Biohit Oyj Interim report April 25, 2013 at 9:30 A.M. local time (EET)
SUMMARY
January–March 2013
- Net sales increased by 25% compared to 2012
- Net sales amounted to EUR 0.6 million (0.4)
- Operating income came to EUR -1.0 million (-1.1)
- Profit before taxes was EUR -1.0 million (-0.9)
- The share of international operations was 80.1% of net sales
- Earnings per share amounted to EUR -0.07 (-0.07)
- Equity ratio 88.5%
-
Biohit Oyj implemented Euroclone acquisition after review period
Biohit Oyj expanded the Acetium product family by releasing its Acetium lozenge for sale. The company also expanded its equipment and instrument portfolio by signing a cooperation agreement according to which Biohit Oyj received the right to sell the American Gold Standard Diagnostics' automated ELISA analyzer globally (excluding USA, Puerto Rico and China).
SEMI KORPELA, PRESIDENT AND CEO:
In the first quarter of 2013, Biohit Oyj's business development focused on investing in the construction of an international sales network in many sectors, on mapping the possibilities offered by the company's diagnostic studies for the development of screening and treatment practices in various countries, as well as on preparing the launching of new products.
During the first quarter, Biohit Oyj signed an exclusive licencing and distribution agreement with Chinese pharmaceutical company GrandPharma regarding the marketing, distribution and manufacture of Acetium products in China. The agreement gives GrandPharma exclusive rights to use Biohit's know-how and intellectual property rights in China. GrandPharma is a large-scale, modern and comprehensive distributor and producer operating in the pharmaceutical sector.
Biohit Oyj has decided to conduct further studies in order to determine the capacity of the company's new BioAcetium product to treat Helicobacter pylori infection.
Biohit Oyj and Tamro Oyj agreed to tighten the cooperation concerning the Acetium product family. Now, the cooperation shall also include the marketing and distribution of the new Acetium lozenge to pharmacies.
Biohit Oyj strengthened its Nordic diagnostics distribution by signing a distribution agreement with Fischer Scientific. The agreement covers the distribution and marketing of Biohit Oyj's diagnostic products in Finland, Sweden, Norway and Denmark.
CONSOLIDATED KEY FIGURES
| 1-3 / 2013 | 1-3 / 2012 | 1-12 /2012 | |
| Net sales, MEUR | 0.6 | 0.4 | 2.0 |
| Operating profit/loss, MEUR | -1.0 | -1.1 | -4.6 |
| Profit/loss before taxes, MEUR | -1.0 | -0.9 | -3.7 |
| Profit/loss for the period, MEUR | -1.0 | -0.9 | -3.7 |
| Average number of personnel | 35 | 36 | 35 |
| Number of personnel at the end of the period | 34 | 36 | 35 |
| Equity ratio, % | 88.5% | 81.6% | 88.7% |
| Earnings per share, EUR | -0.07 | -0.07 | -0.27 |
| Shareholders' equity per share, EUR | 2.5 | 3.8 | 2.6 |
| Average number of shares during the period | 13,615,593 | 13,615,593 | 13,615,593 |
| Number of shares at the end of the period | 13,615,593 | 13,615,593 | 13,615,593 |
NET SALES AND RESULT
January–March
Net sales increased by 25% compared to 2012.
Operating loss amounted to EUR -1.0 million (EUR -1.1 million in 1-3/2012). In order to utilize great potential of diagnostics and acetaldehyde binding products in building up the business, extensive investments are required to the construction of a distributor and partner network, to support the resulting partnerships (sales permits, registrations, marketing), as well as product development.
Consolidated net sales and operating income
|
1–3/2013 MEUR |
1–3/2012 MEUR |
Change EUR |
1–12/2012 MEUR |
|
| Net sales | 0.6 | 0.4 | 0.1 | 2.0 |
| Change compared to the previous year, % | 24.9% | 2.3% | -5.7% | |
| Operating income | -1.0 | -1.1 | 0.1 | -4.6 |
| Change compared to the previous year, % | 8.4% | -21.3% | -23.3% | |
| Operating income, % of net sales | -179% | -244% | -224% |
BALANCE SHEET
On 31 March 2013, the balance sheet total was EUR 39.1 million (EUR 63.5 million) and the equity ratio 88.5% (81.6%).
