UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the date of December 16, 2020

Commission File Number 001-39124

Centogene N.V.

(Translation of registrant’s name into English)

Am Strande 7

18055 Rostock

Germany

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F.... Form 40-F.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):


Centogene N.V.

On December 16, 2020, Centogene N.V. (the “Company”) issued a press release reporting its financial results for the Nine Months Ended September 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1.

Attached hereto as Exhibit 99.2, 99.3 and 99.4 are also the financial statements of the Company for the three and nine months ended September 30, 2020, the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and nine months ended September 30, 2020 and a risk factor on COVID-19, respectively.

All exhibits attached hereto are incorporated by reference herein.

Exhibits 99.2, 99.3 and 99.4 to this Report on Form 6-K shall be deemed to be incorporated by reference into the registration statement on Form S-8 (Registration Number 333-234551) of the Company and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

 

Exhibit 99.1 to this Report on Form 6-K shall not be deemed “filed” for purposes of Section 18 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the U.S. Securities Act of 1933, as amended, or the Exchange Act.

2


Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CENTOGENE N.V.

Date: December 16, 2020

By:

/s/ Richard Stoffelen

Name:

Richard Stoffelen

Title:

Chief Financial Officer

3


Exhibit Index

Exhibit

    

Description of Exhibit

99.1

Press Release dated December 16, 2020

99.2

Unaudited Condensed Consolidated Interim Financial Statements as of and for the Three and Nine Months ended September 30, 2020

99.3

Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Three and Nine Months ended September 30, 2020

99.4

Risk Factor on COVID-19

4


Exhibit 99.1

CENTOGENE Reports Third-Quarter 2020 Financial Results and Increases Full Year Guidance

CAMBRIDGE, Mass., and ROSTOCK Germany, and BERLIN, December 16, 2020 (Globe Newswire) — Centogene N.V. (Nasdaq: CNTG) (“CENTOGENE” or the “Company”), a commercial-stage company focused on rare diseases that transforms real-world clinical and genetic data into actionable information for patients, physicians, and pharmaceutical companies, today provided an update on its corporate progress and reported its financial results for the three and nine months ended September 30, 2020.

Revenues increased 212% compared to Q3 2019, driven by the continued expansion of our COVID-19 testing offering
Increased 2020 full-year revenue guidance to more than €100 million
Continued growth of new pharma partnerships, with 12 new deals signed and a robust recovery anticipated in 2021
Expansion of commercial COVID-19 testing, which now includes antigen testing
Announced leadership transition and appointment of Dr. Andrin Oswald as Chief Executive Officer to support the next stage of the Company’s growth

Andrin Oswald, M.D., Chief Executive Officer at CENTOGENE, said, “I am excited to have joined CENTOGENE at such an important stage in the Company’s evolution. While I have only been with CENTOGENE for a few weeks, it is clear to me that our entire team is focused on achieving a common goal of helping rare disease patients around the world. We believe that our mission has the potential to significantly reduce the burden of rare diseases – and offers an exciting value creation opportunity for our stakeholders at the same time. Leveraging more than 20 years of professional experience across the life sciences, including my time at Novartis and the Bill and Melinda Gates Foundation, I am looking forward to helping further scale and accelerate CENTOGENE’s growth as a leader in the rare diseases space.”

Richard Stoffelen, Chief Financial Officer at CENTOGENE, said, “During the third quarter, we saw a significant increase in our revenues, year-over-year, driven by our ability to leverage our core competency in precise medical diagnoses to pivot quickly and provide solutions to help address the COVID-19 pandemic. As we approach the end of what has been an unprecedented year, I would like to thank the entire CENTOGENE team once more for their flexibility and unwavering commitment.”

A Solid Foundation for 2021

CENTOGENE has leveraged its core competency of providing precise medical diagnoses, as well as its infrastructure, to help prevent further outbreaks of SARS-CoV-2 (COVID-19) throughout 2020. As part of this initiative, CENTOGENE has become one of the largest COVID-testing companies in Europe and created a pioneering and leading role in providing testing services at airports. The positive financial contribution from COVID-19 testing will enable the Company to make strategic investments to further solidify its leading position in the rare disease space. The number of Pharma partnership discussions have also continued to increase since Q2 2020, positioning CENTOGENE for further progress in 2021.

Further information on the Company’s Q3 2020 Earnings, including the management’s discussion and analysis of financial condition and results of operations, can be found by visiting EDGAR on the SEC website at www.sec.gov, as well as the Investor Relations page of the Company’s website at http://investors.centogene.com.

About CENTOGENE

CENTOGENE engages in diagnosis and research around rare diseases transforming real-world clinical and genetic data into actionable information for patients, physicians, and pharmaceutical companies. Our goal is to bring rationality to treatment decisions and to accelerate the development of new orphan drugs by using our extensive rare disease knowledge, including epidemiological and clinical data, as well as innovative biomarkers. CENTOGENE has developed a global proprietary rare disease platform based on our real-world data repository with over 3.6 billion weighted data points from approximately 595,000 patients representing over 120 different countries as of September 30, 2020.

The Company’s platform includes epidemiologic, phenotypic, and genetic data that reflects a global population, and also a biobank of these patients’ blood samples. CENTOGENE believes this represents the only platform that comprehensively analyzes multi-level data to improve the understanding of rare hereditary diseases, which can aid in the identification of patients and improve our pharmaceutical partners’ ability to bring orphan drugs to the market. As of September 30, 2020, the Company collaborated with over 40 pharmaceutical partners covering over 45 different rare diseases.


