) the Company expects to achieve greater revenue and increased margins, due to removing the distribution layer between Osteopore and its end customers.
The transaction will create a dedicated sales team with localised knowledge and networks across key target markets, along with an internal business development team with deep expertise in the aesthetic segment to lead our strategy for deeper penetration into the global aesthetic market in 2023.
The acquisition consideration is part cash (no cash upfront due to the offsetting of debtor balances) and performance rights (subject to achieving performance milestones).
Osteopore continues to investigate the viability of additional potential acquisitions and partnership opportunities in the 20 countries which it is already selling products, including the US, Europe, and Asian markets like Singapore, South Korea, Vietnam, Malaysia, and Indonesia.

The Proposed Acquisition was first announced by the Company on 22 December 2022.

The Target Businesses are currently responsible for distributing Osteopore products and have historically been the Company’s top distributor groups - contributing approximately 40%-45% of Osteopore’s total sales over the past few years. The sales are primarily related to the aesthetic market in South Korea, complemented by sales in Singapore, Thailand, Vietnam and the Philippines.

Osteopore will acquire 100% of all business activities relating to the marketing, sales and distribution of Osteopore products from the Target Businesses (see key terms below), including the sales teams, office premises, distribution networks and business contracts. The Target Businesses are estimated to be fully integrated into Osteopore shortly, with no disruptions expected to occur in regards to current business activities and sales during the process.

Osteopore’s CEO, Goh Khoon Seng said: “This acquisition will allow Osteopore to be vertically integrated across an estimated 40%-45% of our business. This means we will control the entire process from manufacturing, marketing and direct “retail” sales. The potential benefits of this are highly encouraging, including the immediate creation of a proven direct sales team, direct access to an extensive network of hospitals and surgeons, along with the anticipated benefit of supercharging revenue and increasing margins.”

Osteopore’s Executive Chairman, Mark Leong added: “We are enthused as this transaction marks our first acquisition since listing on the ASX, adding complementary synergistic value and exciting organic growth to complement the strong traction seen to date. This sets us on an accelerated path towards positive cashflows. This is the start of an exciting chapter and we will continually seek more opportunities to further boost our trajectory.”

Click here for the full ASX Release

This article includes content from Osteopore Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.

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Condensed Consolidated Statements of Income (unaudited)
	Three months ended
	June 29,			% of		July 1,			% of
(Dollars in millions except per share amounts)	2024			Revenues		2023			Revenues
Revenues	$	10,541				$	10,687
Costs and operating expenses:
Cost of revenues (a)		6,106		57.9	%		6,323		59.2	%
Selling, general and administrative expenses (b)		1,687		16.0	%		1,673		15.7	%
Amortization of acquisition-related intangible assets		513		4.9	%		585		5.4	%
Research and development expenses		339		3.2	%		345		3.2	%
Restructuring and other costs (c)		77		0.7	%		183		1.7	%
Total costs and operating expenses		8,722		82.7	%		9,109		85.2	%
Operating income		1,820		17.3	%		1,578		14.8	%
Interest income		295					178
Interest expense		(354	)				(326	)
Other income/(expense) (d)		5					—
Income before income taxes		1,765					1,430
Provision for income taxes (e)		(128	)				(52	)
Equity in earnings/(losses) of unconsolidated entities		(84	)				(16	)
Net income		1,553					1,362
Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest		6					1
Net income attributable to Thermo Fisher Scientific Inc.	$	1,548		14.7	%	$	1,361		12.7	%

Earnings per share attributable to Thermo Fisher Scientific Inc.:
Basic	$	4.05				$	3.53
Diluted	$	4.04				$	3.51
Weighted average shares:
Basic		382					386
Diluted		383					388

Reconciliation of adjusted operating income and adjusted operating margin
GAAP operating income	$	1,820		17.3	%	$	1,578		14.8	%
Cost of revenues adjustments (a)		1		0.0	%		18		0.2	%
Selling, general and administrative expenses adjustments (b)		(64	)	-0.6	%		6		0.1	%
Restructuring and other costs (c)		77		0.7	%		183		1.7	%
Amortization of acquisition-related intangible assets		513		4.9	%		585		5.4	%
Adjusted operating income (non-GAAP measure)	$	2,347		22.3	%	$	2,370		22.2	%

Reconciliation of adjusted net income
GAAP net income attributable to Thermo Fisher Scientific Inc.	$	1,548				$	1,361
Cost of revenues adjustments (a)		1					18
Selling, general and administrative expenses adjustments (b)		(64	)				6
Restructuring and other costs (c)		77					183
Amortization of acquisition-related intangible assets		513					585
Other income/expense adjustments (d)		—					(1	)
Provision for income taxes adjustments (e)		(102	)				(171	)
Equity in earnings/losses of unconsolidated entities		84					16
Noncontrolling interests adjustments (f)		(1	)				—
Adjusted net income (non-GAAP measure)	$	2,057				$	1,997