FINANCING
Biohit Oyj's financial position is good and it allows strong investments in business and product development as well as in the commercialization. At the end of the quarter, the company’s current financial assets were EUR 29.6 million. In addition, the company has EUR 6.8 million in receivables in an escrow account from a business transaction made at the end of 2011. The funds will be released on 31 March 2014, provided no claims concerning the transaction are made.
RESEARCH AND DEVELOPMENT
Research and development has focused on the further development and improvement of existing innovations and products. The company also uses external experts and subcontractors in its research and development operations. The development expenditure has not been capitalised.
Development expenditure for the reporting period totalled EUR 0.2 million (EUR 0.2 million 1–3/2012).
INVESTMENTS
Gross investments during the reporting period totalled EUR 0.0 million (EUR 0.0 million).
PERSONNEL
During the reporting period, the average number of personnel employed by the Group was 35 (36 in the corresponding period in 2012), of whom 29 (29) were employed by the parent company and 6 (7) by subsidiaries. At the end of the reporting period, the number of personnel was 34, of whom 28 were employed by the parent company.
SHORT-TERM RISKS AND UNCERTAINTY FACTORS
The company's key risk factors are related to the development of the business environment and the demand for the company's supply. These risk factors include financial development of the selected market areas, the ability and willingness of various countries to improve their healthcare systems (development priorities, reimbursement practices, import restrictions, lengths of registration times) and requirements set by customers on the products. In the management of short-term risk factors, it is vital to take into account the timely selection of new market areas, as well as the selection of professional partners for them and the marketing of the requested product supply.
Business development and the launching of new products require significant investments.
The aim of the investment activities related to the company's liquid assets is to achieve profit at very low risk of capital loss. The investment portfolio consists of deposits, money market investments and corporate loans. Sufficient distribution of investments between asset categories, investment instruments and counterparties is essential. The company uses at least two partners in its investment activities.
OUTLOOK FOR 2013
Net sales for 2013 are expected to increase compared to 2012. In April 2013, Biohit Oyj purchased an Italian diagnostics company through a directed share issue and, at the same time, updated its guidelines. Predicting earnings in this major restructuring and development phase is very challenging. However, Biohit Oyj expects earnings to turn positive during 2014.
MAIN EVENTS IN THE REPORTING PERIOD
Biohit signs licensing agreement with GrandPharma
Biohit Oyj signed a distributor agreement with Chinese pharmaceutical company GrandPharma Ltd. The agreement covers the marketing and distribution of Biohit's Acetium in China and gives GrandPharma exclusive rights to use Biohit's know-how and intellectual property rights in the distribution and production of Acetium products in China. GrandPharma is a large-scale, modern and comprehensive distributor and producer operating in the pharmaceutical sector.
Clinical trial
Biohit Oyj has received the preliminary results of a clinical trial conducted to determine the capacity of the company's new BioAcetium product to treat Helicobacter pylori infections. Based on the results, Biohit Oyj has decided to conduct further studies using longer treatment times. In the further studies, BioAcetium will also be combined with an antibiotic that does not cause development of antibiotic-resistant strains of the bacteria.
Acetium lozenge
Biohit Oyj and Tamro Oyj have agreed to tighten the cooperation concerning the Acetium product family. Now, the cooperation shall include the marketing and distribution of the new Acetium lozenge to pharmacies in Finland. This lozenge effectively removes acetaldehyde dissolved into saliva during smoking. In 2008, WHO stated that acetaldehyde is one of the major carcinogens in cigarette smoke, and reducing exposure to these carcinogens should be mandatory. In Finland, the new product became available for sale in pharmacies in April.
Acetaldehyde measurements
Biohit Oyj has carried out new measurements of acetaldehyde concentrations in beer and yoghurts. Acetaldehyde is an apple-scented chemical compound that is abundantly present in food produced through fermentation processes, such as alcoholic beverages, vinegar and dairy products. In 2009, the International Agency for Research on Cancer (IARC), which is part of the World Health Organisation (WHO), classified acetaldehyde, which derives from alcoholic products and forms in the body after their ingestion, as a Group I human carcinogen.