Important Notice and Disclaimer

This press release contains statements that constitute “forward-looking statements” as that term is defined in the United States Private Securities Litigation Reform Act of 1995, including statements that express the Company’s opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results, in contrast with statements that reflect historical facts. Examples include discussion of our strategies, financing plans, growth opportunities, and market growth. In some cases, you can identify such forward-looking statements by terminology such as “anticipate,” “intend,” “believe,” “estimate,” “plan,” “seek,” “project” or “expect,” “may,” “will,” “would,” “could,” or “should,” the negative of these terms or similar expressions. Forward-looking statements are based on management’s current beliefs and assumptions and on information currently available to the Company. However, these forward-looking statements are not a guarantee of our performance, and you should not place undue reliance on such statements. Forward-looking statements are subject to many risks, uncertainties, and other variable circumstances, such as negative worldwide economic conditions and ongoing instability and volatility in the worldwide financial markets, the effects of the COVID-19 pandemic on our business and results of operations, possible changes in current and proposed legislation, regulations and govern-mental policies, pressures from increasing competition and consolidation in our industry, the expense and uncertainty of regulatory approval, including from the U.S. Food and Drug Administration, our reliance on third parties and collaboration partners, including our ability to manage growth and enter into new client relationships, our dependency on the rare disease industry, our ability to manage international expansion, our reliance on key personnel, our reliance on intellectual property protection, fluctuations of our operating results due to the effect of exchange rates, or other factors. Such risks and uncertainties may cause the statements to be inaccurate and readers are cautioned not to place undue reliance on such statements. Many of these risks are outside of the Company’s control and could cause its actual results to differ materially from those it thought would occur. The forward-looking statements included in this press release are made only as of the date hereof. The Company does not undertake, and specifically declines, any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments, except as required by law.

For further information, please refer to the Risk Factors section in our Annual Report for the year ended December 31, 2019, on Form 20-F filed with the SEC on April 23, 2020, Form 6-K containing our financial results for the three months ended March 31, 2020, furnished to the SEC on June 15, 2020, Form 6-K containing our financial results for the three and nine months ended September 30, 2020, furnished to the SEC on December 16, 2020, and other current reports and documents furnished to or filed with the U.S. Securities and Exchange Commission (SEC). You may get these documents by visiting EDGAR on the SEC website at www.sec.gov.

Media Contact:

CENTOGENE

Sun Kim

Chief Strategy and Investor Relations Officer

investor.relations@centogene.com

FTI Consulting
Bridie Lawlor O’Boyle
+1.917.929.5684
bridie.lawlor@fticonsulting.com


Centogene N.V.

Unaudited interim condensed consolidated statements of comprehensive loss for the three and nine months ended September 30, 2019 and 2020

(in EUR k)

    

    

For the three months ended September 30

    

For the nine months ended September 30

Note

2019

    

2020

    

2019

    

2020

Revenue

 

4, 5

11,638

 

36,305

 

33,559

 

58,129

Cost of sales

 

6,641

 

26,059

 

19,499

 

39,892

Gross profit

 

4,997

 

10,246

 

14,060

 

18,237

Research and development expenses

 

2,011

 

4,796

 

6,119

 

10,606

General administrative expenses

 

4,884

 

8,373

 

16,487

 

24,038

Selling expenses

 

1,788

 

1,300

 

6,144

 

6,012

Impairment of financial assets

 

8

92

 

1,147

 

554

 

2,821

Other operating income

 

6.1

935

 

679

 

2,623

 

2,425

Other operating expenses

 

6.2

 

53

 

2

 

191

Real estate transfer tax expenses

7

 

 

1,200

 

Operating loss

 

  

(2,843)

 

(4,744)

 

(13,823)

 

(23,006)

Interest and similar income

 

  

 

 

12

 

6

Interest and similar expense

 

  

1,433

 

793

 

1,865

 

1,504

Financial costs, net

 

(1,433)

 

(793)

 

(1,853)

 

(1,498)

Loss before taxes

 

  

(4,276)

 

(5,537)

 

(15,676)

 

(24,504)

Income tax expenses

 

 

103

 

163

 

232

Loss for the period

 

  

(4,276)

 

(5,640)

 

(15,839)

 

(24,736)

Other comprehensive income/(loss), all attributable to equity holders of the parent

 

  

(1)

 

(66)

 

9

 

4

Total comprehensive loss

 

  

(4,277)

 

(5,706)

 

(15,830)

 

(24,732)

Attributable to:

 

  

 

 

 

Equity holders of the parent

 

  

(4,247)

 

(5,708)

 

(15,674)

 

(24,671)

Non‑controlling interests

 

  

(30)

 

2

 

(156)

 

(61)

(4,277)

 

(5,706)

 

(15,830)

 

(24,732)

Loss per share - Basic and diluted (in EUR)

 

  

(0.27)

 

(0.27)

 

(0.99)

 

(1.20)

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements

1


Centogene N.V.

Unaudited interim condensed consolidated statements of financial position as at December 31, 2019 and September 30, 2020

(in EUR k)

Assets

    

Note

    

Dec 31, 2019

    

Sep, 2020

Noncurrent assets

 

  

 

  

 

  

Intangible assets

 

 

14,145

 

16,405

Property, plant and equipment

 

 

8,376

 

13,585

Right-of-use assets

24,932

 

23,915

Other assets

 

8

 

1,948

 

1,953

 

49,401

 

55,858

Current assets

 

  

 

 

Inventories

 

 

1,809

 

7,291

Trade receivables and contract assets

 

8

 

16,593

 

25,787

Other assets

 

8

 

8,612

 

4,055

Cash and cash equivalents

 

9

 

41,095

 

28,748

 

68,109

 

65,881

 

117,510

 

121,739

Equity and liabilities

    

Note

    

