Sorin Group Releases Preliminary Results for 2013

At a meeting held on February 6 and chaired by Rosario Bifulco, the Sorin S.p.A. Board of Directors analyzed the results for the fourth quarter 2013 and the preliminary unaudited consolidated results for the year of 2013.

In a release on February 6, the Company noted the final draft of the financial statements for the year of 2013 will be approved by the Board of Directors at a meeting to be held on March 14.

"In 2013 Sorin Group successfully recovered from the consequences of the earthquakes, reported results in line with guidance and generated a robust cash flow. During the year, the Company launched new breakthrough products, such as the new Inspire- Heartlink- Connect System and KORA, the only pacemaker with MRI automatic mode feature, and continued the successful roll-out of SonR and Perceval. In 2013, the Company also closed several important deals, including the acquisition of Brazilian manufacturer Alcard, the joint-venture with MicroPort for the Chinese CRM market and the greenfield project for cardiopulmonary products in China, thus executing on its medium- long term growth objectives," said Andre-Michel Ballester, Sorin Group's Chief Executive Officer. "Notwithstanding the anticipated adverse foreign-exchange impact, the Company is well positioned to drive top-line growth in 2014 across a variety of new products and geographies as well as to continue sustaining its longer-term growth strategy with further geographic expansion initiatives and investments in innovation," he added.

CONSOLIDATED RESULTS FOR THE FOURTH QUARTER 2013

In the fourth quarter of 2013, Sorin Group posted revenues of EUR191.8 million, a 5.3 percent* increase over the fourth quarter of 2012.

-The Cardiac Surgery Business Unit (cardiopulmonary products for open heart surgery and heart valve repair or replacement products) reported revenues of EUR128.0 million. The heart-lung machine segment delivered a strong performance in every major market in the quarter. The oxygenator and ATS system segments also reported a positive performance, confirming Sorin's full recovery from the earthquakes of 2012. Strong performance of Perceval more than compensated weak sales of traditional tissue valves in Europe. Mechanical valves' volume growth in Emerging markets was offset by the continued shift toward tissue valves in Europe and the US.

In October 2013, Sorin Group officially launched its new Inspire family of adult oxygenators and the Heartlink system at the EACTS (European Association for Cardio-Thoracic Surgery) Annual Meeting, in Vienna, Austria. During the quarter, Sorin received CE (Conformite Europeenne) mark approvals for the Solo Smart stentless aortic valve, which provides heart valve performance similar to a native valve with the ease of implantation of stented prostheses, and for the XL version of Perceval, thus expanding the number of patients that can benefit from a sutureless aortic valve replacement. Sorin Group also received a dedicated reimbursement for Perceval in Belgium and Germany effective, respectively, 1st November 1st, 2013 and January 1st.

-The Cardiac Rhythm Management Business Unit (implantable devices to manage cardiac rhythm disorders) reported revenues of EUR63.0 million, a 6.5 percent* decrease compared to the fourth quarter of 2012. Low voltage revenues continue to be affected by a challenging pricing environment in Europe and lower volumes in Japan due to the penetration of Magnetic Resonance Imaging (MRI) compatible pacemakers. The high voltage segment also reported a slightly negative performance, notwithstanding the continued success of SonR in Europe.

During the quarter, Sorin obtained CE mark approvals for the KORA 100 MRI compatible pacing system and the INTENSIA family of implantable defibrillators and CRT-D devices. KORA pacemakers feature Sorin's proprietary SafeR algorithm, Sleep Apnea monitoring and the patented Automatic MRI mode, again demonstrating Sorin's commitment to advance the state-of-the-art in pacing technology today. INTENSIA family of implantable defibrillators and CRT-D devices features the DF-4 high voltage connector, the new industry- standard which reduces the number of connections between the implanted device and the lead, thus facilitating the implant procedure.

PRELIMINARY CONSOLIDATED RESULTS FOR 2013

In 2013, Sorin Group reported revenues of EUR738.5 million, a 4.8 percent* increase compared to 2012.