Biohit Laboratory Services Oy
At the end of 2012, the company decided to incorporate its service laboratory activities. From the beginning of 2013, Biohit Laboratory Services Oy offers analyses of diagnostic tests developed by Biohit and the determination of acetaldehyde concentrations in food and alcoholic beverages.
EVENTS AFTER THE REPORTING PERIOD
Annual General Meeting
The Annual General Meeting (AGM) of Biohit Oyj held on Monday 8 April 2013 approved the financial statements of the parent company and the consolidated financial statements for 2012 and discharged the members of the Board of Directors and the President and CEO from liability.
Distribution of dividends
In accordance with the proposal by the Board of Directors, the AGM decided that, on the basis of the financial statements for the financial year ended on 31 December 2012, a dividend of EUR 0.4964 for each A share and EUR 0.4998 for each B share be paid. Dividends were paid to shareholders recorded in the company's shareholder register on the record date for the payment of dividends, i.e., on 11 April 2013. Dividends were paid out on 18 April 2013.
In accordance with the proposal of the Board of Directors, the AGM decided also that, on the basis of the financial statements for the financial year ended on 31 December 2012, funds from the invested non-restricted equity fund be distributed to shareholders as a capital repayment, with the capital repaid amounting to EUR 0.237 for each A and B share. Capital was repaid to shareholders recorded in the company's shareholder register on the record date for the repayment of capital, i.e., on 11 April 2013. The capital repayment was made on 18 April 2013.
Members of the Board of Directors
The AGM decided that the number of members of the Board of Directors would be five (5) and re-elected the following members to the Board until the end of the next AGM: Professor Osmo Suovaniemi, Professor Mikko Salaspuro, Commercial Counsellor Eero Lehti and MSc (Eng.) Seppo Luode, as well as President and CEO Franco Aiolfi as a new member.
Additionally, the AGM decided that the chairman and the other members of the Board of Directors would be paid a monthly fee of EUR 1,600 and EUR 1,500, respectively.
Auditors
The AGM elected Authorised Public Accountants Ernst & Young Oy as the company’s auditors, with APA Erkka Talvinko as the head auditor, until the end of the next AGM.
Biohit implemented Euroclone acquicition
The new company will function as an Italian subsidiary, focusing on Biohit’s diagnostic products distribution and marketing in Italy. The company was acquired by direct share issue, which will be 180,000 Biohit B-shares. The acquisition was closed and the share issue was subscribed in accordance with the exchange rate of the day prior to the closing (17 April 2013) thus resulting as the value of the acquisition
1,126,800.00 €.
Net sales of Euroclone S.p.A.’s business unit focused on gastrointestinal diagnostic were 0.8 million euros and net income was slightly negative in 2012. The acquired company has assets and inventory worth of 0.1 million euros and the company has no debt. The acquired company will employ 2 key employees from Euroclone S.r.l. When Euroclone Gastro S.r.l. forms a Biohit Oyj subsidiary, Franco Aiolfi will act as a managing director. One-off expenses that relate to the acquisition will not be significant.
As a result of new shares emission, the total number of Biohit shares raises up to 13,795,593 shares (13,615,593) and the number of B-shares to 10,820,093 shares (10,640,093). The company's share capital will increase from 2,314,650.81 euros to 2,345,250.81 euros. The new shares will correspond to a percentage of 1.3% of the Biohit Oyj's total number of shares and 0.3% of the share of voting rights after registration.
Biohit Group reporting includes Italian subsidiary figures from April 18, 2013 onwards.
Kazakhstan's GastroPanel screening yields encouraging results
The GastroPanel screening study started by Biohit Oyj and the Medical Center of the President's Affairs Administration of the Republic of Kazakhstan in the autumn of 2012 has been completed.
Administration
Authorisations of the Board of Directors
Based on a resolution of the AGM held on 13 April 2011, the Board of the company is authorised to decide on the issue of shares and to issue the special rights referred to in Chapter 10, section 1 of the Limited Liability Companies Act so that the maximum number of new Series B shares to be issued pursuant to the special rights is 2,000,000, which corresponds to approximately 20% of the company's Series B shares. In August 2011, based on the authorisation, the Board of Directors decided to arrange a directed share issue to Sartorius in August 2011 (677,966 B-shares) and to Euroclone in April 2013 (180,000 B-shares). Thereby, the remaining authorisation is for 1,142,034 Series B shares.
