Sorin Group Announces First Quarter 2010 Results: Continued Expansion in Profitability and Net Debt Reduction

First Quarter 2010 highlights:

• Consolidated revenues at € 172.4 million, up 3.4%^* (2.3% at actual exchange rates) versus Q1 09;
• Gross Profit at € 100.2 million, 58.1% of revenues (55.8% in Q1 09);
• EBITDA at € 24.9 million, 14.4% of revenues (13.4% in Q1 09);
• EBIT at € 15.0 million, 8.7% of revenues (7.5% in Q1 09);
• Net earnings at € 6.9 million, 4.0% of revenues (1.7% in Q1 09);
• Net Debt as of March 31, 2010 down to € 174.5 million, versus € 181.6 million as of December 31, 2009 (€ 238.6 million as of March 31, 2009).

Sorin Group (MIL:SRN) expects second quarter 2010 net revenues to grow by approximately 3%*. EBITDA margin is expected to be 15.0-16.0% of revenues. Net profit in the first half of 2010 is expected to grow by 25% versus the same period in 2009.

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In application of IAS 39, from 1st January 2010, the Group has implemented the tools and the procedures for the application of hedge accounting on derivative financial instruments to cover the risk of fluctuation in exchange rates on highly probable foreign currency transactions (cash flow hedge). For a detailed analysis of the impact of the adoption of hedge accounting on the Company’s results, please refer to the table attached to this press release.

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The Board of Directors of Sorin S.p.A., meeting today under the Chairmanship of Rosario Bifulco, approved the results for the First Quarter of 2010.

"Quarter after quarter Sorin is maintaining its promises, and ensuring the achievement of the long term results outlined in the Strategic Plan. We are particularly satisfied with our ability to improve industrial efficiency which, together with our strong focus on innovation, are key milestones of our strategy”, said Chief Executive Officer André-Michel Ballester.

In the first quarter 2010, Sorin Group posted revenues of € 172.4 million, up 3.4%^* (2.3% at actual exchange rates) versus the same period in 2009, driven by the positive performance of the Heart Valves and CRM business units.

• The Cardiopulmonary Business Unit (Heart-lung machines, extra-corporeal and Autotransfusion blood circulation systems) posted revenues of € 75.1 million, down 2.0%* compared with the same quarter last year, due to a temporary market slow down in January, partially recovered towards the end of the quarter. Sales of Heart-lung machines registered a modest increase, driven by the S5^TM industry-standard machine, and by the newest generation C5^TM compact machine, which obtained FDA clearance in February 2010, whilst sales of the Oxygenator and the Autotranfusion segments have registered a slowdown in the quarter in line with market conditions. The business unit is focusing on its core products, as shown by the sale, in April, for $7 million, of the Angel® Whole Blood Separation System and activAT® Autologous Thrombin Processing Kit product lines to the US company Cytomedix.

• The Cardiac Rhythm Management Business Unit (implantable devices to manage cardiac rhythm disorders) posted revenues of € 66.5 million, up 6.8%* compared with the same period in 2009, driven by solid performance in key European countries, in the US and in the rest of the world, in particular in the high-voltage segment where the recently introduced Paradym^TM family is gaining share. During the quarter the Company announced FDA approval and the first implant of its next-generation cardiac resynchronization therapy defibrillator (CRT-D), Paradym™ CRT Model 8750. Low Voltage sales remained substantially flat; however, the underlying trend of pacemaker implants in Europe and in Japan shows the company is gaining share in both regions.

• The Heart Valves Business Unit (mechanical and tissue heart valves, and valve repair products) posted revenues of € 29.4 million, up 8.7%* compared with the same quarter in 2009. Sales in the biological valves segment reflected continuous market share gain in particular due to the increased penetration of the Mitroflow^TM valve in the US, whilst mechanical segment sales were substantially flat in all main geographies. The company expects to see a slowdown in the next quarter generated in particular by discontinuation of the All Carbon^TM tilting disc valve. In the first quarter enrolment in the landmark minimally invasive Perceval S^TM aortic tissue valve clinical trial continued to progress and now includes more than 200 patients. Following recent publication of new clinical data, the stentless Solo^TM valve is rapidly gaining share in Europe.