Dec 31, 2019

    

Sep, 2020

Equity

 

  

 

  

 

  

Issued capital

 

10

 

2,383

 

2,653

Capital reserve

 

10

 

98,099

 

122,801

Retained earnings and other reserves

 

  

 

(40,622)

 

(66,073)

Non‑controlling interests

 

  

 

(938)

 

(26)

 

58,922

 

59,355

Noncurrent liabilities

 

  

 

 

Non‑current loans

 

11.1

 

1,578

 

501

Lease liabilities

 

11.1

 

18,069

 

18,052

Deferred tax liabilities

 

 

 

219

Government grants

 

11.2

 

9,941

 

9,296

 

29,588

 

28,068

Current liabilities

 

  

 

 

Government grants

 

11.2

 

1,348

 

1,350

Current loans

 

11.1

 

3,688

 

4,619

Lease liabilities

 

11.1

 

3,635

 

3,295

Trade payables

 

11.2

 

8,554

 

12,052

Other liabilities

 

11.2

 

11,775

 

13,000

 

29,000

 

34,316

 

117,510

 

121,739

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements

2


Centogene N.V.

Unaudited interim condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2020

(in EUR k)

    

Note

    

2019

    

2020

Operating activities

 

  

 

  

 

  

Loss before taxes

 

  

 

(15,676)

(24,504)

Adjustments to reconcile loss to cash flow from operating activities

 

  

 

Amortization and depreciation

 

5

 

4,461

6,943

Interest income

 

 

(12)

(6)

Interest expense

 

 

1,865

1,504

Gain on the disposal of property, plant and equipment

(532)

Expected credit loss allowances on trade receivables and contract assets

8

554

2,821

Share‑based payment expenses

 

12

 

5,299

2,542

Real Estate transfer tax expenses

7

1,200

Other non‑cash items

 

  

 

(26)

(1,800)

Changes in operating assets and liabilities

 

  

 

Inventories

 

 

(240)

(5,482)

Trade receivables and contract assets

 

8

 

(3,336)

(12,015)

Other assets

 

8

 

(739)

5,605

Trade payables

 

11.2

 

3,280

3,498

Other liabilities

 

11.2

 

448

1,225

Cash flow used in operating activities

 

  

 

(3,454)

(19,669)

Investing activities

 

  

 

Cash paid for investments in intangible assets

 

5

 

(5,366)

(4,781)

Cash paid for investments in property, plant and equipment

 

 

(1,266)

(6,641)

Grants received for investment in property, plant and equipment

 

11.2

 

341

 

390

Cash received from the disposals of property, plant and equipment

19,800

Interest received

 

 

12

 

6

Cash flow used in investing activities

 

  

 

13,521

(11,026)

Financing activities

 

  

 

 

Cash received from issuance of shares

10

22,430

Cash paid for acquisition of non-wholly owned subsidiary

(75)

Cash received from loans

 

11.1

 

1,545

1,114

Cash repayments of loans

 

11.1

 

(11,871)

(1,260)

Cash received from finance leases

470

Cash repayments of lease liabilities

 

11.1

 

(1,507)

(2,833)

Interest paid

 

 

(1,865)

(1,028)

Cash flow used in financing activities

 

  

 

(13,228)

18,348

Changes in cash and cash equivalents

 

  

 

(3,161)

(12,347)

Cash and cash equivalents at the beginning of the period

 

  

 

9,222

41,095

Cash and cash equivalents at the end of the period

 

  

 

6,061

28,748

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements

3


Centogene N.V.

Unaudited interim condensed consolidated statements of changes in equity for the nine months ended September 30, 2019 and 2020

Attributable to the owners of the parent

Currency

Non-

Issued

Capital

translation

Retained

controlling

Total

in EUR k

    

Note

    

capital

    

reserve

    

reserve

    

earnings

    

Total

    

interests

    

equity

 

As of January 1, 2019

1,903

45,342

(16)

(19,948)

27,281

(757)

26,524

Loss for the period

  

(15,683)

(15,683)

(156)

(15,839)

Other comprehensive loss

  

9

9

9

Total comprehensive loss

 

 

9

 

(15,683)

 

(15,674)

 

(156)

 

(15,830)

Share-based payments

12

494

494

494

As of September 30, 2019

1,903

 

45,836

 

(7)

 

(35,631)

 

12,101

 

(913)

 

11,188

Attributable to the owners of the parent

Currency

Non-

Issued

Capital

translation

Retained

controlling

Total

in EUR k

    

Note

    

capital

    

reserve

    

reserve

    

earnings

    

Total

    

interests

    

equity

 

As of January 1, 2020

2,383

98,099

(40,622)

59,860

(938)

58,922

Loss for the period

  

(24,675)

(24,675)

(61)

(24,736)

Other comprehensive loss

  

4

4

4

Total comprehensive loss

 

 

4

 

(24,675)

 

(24,671)

 

(61)

 

(24,732)

Share-based payments

12

2,542

2,542

2,542

Issuance of shares

10

240

22,969

23,209

23,209

Exercise of options

30

(30)

Transaction costs

(779)

(779)

(779)

Disposal of non-wholly owned subsidiary

6.2

268

268

Acquisition of non-wholly owned subsidiary

(780)

(780)

705

(75)

As of September 30, 2020

2,623

 

122,831

 

4

 

(66,077)

 

59,381

 

(26)

 

59,355

The accompanying notes form an integral part of these unaudited interim condensed consolidated financial statements

4


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

1 General company information

Centogene N.V. (“the Company”) and its subsidiaries (“the Group”) focus on rare diseases and seek to transform real-world clinical and genetic data into actionable information for patients, physicians and pharmaceutical companies. The mission of the Company is to bring rationality to treatment decisions and to accelerate the development of new orphan drugs by using our knowledge of the global rare disease market, including epidemiological and clinical data and innovative biomarkers.