-The Cardiac Surgery Business Unit (cardiopulmonary products for open heart surgery and heart valve repair or replacement products) reported revenues of EUR481.8 million, up 12.1 percent* compared to 2012.

The heart-lung machine segment posted record revenues for the fifth consecutive year, further reinforcing the Company's leadership position in every major market. The oxygenator and autotransfusion segments also performed positively, confirming Sorin's full recovery from the earthquakes of 2012. The oxygenator segment benefited from ongoing penetration in emerging markets and from the significant contribution of the cannulae business. The autotransfusion segment also reported a significant growth in emerging markets as well as a continued penetration of Xtra in Europe and the US. In 2013 the Company launched the new Inspire- Heartlink-Connect System, the first and only perfusion system that integrates hardware, disposables and data management.

The mechanical valves segment witnessed a decrease in revenues in line with the continued shift of the market toward biological valves and lower volumes in emerging markets during the first part of the year. Growth in the tissue valves segment was driven by the ongoing penetration of Mitroflow, particularly in emerging markets and Japan, and the positive performance of Perceval, whose annual revenues amounted to EUR12.1 million. During 2013, Sorin Group obtained approval from the FDA for the Investigational Device Exemption (IDE) for Perceval, CE mark for the XL version of Perceval as well as dedicated reimbursement for Perceval in Belgium and Germany.

In February 2013, Sorin Group acquired Alcard Industria Mecanica, a manufacturer of heart-lung machines in Brazil. This acquisition is strategic for Sorin Group since it represents a gateway to the Brazilian market and to the entire Latin American region.

In July 2013, Sorin Group signed a supply agreement for the manufacturing of certain components of the Lotus Aortic Valve System, Boston Scientific Corp.'s second-generation TAVR (Transcatheter Aortic Valve Replacement) technology.

During 2013, Sorin Group also initiated a greenfield project for the local manufacturing of cardiopulmonary disposable products in Suzhou Industrial Park in China.

In 2013, Sorin Group confirmed its continued commitment to build a new growth platform in percutaneous mitral valve therapies. In October 2013, the Company invested a further US$5.5 million in Caisson, a company focused in the development of an innovative mitral replacement system, and continued to support the development of Cardiosolutions and HighLife.

-The Cardiac Rhythm Management Business Unit (implantable devices to manage cardiac rhythm disorders) posted revenues of EUR253.9 million in 2013, a 6.8 percent* decline compared to 2012.

High voltage revenues were affected by a challenging pricing environment in the implantable defibrillator segment, however the continued penetration of SonR allowed the CRT-D segment to grow by approximately 5 percent* in Europe in 2013.

Decline in low voltage revenues was driven by pricing pressure in Europe and lower volumes in Europe and Japan due to the penetration of MRI compatible pacemakers. Sorin's new pacemaker KORA 100, featuring the only automatic MRI mode, was launched in Europe at the end of November 2013 only, thus minimally impacting 2013 results.

In 2013, Sorin Group obtained several important regulatory approvals: i) FDA approval for the Investigational Device Exemption (IDE) of the RESPOND CRT clinical study and the first SonR implants in the United States; ii) FDA approval and US launch of the SMARTVIEW remote monitoring solution for patients with implanted cardiac defibrillators; iii) CE mark and the European commercial launch of the REPLY 200 family of pacemakers featuring Sleep Apnea Monitoring (SAM); iv) CE mark and European commercial launch of the KORA MRI compatible pacing system; and v) CE mark and European launch of INTENSIA family of implantable defibrillators and CRT-D devices featuring DF-4 high voltage connector.

During the year, Sorin also presented the results of the OPTION and DREAM studies aimed at demonstrating, respectively, a lower rate of inappropriate shocks in patients with Sorin dual chamber ICD devices and the innovative capacity of the REPLY 200 pacemaker to provide screening for the risk of severe Sleep Apnea.

During 2013, Sorin Group confirmed its continued commitment to build the new growth platform in neuromodulation therapies to treat heart failure. In February 2013, the Company executed a further US$5 million investment, with option-to-buy, in Enopace Biomedical and continued to support its "Equilia" internal project as well as the "Intense" collaborative R&D project.