Gross Profit grew 6.6% in the first quarter 2010 to € 100.2 million, 58.1% of revenues (55.8% in Q1 09), as a result of the positive effects of manufacturing cost reduction programs and a more favourable geographic and product mix, despite the negative impact of exchange rates for about 100 b.p..

Selling, General and Administrative (SG&A) expenses grew slightly more than revenues to € 69.7 million, or 40.4% of revenue, versus 39.8% of revenues in Q1 09, mainly due to adoption of hedge accounting by the Group, which accounted for about 50 b.p. in the quarter.

Research & Development (R&D) grew 7.6% in the quarter to € 15.4 million, equal to 9.0% of revenue (8.5% in Q1 09).

EBITDA showed a significant increase of 10.3% to € 24.9 million (14.4% of revenues), versus € 22.6 million (13.4% of revenue) posted in Q1 09, mainly due to expansion of gross profit.

EBIT grew 18.9% to € 15.0 million (8.7% of revenues), versus € 12.6 million (7.5% of revenue) in Q1 09. Before special items, EBIT was € 15.1 million, equal to 8.8% of revenues (7.5% of revenue in Q1 09).

Net Financial Charges were € 3.0 million, versus € 3.9 million in Q1 2009, due both to lower average net debt and cost of debt.

Net Earnings were € 6.9 million, equal to 4.0% of revenues, versus € 2.8 million, equal to 1.7% of revenues, in Q1 09.

Net Financial Debt as of March 31, 2010 decreased to € 174.5 million, versus € 238.6 million as of March 31, 2009 (€ 181.6 million as of December 31, 2009). Over the last 12 months debt reduction was € 64.2 million, generated by operating cash flow and working capital optimization. Special items accounted for a positive € 2.3 million in the last 12 months (see attached table) and for € 2.1 million in the last 3 months, respectively.

Sorin Group expects second quarter 2010 net revenues to grow by approximately 3%*. EBITDA margin is expected to be 15.0-16.0% of revenues. In the first six months of 2010, net profit is expected to grow at 25% versus the same period in 2009 and net debt at the end of June, 2010, is expected to be stable versus the end of the first quarter 2010, taking into account the potential impact of an extraordinary cash-out of 10 million $ for the settlement with the US Department of Justice, previously disclosed on March 12, 2010.

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Declaration
The manager responsible for preparing the company’s financial reports, Demetrio Mauro, declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.

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Disclaimer
This press release contains forward-looking statements. These statements are based on the Group’s current expectations and projections about future events and, by their nature, are subject to inherent risks and uncertainties. They relate to events and depend on circumstances that may or may not occur or exist in the future, and, as such, undue reliance should not be placed on them. Actual results may differ materially from those expressed in such statements as a result of a variety of factors, including: continued volatility and further deterioration of capital and financial markets, changes in commodity prices, changes in general economic conditions, economic growth and other changes in business conditions, changes in government regulation (in each case, in Italy or abroad), and many other factors outside of the Group’s control.

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About the Sorin Group

Sorin Group (www.sorin.com) is a global company and a leader in the treatment of cardiovascular diseases. The company develops, manufactures and markets medical technologies for cardiac surgery and for the treatment of cardiac rhythm disorders.
With 3,600 employees worldwide, the Group focuses on three major therapeutic areas: cardiopulmonary bypass (extracorporeal circulation and autotransfusion systems), cardiac rhythm management, and heart valve repair and replacement. Each year, over 1 million patients are treated with the devices of Sorin Group in more than 80 countries.
For more information, please visit: www.sorin.com

^* at comparable exchange rates.

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CONSOLIDATED INCOME STATEMENT

(Euro million)

NET FINANCIAL DEBT - IMPACT OF SPECIAL ITEMS

(Euro million)

NET FINANCIAL DEBT - MATURITY ANALYSIS

(Euro million)

CONSOLIDATED INCOME STATEMENT

Impact of introduction of hedge accounting (exchange rates hedging)

(Euro million)

The adoption of hedge accounting does not impact the net debt, net invested capital and net equity amounts.

(*) reflected in the other operating expenses and therefore in the SG&A