On November 7, 2019, the Company completed an initial public offering (“IPO”) and has since been listed on Nasdaq Global Market under stock code “CNTG”. We have historically conducted our business through Centogene AG (which is now known as Centogene GmbH), and therefore our historical financial statements present the results of operations and financial condition of Centogene AG and its controlled subsidiaries. In connection with our initial public offering, Centogene N.V. became the holding company of Centogene AG on November 12, 2019, and the historical consolidated financial statements of Centogene AG became the historical consolidated financial statements of Centogene N.V. Centogene N.V. is a public company with limited liability incorporated in the Netherlands, with registered office located at Am Strande 7 in 18055 Rostock, Germany and Dutch trade register number 72822872.

On March 5, 2020, the Company resolved that Centogene AG shall be converted into a German limited liability company and renamed Centogene GmbH. Such conversion became effective upon the registration in the German commercial register on June 29, 2020. Unless otherwise stated, “Centogene GmbH” also refers to the historical operations of Centogene AG throughout the notes.

In July 2020, the Company completed a follow-on public offering of 3,500,000 common shares of the Company (the “July 2020 Offering”), consisting of 2,000,000 common shares offered by the Company and 1,500,000 common shares offered by selling shareholders at a price to the public of USD 14.00 per common share (i.e. EUR 12.71 per share). Aggregate offering proceeds, net of underwriting discounts, commissions and transaction costs, were EUR 22 million to the Company.

2 Basis of preparation

The interim condensed consolidated financial statements for the three and nine months ended September 30, 2019 and 2020 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements as of December 31, 2018 and 2019 and for the three years ended December 31, 2019. Unless otherwise specified, "the Company" refers to Centogene N.V. and Centogene GmbH throughout the remainder of these notes, while "the Group" refers to Centogene N.V., Centogene GmbH and its subsidiaries.

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended December 31, 2019, except for the adoption of new standards effective as of January 1, 2020 (see note 2.2). The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Several other amendments and interpretations apply for the first time in 2020, but do not have an impact on the interim condensed consolidated financial statements of the Group.

These interim condensed consolidated financial statements are presented in euro, which is the Group's functional currency. Unless otherwise specified, all financial information presented in euro is rounded to the nearest thousand (EUR k) in line with customary commercial practice.

5


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

2.1 COVID-19 reporting

Due to the growth and significance of the COVID-19 business in relation to the total activities of the Group, the COVID-19 testing business is managed and reported as a separate segment beginning in the third quarter of 2020. In the second quarter 2020 report, furnished to the SEC on Form 6-K on September 23, 2020, the financial impact of the COVID-19 business has been reported as a part of our Diagnostics segment, whereas it has been separated from the Diagnostics segment and included in the year-to-date COVID-19 financials in this report.

In the third quarter of 2020, the Company entered into a collaboration agreement with Dr. Bauer Laboratoriums GmbH, Rostock (hereafter ‘Bauer GmbH’). Bauer GmbH supports Centogene in certain areas of its COVID-19 testing business by providing the medical laboratory services to facilitate Centogene to perform its COVID-19 testing business activities. Bauer GmbH is wholly owned by a long-time employee of Centogene, who from a medical perspective and by observing the Medical Association's professional code of conduct continues to operate as an independent medical physician.

As per the criteria in IFRS 10, Centogene assessed the control it has over Bauer GmbH and concluded to consolidate the activities of Bauer GmbH in the Group from the third quarter of 2020. Centogene does not own any shares in Bauer GmbH. However, based on the analysis of all facts and circumstances surrounding the close collaboration with Bauer GmbH and the employment relationship with the sole shareholder of Bauer GmbH, this shareholder is considered as a de facto agent. Centogene meets the criteria of the control model under IFRS 10 as it has exposure to variable returns and the ability to use power to affect returns. Bauer GmbH has a share in the net result of the respective COVID-19 testing business which has been accounted for under non-controlling interest.

2.2Effects of new accounting standards

The following amendments and interpretations apply for the first time in 2020 and had no impact on the unaudited interim condensed consolidated financial statements of the Group:

Amendments to IAS 1 and IAS 8: Definition of Material
Amendments to IFRS 3: Definition of a Business
Amendments to IFRS 7, IFRS 9 and IAS 39: Interest Rate Benchmark Reform
References to the Conceptual Framework for Financial Reporting issued on 29 March 2018

3 Effect of COVID-19 Pandemic

The COVID-19 pandemic, which began in December 2019, has spread worldwide and continues to cause many governments to maintain measures to slow the spread of the outbreak through quarantines, travel restrictions, closures of borders and requiring maintenance of physical distance between individuals. Due to the complexity of the overall factors, which cannot be reliably separated from unrelated drivers of changes in the Group’s financial performance, the impact of the pandemic could not be quantified.

For more information, also refer to note 2.1 COVID-19 reporting and to notes 4 and 5 below on the new COVID-19 segment.