Reconciliation of adjusted earnings per share
GAAP diluted EPS attributable to Thermo Fisher Scientific Inc.	$	4.04				$	3.51
Cost of revenues adjustments (a)		0.00					0.05
Selling, general and administrative expenses adjustments (b)		(0.17	)				0.01
Restructuring and other costs (c)		0.20					0.47
Amortization of acquisition-related intangible assets		1.34					1.51
Other income/expense adjustments (d)		0.00					0.00
Provision for income taxes adjustments (e)		(0.26	)				(0.44	)
Equity in earnings/losses of unconsolidated entities		0.22					0.04
Noncontrolling interests adjustments (f)		0.00					0.00
Adjusted EPS (non-GAAP measure)	$	5.37				$	5.15

Reconciliation of free cash flow
GAAP net cash provided by operating activities	$	1,960				$	1,540
Purchases of property, plant and equipment		(301	)				(284	)
Proceeds from sale of property, plant and equipment		15					4
Free cash flow (non-GAAP measure)	$	1,674				$	1,260

Business Segment Information	Three months ended
	June 29,			% of		July 1,			% of
(Dollars in millions)	2024			Revenues		2023			Revenues

Revenues
Life Sciences Solutions	$	2,355		22.3	%	$	2,463		23.0	%
Analytical Instruments		1,782		16.9	%		1,749		16.4	%
Specialty Diagnostics		1,117		10.6	%		1,109		10.4	%
Laboratory Products and Biopharma Services		5,758		54.6	%		5,831		54.6	%
Eliminations		(470	)	-4.5	%		(465	)	-4.4	%
Consolidated revenues	$	10,541		100.0	%	$	10,687		100.0	%

Segment income and segment income margin
Life Sciences Solutions	$	865		36.7	%	$	817		33.2	%
Analytical Instruments		439		24.6	%		432		24.7	%
Specialty Diagnostics		299		26.7	%		297		26.7	%
Laboratory Products and Biopharma Services		745		12.9	%		824		14.1	%
Subtotal reportable segments		2,347		22.3	%		2,370		22.2	%
Cost of revenues adjustments (a)		(1	)	0.0	%		(18	)	-0.2	%
Selling, general and administrative expenses adjustments (b)		64		0.6	%		(6	)	-0.1	%
Restructuring and other costs (c)		(77	)	-0.7	%		(183	)	-1.7	%
Amortization of acquisition-related intangible assets		(513	)	-4.9	%		(585	)	-5.4	%
Consolidated GAAP operating income	$	1,820		17.3	%	$	1,578		14.8	%


(a) Adjusted results in 2024 and 2023 exclude charges for inventory write-downs associated with large-scale abandonment of product lines. Adjusted results in 2023 exclude $11 of charges for the sale of inventory revalued at the date of acquisition and $5 of accelerated depreciation on manufacturing assets to be abandoned due to facility consolidations.
(b) Adjusted results in 2024 and 2023 exclude certain third-party expenses, principally transaction/integration costs related to recent acquisitions, and charges/credits for changes in estimates of contingent acquisition consideration.
(c) Adjusted results in 2024 and 2023 exclude restructuring and other costs consisting principally of severance, impairments of long-lived assets, net charges for pre-acquisition litigation and other matters, and abandoned facility and other expenses of headcount reductions and real estate consolidations. Adjusted results in 2023 also exclude $26 of contract termination costs associated with facility closures.
(d) Adjusted results in 2024 and 2023 exclude net gains/losses on investments.
(e) Adjusted results in 2024 and 2023 exclude incremental tax impacts for the reconciling items between GAAP and adjusted net income, incremental tax impacts as a result of tax rate/law changes, and the tax impacts from audit settlements.
(f) Adjusted results exclude the incremental impacts for the reconciling items between GAAP and adjusted net income attributable to noncontrolling interests.
Note:
Consolidated depreciation expense is $276 and $270 in 2024 and 2023, respectively.

Organic and Core organic revenue growth		Three months ended
		June 29, 2024
Revenue growth		-1 %
Acquisitions		0 %
Currency translation		-1 %
Organic revenue growth (non-GAAP measure)		-1 %
COVID-19 testing revenue		-1 %
Core organic revenue growth (non-GAAP measure)		0 %

Note:
For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.

