# Strategy delivering growth above expectations

- Link: https://www.directorstalkinterviews.com/strategy-delivering-growth-above-expectations/412758487
- Published: 2018-09-14T07:28:07+01:00
- Author: Charlotte Edwards

**[⌊Hardman & Co Report Report Downloads⌉⌊Hardman & Co Report Report Downloads⌉[Tissue Regenix
Group** (LON:TRX) has a broad portfolio of regenerative medicine products for the
biosurgery, orthopaedics, dental and cardiac markets. The company has two proprietary
decellularisation technology platforms, for the repair of tissues and bone. 2017
was a dynamic year for the group, growth being boosted by the acquisition of CellRight
Technologies in August 2017. As part of the integration process, management embarked
upon a revised strategy to increase sales momentum and market penetration. Interim
results ahead of market expectations indicate that the company has made good progress
in executing its growth ambitions.

**Strategy**: To build an international regenerative medicine business with a portfolio
of products using proprietary dCELL and BioRinse technology platforms, underpinned
by compelling clinical outcomes. TRX is looking to expand its global distribution
network, via strategic partnerships, to drive sales momentum.

**Interims**: Although reported group sales growth of 305% to £5.6m (£1.4m) in 1H’
18 looks spectacular, it is biased by the acquisition and impacted by currency. 
A true reflection of underlying growth is the still impressive 61% growth on a
 
pro forma basis, as if CellRight had been acquired on 1 January 2017.

**EBIT**: Even though a full six months of CellRight costs are included in 1H’18,
the focus of the new management team on controlling costs is evident from the modest
rise in absolute SG&A spend, such that the underlying EBIT loss was reduced to £
4.0m (£5.0m).

**CellRight**: The integration strategy is already delivering success, with sales
in the orthopaedics and dental division (US) growing 46% to $4.5m/£3.2m ($3.1m pro
forma), well ahead of our forecast of $4.0m/£3.0m.

**Investment summary**: Tissue Regenix is building commercial momentum through three
value drivers: sales of BioSurgery products in the US; expansion of combined CellRight
and TRX technologies in dental, orthopaedics and spine; and preparation for the 
OrthoPure XT launch in the EU in 2019. Early signs of the benefits derived from 
CellRight are apparent, which should hasten the time to reach a cash-neutral position
and sustainable profitability, now estimated in fiscal 2020.

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