6


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

4 Revenues from contracts with customers

Three months ended September 30

in EUR k

Three Months Ended September 30, 2019

    

Pharmaceutical

    

Diagnostics

    

Total

Rendering of services

4,512

6,805

11,317

Sales of goods

321

321

Total Revenues from contracts with external customers

4,833

6,805

11,638

Recognized over time

4,512

6,805

11,317

Recognized at a point in time

321

321

Total Revenues from contracts with external customers

4,833

6,805

11,638

Geographical information

Europe

 

18

1,945

 

1,963

—Germany*

 

18

78

 

96

Middle East

 

3,407

 

3,407

—Saudi Arabia#

 

1,921

 

1,921

North America

 

4,815

325

 

5,140

—United States#

 

4,815

307

 

5,122

Latin America

 

829

 

829

Asia Pacific

 

299

 

299

Total Revenues from contracts with external customers

 

4,833

 

6,805

 

11,638


* country of the incorporation of Centogene GmbH

# countries contributing more than 10% of the Group’s total consolidated revenues for the three months ended September 30, 2019

7


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

in EUR k

Three Months Ended September 30, 2020

    

Pharmaceutical

    

Diagnostics

Covid-19

    

Total

Rendering of services

3,598

5,069

26,795

35,462

Sales of goods

202

641

843

Total Revenues from contracts with external customers

3,800

5,069

27,436

36,305

Recognized over time

3,598

5,069

8,693

17,360

Recognized at a point in time

202

18,743

18,945

Total Revenues from contracts with external customers

3,800

5,069

27,436

36,305

    

Geographical information

 

Europe

 

39

1,547

27,238

28,824

—Germany*#

 

20

52

26,568

26,640

Netherlands**

2

2

Middle East

 

26

2,648

2,674

North America

 

3,735

333

197

4,265

—United States#

 

3,735

299

197

4,231

Latin America

 

398

1

399

Asia Pacific

 

143

143

Total Revenues from contracts with external customers

 

3,800

 

5,069

27,436

 

36,305


* country of the incorporation of Centogene GmbH

** country of the incorporation of Centogene N.V.

# countries contributing more than 10% of the Group’s total consolidated revenues for the three months ended September 30, 2020

8


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

Nine months ended September 30

in EUR k

Nine months ended September 30, 2019

    

Pharmaceutical

    

Diagnostics

    

Total

Rendering of services

12,545

20,028

32,573

Sales of goods

986

986

Total Revenues from contracts with external customers

13,531

20,028

33,559

Recognized over time

11,964

20,028

31,992

Recognized at a point in time

1,567

1,567

Total Revenues from contracts with external customers

13,531

20,028

33,559

    

Geographical information

 

Europe

 

298

5,357

5,655

—Germany*

 

213

211

424

Middle East

 

61

10,117

10,178

—Saudi Arabia#

 

5,102

5,102

North America

 

13,172

1,646

14,818

—United States#

 

13,172

1,280

14,452

Latin America

 

2,148

2,148

Asia Pacific

 

760

760

Total Revenues from contracts with external customers

 

13,531

20,028

33,559


*country of the incorporation of Centogene GmbH

# countries contributing more than 10% of the Group's total consolidated revenues for the nine months ended September 30, 2019

in EUR k

Nine months ended September 30, 2020

    

Pharmaceutical

    

Diagnostics

Covid-19

    

Total

Rendering of services

11,478

16,308

28,848

56,634

Sales of goods

812

683

1,495

Total Revenues from contracts with external customers

12,290

16,308

29,531

58,129

Recognized over time

11,478

16,308

9,215

37,001

Recognized at a point in time

812

20,316

21,128

Total Revenues from contracts with external customers

12,290

16,308

29,531

58,129

    

Geographical information

 

Europe

 

106

4,282

29,323

33,711

—Germany*#

 

58

144

28,645

28,847

Netherlands**

3

2

5

Middle East

 

74

8,852

8,926

North America

 

12,110

1,446

206

13,762

—United States#

 

12,110

1,254

206

13,570

Latin America

 

1,362

2

1,364

Asia Pacific

 

366

366

Total Revenues from contracts with external customers

 

12,290

16,308

29,531

58,129


* country of the incorporation of Centogene GmbH

** country of the incorporation of Centogene N.V.

9


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

# countries contributing more than 10% of the Group's total consolidated revenues for the nine months ended September 30, 2020

The Group collaborated with the majority of our pharmaceutical partners on a worldwide basis in 2019 and 2020. In addition, in cases where our pharmaceutical partners are developing a new rare disease treatment, it is generally anticipated that the final approved treatment will be made available globally. As a result, we allocate the revenues of our pharmaceutical segment by geographical region by reference to the location where each pharmaceutical partner mainly operates, which is based on the region from which most of their revenues are generated. The allocation of revenues in our diagnostics segment and COVID-19 segments are based on the location of each customer.

Pharmaceutical segment

During the three and nine months ended September 30, 2020, revenues from one pharmaceutical partner represented 7.3% and 14.4% respectively, of the Group's total revenues (the three and nine months ended September 30, 2019: 25.4% and 26.5%, respectively).

During the nine months ended September 30, 2019, we have entered into two collaborations with an existing pharmaceutical partner, of which upfront fees of EUR 430k, representing the transaction price allocated to the one-off transfer of the Group's intellectual property, were received and recognized as revenues. No such revenues were recognized in the three and nine months ended September 30, 2020 and the three months ended September 30, 2019.

Covid-19 segment

The Company has commenced testing for COVID-19 in March 2020. Starting from the Mecklenburg-Western Pomerania region of Germany focusing on employees and essential workers in Rostock, the testing for COVID-19 was further expanded to nursing homes as well as to high school students in Germany, and made available to the rest of the world in May 2020. Some of the tests are offered free of charge by the Company, while others are offered in collaboration with the state government, educational institutions and other companies, as well as via the online marketplace. In particular we expanded our COVID-19 testing and entered into new collaborations during the third quarter by launching a CE-labelled CentoSwab (a two-component dry plastic swab for oropharyngeal swab sampling), and opened test centers at Hamburg Airport, Düsseldorf Airport, the Free State of Bavaria and Munich and Nuremberg Central Stations.