Condensed Consolidated Statements of Income (unaudited)
	Six months ended
	June 29,			% of		July 1,			% of
(Dollars in millions except per share amounts)	2024			Revenues		2023			Revenues
Revenues	$	20,886				$	21,397
Costs and operating expenses:
Cost of revenues (a)		12,146		58.2	%		12,760		59.6	%
Selling, general and administrative expenses (b)		3,417		16.4	%		3,319		15.5	%
Amortization of acquisition-related intangible assets		1,065		5.1	%		1,191		5.5	%
Research and development expenses		670		3.2	%		691		3.2	%
Restructuring and other costs (c)		106		0.5	%		295		1.4	%
Total costs and operating expenses		17,404		83.3	%		18,256		85.3	%
Operating income		3,483		16.7	%		3,141		14.7	%
Interest income		574					324
Interest expense		(717	)				(626	)
Other income/(expense) (d)		14					(46	)
Income before income taxes		3,354					2,793
Provision for income taxes (e)		(408	)				(98	)
Equity in earnings/(losses) of unconsolidated entities		(61	)				(41	)
Net income		2,885					2,654
Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest		9					4
Net income attributable to Thermo Fisher Scientific Inc.	$	2,875		13.8	%	$	2,650		12.4	%

Earnings per share attributable to Thermo Fisher Scientific Inc.:
Basic	$	7.53				$	6.86
Diluted	$	7.50				$	6.83
Weighted average shares:
Basic		382					386
Diluted		383					388

Reconciliation of adjusted operating income and adjusted operating margin
GAAP operating income	$	3,483		16.7	%	$	3,141		14.7	%
Cost of revenues adjustments (a)		17		0.1	%		59		0.3	%
Selling, general and administrative expenses adjustments (b)		(45	)	-0.2	%		14		0.1	%
Restructuring and other costs (c)		106		0.5	%		295		1.4	%
Amortization of acquisition-related intangible assets		1,065		5.1	%		1,191		5.5	%
Adjusted operating income (non-GAAP measure)	$	4,625		22.1	%	$	4,700		22.0	%

Reconciliation of adjusted net income
GAAP net income attributable to Thermo Fisher Scientific Inc.	$	2,875				$	2,650
Cost of revenues adjustments (a)		17					59
Selling, general and administrative expenses adjustments (b)		(45	)				14
Restructuring and other costs (c)		106					295
Amortization of acquisition-related intangible assets		1,065					1,191
Other income/expense adjustments (d)		(11	)				45
Provision for income taxes adjustments (e)		(51	)				(342	)
Equity in earnings/losses of unconsolidated entities		61					41
Noncontrolling interests adjustments (f)		(1	)				—
Adjusted net income (non-GAAP measure)	$	4,016				$	3,953

Reconciliation of adjusted earnings per share
GAAP diluted EPS attributable to Thermo Fisher Scientific Inc.	$	7.50				$	6.83
Cost of revenues adjustments (a)		0.04					0.15
Selling, general and administrative expenses adjustments (b)		(0.12	)				0.03
Restructuring and other costs (c)		0.28					0.76
Amortization of acquisition-related intangible assets		2.78					3.07
Other income/expense adjustments (d)		(0.03	)				0.11
Provision for income taxes adjustments (e)		(0.13	)				(0.88	)
Equity in earnings/losses of unconsolidated entities		0.16					0.11
Noncontrolling interests adjustments (f)		0.00					0.00
Adjusted EPS (non-GAAP measure)	$	10.47				$	10.18

Reconciliation of adjusted free cash flow
GAAP net cash provided by operating activities	$	3,211				$	2,269
Purchases of property, plant and equipment		(648	)				(742	)
Proceeds from sale of property, plant and equipment		20					10
Free cash flow (non-GAAP measure)	$	2,583				$	1,537

Business Segment Information	Six months ended
	June 29,			% of		July 1,			% of
(Dollars in millions)	2024			Revenues		2023			Revenues

Revenues
Life Sciences Solutions	$	4,640		22.2	%	$	5,075		23.7	%
Analytical Instruments		3,469		16.6	%		3,472		16.2	%
Specialty Diagnostics		2,227		10.7	%		2,217		10.4	%
Laboratory Products and Biopharma Services		11,480		55.0	%		11,594		54.2	%
Eliminations		(930	)	-4.5	%		(961	)	-4.5	%
Consolidated revenues	$	20,886		100.0	%	$	21,397		100.0	%

Segment income and segment income margin
Life Sciences Solutions	$	1,705		36.7	%	$	1,653		32.6	%
Analytical Instruments		838		24.2	%		853		24.6	%
Specialty Diagnostics		593		26.6	%		577		26.0	%
Laboratory Products and Biopharma Services		1,489		13.0	%		1,617		14.0	%
Subtotal reportable segments		4,625		22.1	%		4,700		22.0	%
Cost of revenues adjustments (a)		(17	)	-0.1	%		(59	)	-0.3	%
Selling, general and administrative expenses adjustments (b)		45		0.2	%		(14	)	-0.1	%
Restructuring and other costs (c)		(106	)	-0.5	%		(295	)	-1.4	%
Amortization of acquisition-related intangible assets		(1,065	)	-5.1	%		(1,191	)	-5.5	%
Consolidated GAAP operating income	$	3,483		16.7	%	$	3,141		14.7	%