According to the resolution, the Board of Directors is entitled to decide on all terms and conditions regarding the issue of shares and the issue of special rights entitling to shares. The issue of shares and the issue of special rights entitling to shares can occur in deviation from the subscription right of shareholders (special issue) Such authorisation shall remain valid for three years from the resolution of the AGM.
Changes to Biohit Oyj’s management
Kari Syrjänen, MD, PhD, FIAC, born 1948, was appointed Chief Medical Director and a member of the management team at Biohit Oyj as of 1 January 2013. Syrjänen has worked for more than 40 years in various universities and hospitals in Finland and abroad in positions ranging from professor of pathology and chief physician to dean of faculty. In addition, he has served as a visiting professor at several foreign universities and research institutes.
The other members of the management team are Semi Korpela, President and CEO; Jussi Kolunen, Chief Financial Officer; Lea Paloheimo, Development Director; Panu Hendolin, R&D Director; and Anu Mickels, Sales and Marketing Director.
SHARE TURNOVER AND PRICE DEVELOPMENT
Biohit Oyj's shares are divided into Series A and Series B shares. There are 2,975,500 Series A shares and 10,640,093 Series B shares, totalling 13,615,593 shares. Series A shares confer 20 votes per share and Series B shares 1 vote per share. The dividend paid for Series B shares is, however, two (2) per cent of the nominal value higher than that paid for Series A shares. The total market capitalisation value (assuming that the market capitalisation value for Series A and B shares is equal) at the end of the period was EUR 100.1 million (EUR 51.7 million on 31 March 2012).
Biohit Oyj's Series B shares have been listed on NASDAQ OMX Helsinki in the Small cap/Healthcare group under the code BIOBV.
| BIOBV/NASDAQ OMX Helsinki | 1-3/2013 | 1-3/2012 |
| High, EUR | 9.10 | 3.97 |
| Low, EUR | 4.00 | 2.80 |
| Average, EUR | 6.55 | 3.65 |
| Latest, EUR | 7.35 | 3.80 |
| Turnover, EUR | 36,360,454 | 4,438,617 |
| Turnover, volume | 5,548,216 | 1,320,492 |
Shareholders
At the end of the reporting period on 31 March 2013, the company had 5,984 shareholders (4,734 on 31 December 2012). Private households held 96.06% (96.05%), companies 3.48% (3.43%) and public-sector organisations 0.08% (0.12%) of the shares. Foreign ownership or nominee registrations accounted for 0.38% (0.4%) of all shares.
Further information on the shares, major shareholders and management's shareholdings is available on the company's website at www.biohit.fi/investors.
ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance with the IAS 34 standard.
Following the divestment made on 14 December 2011, the HealthCare business is presented as continuing operations and the liquid handling business as discontinued operations. Separate segment-based reporting will no longer be provided. As of the beginning of 2012, Biohit Oyj reports the income statement for the current and reference periods according to a function-specific formula. In other respects, Biohit Oyj has applied the same accounting principles in preparing this interim report as for its 2012 financial statements. The IFRS standards that came into effect in 2013 did not affect the accounting principles.
All figures in this interim report have been rounded up or down, so the sums of individual figures may deviate from the totals shown.
The figures in this interim report have not been audited.