COVID-19 revenues are based on a negotiated price per test or on the basis of agreements covering tests to be performed over defined periods. Given the short turnaround time for the COVID-19 tests, revenues from COVID-19 tests that are on a price per test basis are considered as recognized at a point in time. Revenues from COVID-19 tests that are on the basis of agreements covering tests to be performed over defined periods are considered as recognized over time.

During the three and nine months ended September 30, 2020, revenues from two COVID-19 partners represented 25.4% and 23.9% for the quarter and 15.9% and 15.0% for the nine months ended, respectively, of the Group’s total revenues.

To support the expansion of test offerings, the Company acquired laboratory facilities and equipment, developed a Corona Test Portal and leased laboratory space at several locations in Germany. Additionally, COVID-19 testing capacity is provided through our custom-built CentoTruck, a mobile laboratory in a container setup to carry out the COVID-19 analysis. Total investments in COVID-19 testing as of September 30, 2020 amounted to approximately € 6.3 million, of which approximately € 4.8 million and €0.6 million, respectively, are included in property, plant and equipment and right-of-use assets. An amount of € 0.9 million is included in intangible assets and relates to the development of the Corona Test Portal.

10


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

5 Segment information

Three months ended September 30

in EUR k

Three months ended September 30, 2019

    

Pharmaceutical

    

Diagnostics

    

Corporate

    

Total

Total Revenues from contracts with external customers

4,833

6,805

11,638

Adjusted EBITDA

 

3,400

757

(4,917)

(760)

Capital Expenditures

 

Additions to property, plant and equipment and right-of-use assets

 

150

276

426

Additions to intangible assets

 

1,672

578

2,250

Other segment information

 

Depreciation and amortization

281

542

789

1,612

Research and development expenses

 

2,011

2,011

in EUR k

Three months ended September 30, 2020

    

Pharmaceutical

    

Diagnostics

    

Covid-19

Corporate

    

Total

Total Revenues from contracts with external customers

3,800

5,070

27,435

36,305

Adjusted EBITDA

 

871

(1,210)

9,516

(10,261)

(1,084)

Capital Expenditures

 

Additions to property, plant and equipment and right-of-use assets

 

3

195

2,900

516

3,614

Additions to intangible assets

 

218

361

237

816

Other segment information

 

Depreciation and amortization

617

650

110

1,134

2,511

Research and development expenses

 

4,796

4,796

Nine months ended September 30

Nine Months Ended September 30, 2019

in EUR k

    

Pharmaceutical

    

Diagnostics

    

Corporate

    

Total

Total Revenues from contracts with external customers

13,531

20,028

33,559

Adjusted EBITDA

 

9,561

1,298

(14,922)

 

(4,063)

Capital Expenditures

 

 

 

Additions to property, plant and equipment and right-of-use assets

179

419

668

 

1,266

Additions to intangible assets

3,458

1,908

 

5,366

Other segment information

 

 

 

 

Depreciation and amortization

794

1,627

2,040

4,461

Research and development expenses

 

6,119

 

6,119

11


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

Nine Months Ended September 30, 2020

in EUR k

    

Pharmaceutical

    

Diagnostics

    

Covid-19

Corporate

    

Total

Total Revenues from contracts with external customers

12,290

16,309

29,530

58,129

 

Adjusted EBITDA

 

5,278

(2,736)

10,306

(26,369)

(13,521)

Capital Expenditures

 

Additions to property, plant and equipment and right-of-use assets

 

304

585

5,400

2,352

8,641

Additions to intangible assets

 

3,072

888

821

4,781

Other segment information

 

Depreciation and amortization

1,688

1,757

164

3,334

6,943

Research and development expenses

 

10,606

10,606

Adjustments

Corporate expenses, depreciation and amortization, interest and similar income and expenses, as well as share-based payment expenses are not allocated to individual segments as the underlying instruments are managed on a group basis. Current taxes and deferred taxes are allocated to Corporate as they are also managed on a group basis.

Increases in corporate expenses for the three and nine months ended September 30, 2020 are mainly due to our continued international growth and business expansion. The increase is also due to the costs of operating as a public company, such as additional legal, accounting, corporate governance and investor relations expenses, and higher directors' and officers' insurance premiums.

Corporate expenses for the three and nine months ended September 30, 2020 included expenses related to the July 2020 Offering as described in note 1 of EUR 105k and EUR 278k, respectively. Corporate expenses for the nine months ended September 30, 2019 also included real estate transfer tax of EUR 1,200k related to an intercompany sale of land and building. No such expenses were incurred in the nine months ended September 30, 2020 (see note 7).

Capital expenditure consists of additions of property, plant and equipment, right-of-use assets and intangible assets. All of such assets are located in Germany, which is the country of the registered office of the Company, except for property, plant and equipment of EUR 552k (December 31, 2019: EUR 286k) and right-of-use assets of EUR 792k (December 31, 2019: EUR 1,042k), which is located in the United States.