Finally, after the closing of fiscal year 2013, in January 2014, Sorin Group signed a joint venture agreement with MicroPort Scientific Corp. to market and develop CRM devices in China. This agreement represents a key milestone in Sorin's strategy, enabling the Company to accelerate its penetration of the fast growing Cardiac Rhythm Management in China and build a local presence.

Gross profit in 2013 was EUR436.8 million, or 59.1 percent of revenues, compared to 60.6 percent of revenues in 2012. The decrease in Gross margin is mainly due to the effect of foreign exchange rates and to a normalized product mix after the full recovery from the earthquakes, partially offset by ongoing manufacturing efficiencies.

Selling, general and administrative (SG&A) expenses were EUR280.3 million compared to EUR309.6 million in 2012. At constant foreign exchange rates, SG&A were substantially flat, notwithstanding the EUR2.7 million impact of the US medical device excise tax.

Research and development (R&D) expenses were EUR73.7 million (10.0 percent of revenues) compared to EUR75.4 million (10.3 percent of revenues) in 2012. R&D activity was primarily focused on the new product releases of Inspire, Heartlink, Connect, the clinical studies for the Perceval and Freedom Solo valves, the development of REPLY 200 and KORA 100 and the internal neuromodulation projects.

EBITDA was EUR131.1 million, or 17.8 percent of revenues, up 28.8 percent compared to EUR101.8 million, or 13.9 percent of revenues in 2012.

EBIT was EUR70.1 million compared to EUR36.9 million in 2012. EBIT before special items was EUR82.8 million in 2013 compared to EUR58.0 million in 2012. Special items, negative for EUR12.7 million in 2013, included restructuring charges for EUR7.2 million, non- recurring charges related to the earthquakes for EUR3.5 million, partly balanced by a further installment of the insurance indemnification for the earthquakes of EUR3.75 million received in the second quarter of 2013. The remaining non-recurring charges refer to business development activities and litigation costs.

Financial charges amounted to EUR10.3 million compared to EUR14.3 million in 2012. The figure incorporates, respectively, a financial charge of EUR4.8 million in 2012 and a financial income of EUR0.3 million in 2013 related to the unwinding of over-hedging positions. On a run-rate basis, the financial charges in 2013 were lower by EUR0.6 million over the same period of 2012.

Net profit was EUR49.9 million compared to EUR23.0 million in 2012.

Adjusted net profito was EUR59.1 million, up 41.2 percent compared to EUR41.9 million in 2012.

Net financial debt as of December 31, 2013 was EUR68.7 million, compared to EUR87.8 million as of December 31, 2012 (EUR91.3 million as of September 30, 2013). Special items for the period were negative for EUR31.4 million, including EUR20.5 million for business development initiatives.

In 2013, the Company's free cash flow+ amounted to EUR50.5 million.

Guidance for the current fiscal year and for the first quarter of 2014

For 2014, the Company expects revenues to grow by 3-5 percent* over 2013 and Adjusted net profito of approximately EUR55-60 million, equivalent to Adjusted EPS (Earnings per share) of 11.5- 12.5 euro cents.

2014 Adjusted net profit guidance includes the unfavorable impact of foreign exchange for approximately EUR10 million and the investments in New Ventures which will have a temporary dilutive effect of around EUR6-7 million. These factors will be offset by manufacturing efficiencies and cost containment initiatives as well as by top-line growth across a variety of new products and geographies.

In 2014 the Company will focus on accelerating long-term growth through the roll-out of the Inspire-Heartlink-Connect system, the continued growth of SonR and Perceval, the commercial launch of KORA and the geographic expansion in emerging markets, primarily China, Brazil and Russia as well as through the continued investments in the New Ventures platform.

Finally, the Company's 2014 Adjusted net profito guidance does not include the income related to further installments of the insurance indemnification for the earthquakes, for which the final assessment and closing is expected in 2014.

For the first quarter of 2013, Sorin Group expects revenues to grow 0-2 percent* over the same period of 2013.

Sorin Group is a global medical device company.

More Information:

www.sorin.com

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