CONSOLIDATED INCOME STATEMENT
| 1-3/2013 | 1-3/2012 | 1-12/2012 | |
| Net sales | 0.6 | 0.4 | 2.0 |
| Materials and services | -0.3 | -0.3 | -1.3 |
| Gross margin | 0.2 | 0.2 | 0.7 |
| Sales and marketing | -0.4 | -0.5 | -2.2 |
| Administration | -0.6 | -0.6 | -2.2 |
| Product development | -0.2 | -0.2 | -1.0 |
| Other operating income | 0.0 | 0.0 | 0.1 |
| Operating profit/loss | -1.0 | -1.1 | -4.6 |
| Financial income | 0.0 | 0.4 | 1.2 |
| Financial expenses | 0.0 | -0.3 | -0.3 |
| Profit/loss before taxes | -1.0 | -0.9 | -3.7 |
| Income taxes | 0.0 | 0.0 | 0.0 |
| Income for the period | -1.0 | -0.9 | -3.7 |
| Translation differences | 0.0 | -0.1 | 0.0 |
| Total comprehensive income for the period | -1.0 | -1.0 | -3.7 |
| Earnings per share calculated from earnings attributable to the owners of the parent company | 1-3/2013 | 1-3/2012 | 1-12/2012 |
| Undiluted earnings per share, EUR | -0.07 | -0.07 | -0.27 |
CONSOLIDATED BALANCE SHEET
| 31 Mar 2013 MEUR | 31 Mar 2012 MEUR | 31 Dec 2012 MEUR | |
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Intangible assets | 0.2 | 0.3 | 0.2 |
| Property, plant and equipment | 0.4 | 0.1 | 0.4 |
| Receivables | 7.8* | 6.8* | 7.8* |
| Deferred tax assets | 0.0 | 0,0 | 0.0 |
| Total non-current assets | 8.5 | 7.3 | 8.5 |
| CURRENT ASSETS | |||
| Inventories | 0.5 | 0.4 | 0.4 |
| Trade and other receivables | 0.5 | 3.4 | 0.6 |
| Financial assets recognised at fair value through profit or loss | 26.6 | 51.0 | 30.2 |
| Cash and cash equivalents | 3.0 | 1.5 | 0.2 |
| Total current assets | 30.6 | 56.3 | 31.5 |
| TOTAL ASSETS | 39.1 | 63.5 | 40.0 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | |||
| Shareholders' equity attributable to the owners of the parent company | |||
| Share capital | 2.3 | 2.3 | 2.3 |
| Invested unrestricted equity fund | 3.2 | 14.3 | 3.2 |
| Translation differences | 0.0 | 0.0 | 0.0 |
| Retained earnings | 29.0 | 35.3 | 30.0 |
| Total shareholders' equity | 34.5 | 51.9 | 35.5 |
| NON-CURRENT LIABILITIES | |||
| Deferred tax liabilities | 0.0 | 0.0 | 0.0 |
| Pension obligations | 0.0 | 0.0 | 0.0 |
| Total interest-bearing liabilities | 0.0 | 0.0 | 0.0 |
| Other liabilities | 0.0 | 0.1 | 0.0 |
| Total non-current liabilities | 0.0 | 0.1 | 0.0 |
| CURRENT LIABILITIES | |||
| Trade payables | 0.3 | 1.6 | 0.4 |
| Total interest-bearing liabilities | 0.4 | 0.4 | 0.4 |
| Tax liabilities | 0.0 | 4.5 | 0.0 |
| Other liabilities | 3.8 | 5.1 | 3.8 |
| Total current liabilities | 4.5 | 11.6 | 4.5 |
| Total liabilities | 4.5 | 11.7 | 4.5 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 39.1 | 63.5 | 40.0 |
* Includes EUR 6.8 million in receivables from a business transaction; the funds are placed in an escrow account. Funds will be released from the escrow account March 31, 2014, provided no claims concerning the transaction are made.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Statement of changes in consolidated shareholders' equity on 31 March 2013
| MEUR | Share capital | Translation differences | Invested unrestricted equity fund | Retained earnings | Shareholders' equity |
| Shareholders' equity 1 Jan 2013 | 2.3 | 0.0 | 3.2 | 30.0 | 35.5 |
| Total comprehensive income for the period | -1.0 | -1.0 | |||
| Shareholders' equity 31 Mar 2013 | 2.3 | 3.2 | 29.0 | 34.5 |
Statement of changes in consolidated shareholders' equity on 31 March 2012
| MEUR | Share capital | Translation differences | Invested unrestricted equity fund | Retained earnings | Shareholders' equity |
| Shareholders' equity 1 Jan 2012 | 2.3 | 0.0 | 14.3 | 36.2 | 52.8 |
| Total comprehensive income for the period | -0.1 | -0.9 | -1.0 | ||