Reconciliation of segment Adjusted EBITDA to Group loss for the period

For the three months ended September 30

    

2019

    

2020

Reported segment Adjusted EBITDA

 

4,157

 

9,177

Corporate expenses

 

(4,917)

 

(10,261)

 

(760)

 

(1,084)

Share-based payment expenses (Note 12)

 

(471)

 

(1,149)

Depreciation and amortization

 

(1,612)

 

(2,511)

Operating loss

 

(2,843)

 

(4,744)

Financial costs, net

 

(1,433)

 

(793)

Income taxes expenses

 

 

(103)

Loss for the three months ended September 30

 

(4,276)

 

(5,640)

12


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

For the nine months ended September 30

    

2019

    

2020

Reported segment Adjusted EBITDA

 

10,859

 

12,848

Corporate expenses

 

(14,922)

 

(26,369)

 

(4,063)

 

(13,521)

Share-based payment expenses (Note 12)

 

(5,299)

 

(2,542)

Depreciation and amortization

 

(4,461)

 

(6,943)

Operating loss

 

(13,823)

 

(23,006)

Financial costs, net

 

(1,853)

 

(1,498)

Income taxes expenses

 

(163)

 

(232)

Loss for the nine months ended September 30

 

(15,839)

 

(24,736)

6 Other income and expenses

6.1Other operating income

For the Three months ended September 30

    

For the Nine months ended September 30

in EUR k

    

2019

    

2020

    

2019

    

2020

Government grants

363

535

 

1,833

 

1,940

Income from the reversal of provisions

 

89

 

Gain on disposal of property, plant and equipment

532

 

532

 

Others

40

144

 

169

 

485

Total other operating income

935

679

 

2,623

 

2,425

Government grants contain performance-based grants to subsidize research, development and innovation in the state of Mecklenburg-Western Pomerania from funds granted by the European Regional Development Fund. Furthermore, government grants contain the release of deferred income from investment related grants.

6.2Other operating expenses

For the Three months ended September 30

    

For the Nine months ended September 30

in EUR k

    

2019

    

2020

    

2019

    

2020

Currency losses

 

23

 

2

 

60

Others

 

30

 

 

131

Total other operating expenses

 

53

 

2

 

191

During the nine months ended September 30, 2020, the Group disposed of its entire 51% interest in LPC GmbH (“LPC”) to the minority shareholders for a consideration of EUR 213k, of which EUR 200k is to be paid over a period of four years (and included in other assets, see note 8). The related non-controlling interest of EUR 268k (accumulated share of loss) was debited to profit or loss, and the sale resulted in a loss of EUR 101k.

13


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

7 Sale and Leaseback transaction

In June 2019, in preparation for a sale and leaseback transaction, the Company sold its land and building (the Rostock headquarters building) with a carrying value of EUR 22,778k to another subsidiary of the Group. Such intercompany transaction resulted in a real estate transfer tax expense of EUR 1,200k and was recognized in the three and nine months period ended September 30, 2019.

8 Trade receivables and other assets

in EUR k

    

Dec 31, 2019

    

Sep 30, 2020

Noncurrent

 

  

 

  

Other assets - Rental deposits

 

1,948

 

1,853

Other assets – Others

100

 

1,948

 

1,953

Current

 

 

Trade receivables, net

 

12,709

 

22,674

Contract assets, net

 

3,884

 

3,113

Receivables due from shareholders

 

2,766

 

Other assets

 

5,846

 

4,055

 

25,205

 

29,842

Total non-current and current trade receivables and other assets

27,153

31,795

Trade receivables and contract assets

Trade receivables are non-interest bearing and are generally due in 30 to 90 days. In general, portfolio-based expected credit loss allowances are recognized on trade receivables and contract assets.

Considering the potential impact of the COVID-19 pandemic on the global economy, the Group has re-assessed the credit loss rates in relation to the outstanding trade receivables and contract assets as follows:

in EUR k

    

Dec, 2019

    

Sep 30, 2020

 

Not past due

 

11,102

 

21,273

Past due 1-30 days

 

1,113

 

1,033

Past due 31-90 days

 

1,708

 

1,247

Past due more than 90 days

 

5,005

 

7,380

Total gross amount of trade receivables and contract assets

 

18,928

 

30,933

Expected credit loss rate

 

  

 

Not past due

 

0.3

%  

0.7

%

Past due 1-30 days

 

1.0

%  

5.9

%

Past due 31-90 days

 

1.2

%  

10.1

%

Past due more than 90 days

 

45.4

%  

65.3

%

Expected credit loss rate on total gross trade receivables and contract assets

 

12.3

%  

16.6

%

Expected credit loss

 

2,335

 

5,146

Based on the re-assessment the Group recognized impairment losses on receivables and contract assets arising from contracts with customers, included under impairment of financial assets in the consolidated statement of comprehensive loss, amounting to EUR 1,147k and EUR 2,821k, respectively, for the three and nine months ended September 30, 2020 (the three and nine months ended September 30, 2019: EUR 92k and EUR 554k, respectively).

Receivables due from shareholders

In 2016, the Group established a virtual share option program ("2016 VSOP") under Centogene GmbH that entitled the management board to grant virtual share options to individuals, in regard to services they provide and their

14


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

continuous commitment to the Group. Upon completion of the IPO in November 2019, all options granted under the 2016 VSOP were vested immediately in full, and the holders of vested options were entitled to receive a direct cash payment from the Company according to the calculation as stipulated in the 2016 VSOP, which is determined based on the IPO price of the shares of Centogene N.V. and the exercise prices of the vested options.

The payables by the Group to the holders of vested options were recorded as a liability with a carrying amount of EUR 2,766k by the end of December 31, 2019 (see note 11.2). As the payments to the option holders would be reimbursed by certain original shareholders to the Company, corresponding receivables against shareholders were recorded. Such receivables were considered as additional capital from shareholders and recorded against equity (capital reserve). Upon the completion of the July 2020 Offering, the relevant payables to the holders of vested options were settled by the proceeds received from such original shareholders from the sale of their shares.

Other assets

The non-current portion of other assets mainly include cash deposit of EUR 1,500k (used to secure a bank guarantee of EUR 3,000k) relating to the leases of Rostock headquarters building, cash deposits of EUR 128k (used to secure a bank guarantee of EUR 257k) relating to the leases of Berlin office and EUR 191k for the leases of certain plant and machineries. It also includes the consideration receivable for the sale of LPC of EUR 200k, among which EUR 100k is due after 1 year (see note 6.2).