(a) Adjusted results in 2024 and 2023 exclude charges for inventory write-downs associated with large-scale abandonment of product lines and accelerated depreciation on manufacturing assets to be abandoned due to facility consolidations. Adjusted results in 2023 exclude $21 of charges for the sale of inventory revalued at the date of acquisition.
(b) Adjusted results in 2024 and 2023 exclude certain third-party expenses, principally transaction/integration costs related to recent acquisitions, and charges/credits for changes in estimates of contingent acquisition consideration.
(c) Adjusted results in 2024 and 2023 exclude restructuring and other costs consisting principally of severance, impairments of long-lived assets, net charges for pre-acquisition litigation and other matters, and abandoned facility and other expenses of headcount reductions and real estate consolidations. Adjusted results in 2023 also exclude $26 of contract termination costs associated with facility closures.
(d) Adjusted results in 2024 and 2023 exclude net gains/losses on investments.
(e) Adjusted results in 2024 and 2023 exclude incremental tax impacts for the reconciling items between GAAP and adjusted net income, incremental tax impacts as a result of tax rate/law changes and the tax impacts from audit settlements.
(f) Adjusted results exclude the incremental impacts for the reconciling items between GAAP and adjusted net income attributable to noncontrolling interests.

Notes:
Consolidated depreciation expense is $562 and $523 in 2024 and 2023, respectively.
For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.

Condensed Consolidated Balance Sheets (unaudited)

	June 29,		December 31,
(In millions)	2024		2023

Assets
Current assets:
Cash and cash equivalents	$	7,073	$	8,077
Short-term investments		1,750		3
Accounts receivable, net		7,943		8,221
Inventories		5,198		5,088
Other current assets		3,512		3,200
Total current assets		25,476		24,589
Property, plant and equipment, net		9,282		9,448
Acquisition-related intangible assets, net		15,519		16,670
Other assets		4,377		3,999
Goodwill		43,843		44,020
Total assets	$	98,496	$	98,726

Liabilities, redeemable noncontrolling interest and equity
Current liabilities:
Short-term obligations and current maturities of long-term obligations	$	5,121	$	3,609
Other current liabilities		9,651		10,403
Total current liabilities		14,772		14,012
Other long-term liabilities		5,907		6,564
Long-term obligations		30,284		31,308
Redeemable noncontrolling interest		115		118
Total equity		47,419		46,724
Total liabilities, redeemable noncontrolling interest and equity	$	98,496	$	98,726

Condensed Consolidated Statements of Cash Flows (unaudited)

	Six months ended
	June 29,			July 1,
(In millions)	2024			2023

Operating activities
Net income	$	2,885		$	2,654
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,626			1,714
Change in deferred income taxes		(607	)		(328	)
Other non-cash expenses, net		311			480
Changes in assets and liabilities, excluding the effects of acquisitions		(1,003	)		(2,251	)
Net cash provided by operating activities		3,211			2,269

Investing activities
Purchases of property, plant and equipment		(648	)		(742	)
Proceeds from sale of property, plant and equipment		20			10
Proceeds from cross-currency interest rate swap interest settlements		111			35
Acquisitions, net of cash acquired		—			(2,751	)
Purchases of investments		(1,778	)		(188	)
Other investing activities, net		12			51
Net cash used in investing activities		(2,283	)		(3,585	)

Financing activities
Net proceeds from issuance of debt		1,204			—
Repayment of debt		—			(1,000	)
Net proceeds from issuance of commercial paper		—			1,620
Repayment of commercial paper		—			(1,441	)
Purchases of company common stock		(3,000	)		(3,000	)
Dividends paid		(284	)		(252	)
Other financing activities, net		145			24
Net cash used in financing activities		(1,936	)		(4,049	)

Exchange rate effect on cash		7			(19	)
Decrease in cash, cash equivalents and restricted cash		(1,000	)		(5,384	)
Cash, cash equivalents and restricted cash at beginning of period		8,097			8,537
Cash, cash equivalents and restricted cash at end of period	$	7,097		$	3,153

Free cash flow (non-GAAP measure)	$	2,583		$	1,537

Note:
For more information related to non-GAAP financial measures, refer to the section titled "Supplemental Information Regarding Non-GAAP Financial Measures" of this release.

Investor Contact:		Media Contact:
Garen Sarafian		Katie Savastano
ir@bauschhealth.com		corporate.communications@bauschhealth.com
(877) 281-6642 (tollfree)		(908) 569-3692

Osteopore to Acquire Multiple Medical Distribution Businesses & Become Vertically Integrated

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