| Shareholders' equity 31 Mar 2012 | 2.3 | 0.0 | 14.3 | 35.3 | 51.9 |
CASH FLOW STATEMENT
| 1–3/2013 MEUR | 1–3/2012 MEUR | 1–12/2012 MEUR | |
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Profit for the period | -1.0 | -0.9 | -3.7 |
| Adjustments | 0.0 | -0.2 | -0.8 |
| CHANGE IN WORKING CAPITAL | 0.0 | 1.0 | -0.2 |
| Interest paid and payments on other operating financial expenses | 0.0 | -0.7 | -0.8 |
| Interest received | 0.1 | 0.0 | 1.1 |
| Realised exchange rate gains and losses | 0.0 | 0.0 | 0.0 |
| Income taxes paid | 0.0 | 0.0 | -4.5 |
| Net cash flow from operating activities | -0.8 | -0.7 | -8.9 |
| CASH FLOW FROM INVESTMENTS | |||
| Investments in tangible and intangible assets | -0.1 | 0.0 | -0.3 |
| Revenue from disposal of tangible and intangible assets | 0.0 | 0.0 | 0.0 |
| Net investments in funds and deposits | 3.6 | -41.0 | -20.2 |
| Net cash flow from investments | 3.5 | -41.1 | -20.5 |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Dividend payout | 0.0 | 0.0 | -2.7 |
| Repayment of capital | 0.0 | 0.0 | -10.9 |
| Repayment of loans | 0.0 | -4.7 | -4.7 |
| Net cash flow from financing activities | 0.0 | -4.7 | -18.3 |
| Increase (+)/decrease (-) in cash and cash equivalents | 2.8 | -46.4 | -47.7 |
| Cash and cash equivalents at the beginning of the period | 0.2 | 47.9 | 47.9 |
| Effect of exchange rates on cash and cash equivalents | 0.0 | 0.0 | 0.0 |
| Cash and cash equivalents at the end of the period | 3.0 | 1.5 | 0.2 |
RELATED-PARTY TRANSACTIONS
There were no substantial changes in related-party transactions during the reporting period.
PLEDGES, CONTINGENT LIABILITIES AND OTHER LIABILITIES
| 1-3/2013 | 1-3/2012 | 1-12/2012 | |
| Collaterals given on behalf of the parent company | |||
| Corporate mortgages | 0.0 | 0.0 | 0.0 |
| Real estate mortgages | 0.0 | 0.0 | 0.0 |
| Collaterals given on behalf of subsidiaries | |||
| Guarantees | 0.0 | 0.0 | 0.0 |
| Other liabilities | |||
| Leasing commitments | |||
| Due for payment in more than 1 year | 0.0 | 0.1 | 0.0 |
| Due for payment in more than 1 year but less than 5 years | 0.0 | 0.1 | 0.0 |
| Due for payment in more than 5 years | 0.0 | 0.0 | 0.0 |
| Total | 0.0 | 0.2 | 0.1 |
| Other rental commitments | |||
| Due for payment in more than 1 year | 0.1 | 0.2 | 0.2 |
| Due for payment in more than 1 year but less than 5 years | 0.3 | 0.1 | 0.3 |
| Due for payment in more than 5 years | 0.0 | 0.0 | 0.0 |
| Total | 0.4 | 0.3 | 0.4 |
| Total other liabilities | 0.5 | 0.5 | 0.4 |
| Total collaterals and contingent liabilities | 0.5 | 0.5 | 0.5 |
In Helsinki on April 25, 2013
Biohit Oyj
Board of Directors
Additional information:
CEO Semi Korpela, Biohit Oyj
Tel. +358 9 773 861
semi.korpela@biohit.fi
www.biohit.fi
Biohit in brief
Biohit Oyj is a globally operating Finnish biotechnology company established in 1988. Biohit's mission is "Innovating for Health". The purpose of the company is to take social responsibility and produce innovation, new technologies and analysis systems for use in medicine, research institutions and industry, helping to promote research and diagnostics and to improve the quality of life of people by means of preventing disease, human suffering and financial loss. We are committed to social responsibility and it is our duty to spread knowledge about the Group 1 human carcinogen, acetaldehyde, and innovate and develop the marketing and availability of our products and services. Biohit is headquartered in Helsinki and its subsidiaries are located in China, Italy and the United Kingdom. Since 1999, Biohit's Series B shares (BIOBV) have been listed in the NASDAQ OMX Helsinki Oy Small cap/Healthcare sector.