The current portion of other assets include prepaid expenses of EUR 1,483k (December 31, 2019: EUR 3,481k) as well as receivables from grants of EUR 1,268k (December 31, 2019: EUR 409k).

9 Cash and short-term deposits

As of September 30, 2020, the Group has pledged its short-term deposits with carrying amount of EUR 1,500k (December 31, 2019: EUR 1,500k) and EUR 2,500k (December 31, 2019: EUR 2,500k) respectively, to fulfil collateral requirements in respect of existing secured bank loan and overdraft facility up to EUR 2,500k. In addition, the Group has pledged its short-term deposits of EUR 1,000k (December 31, 2019: EUR nil) related to another overdraft facility up to EUR 500k.

The restriction applying to the collateral may be terminated at any time subject to the full amount of the relevant bank loans and the overdrafts being repaid.

10 Equity

As discussed in note 1, Centogene N.V. became the parent holding company of the Group on November 12, 2019 as part of the IPO process. All share, per-share and related information presented in the financial statements and corresponding disclosure notes have been retrospectively adjusted, where applicable, to reflect the impact of the share split resulting from the reorganization.

In July 2020, the Company completed a follow-on public offering of 3,500,000 common shares of the Company, consisting of 2,000,000 common shares offered by the Company and 1,500,000 common shares offered by selling shareholders at a price to the public of USD 14.00 per common share (i.e. EUR 12.71 per share). Aggregate offering proceeds, net of underwriting discounts, commissions and transaction costs, were EUR 22 million to the Company.

Capital reserve

As of September 30, 2020, capital reserve included a share premium of EUR 107,499k, being amounts paid in by shareholders at the issuance of shares in excess of the par value of the shares issued, net of any transaction costs incurred for the share issuance.

In addition, it also included amounts recorded in respect of share-based payments. For additional information on the share-based payments, see note 12.

15


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

11 Financial liabilities

11.1Interest-bearing liabilities

in EUR k

    

Dec 31, 2019

    

Sep 30, 2020

Noncurrent liabilities

 

  

 

  

Non‑current portion of secured bank loans

 

968

 

501

Municipal loans

 

610

 

Total noncurrent loans

 

1,578

 

501

Lease liabilities

 

18,069

 

18,052

Total noncurrent liabilities

 

19,647

 

18,553

Current liabilities

 

 

Current portion of secured bank loans

 

802

 

868

Other bank loans

406

Bank overdrafts

 

2,636

 

3,345

Municipal loans

250

Total current loans

 

3,688

 

4,619

Current portion of lease liabilities

 

3,635

 

3,295

Total current liabilities

 

7,323

 

7,914

Total noncurrent and current liabilities

 

26,970

 

26,467

As of September 30, 2020, short-term cash deposits of EUR 1,500k (December 31, 2019: EUR 1,500k) were used to secure the secured bank loan outstanding (see note 9).

Other bank loans outstanding as of September 30, 2020 represented bank loans granted under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Subject to certain reporting and review requirements, the Company may apply for forgiveness of the amount after the 24-week period beginning on the date of first disbursement of the loans. The Company is in the process of preparing the relevant application and anticipates the result of the forgiveness will be available in the first half of 2021. The amount which is forgiven will be considered as government grant income, while any remaining amount not forgiven will be repaid by the Company. Accordingly, the entire amount was classified as current.

16


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

The following table is based on the original terms and conditions:

Conditions and statement of liabilities

The outstanding interest-bearing liabilities as of September 30, 2020 and December 31, 2019 have the following conditions:

Dec 31, 2019

Sep 30, 2020

Nominal

Carrying

Nominal

Carrying

in EUR k

Currency

Nominal interest rate

Maturity

amount

amount

amount

amount

Secured bank loan

    

EUR

    

3.95%

2018‑25

    

1,770

    

1,770

    

1,369

    

1,369

Other bank loan

USD

1%

2020-22

    

406

406

Municipal loan

 

EUR

 

8.25%; plus 1.5% profit-related; 0.75% on losses

2018-23

 

500

    

500

 

 

Municipal loan

 

EUR

 

8%; plus 1.5% profit-related; 0.75% on losses

2021

 

360

    

360

 

 

Bank overdrafts

 

EUR

 

4.46%

Rollover

 

476

    

476

 

490

 

490

Bank overdrafts

 

EUR

 

3.75%

Rollover

 

2,160

    

2,160

 

2,405

 

2,405

Bank overdrafts

 

EUR

 

3.59%

Rollover

 

    

 

450

 

450

Lease liabilities

EUR

2.1%-3.5%*, 5.4%-8.9%

2017-31

21,704

    

21,704

21,347

21,347

Total interestbearing financial liabilities

 

  

 

  

  

 

26,970

 

26,970

 

26,467

 

26,467

*     represents the incremental borrowing rate of the Group at the commencement of the leases

The bank overdrafts of EUR 2,405k as of September 30, 2020 (December 31, 2019: EUR 2,160k) were secured by short-term deposits with a carrying amount of EUR 2,500k (December 31, 2019: EUR 2,500k) (see note 9). The bank overdrafts of EUR 490k (December 31, 2019: EUR 476k) were secured by guarantees provided by certain of the Company's shareholders as of December 31, 2019, and these guarantees were released providing security over a short-term deposit with a carrying amount of EUR 500k subsequent to the year end (see note 9).

The municipal loan due to MBMV (Mittelständische Bürgschaftsbank Mecklenburg-Vorpommern) of EUR 860k outstanding as of December 31, 2019 was secured by guarantees provided by the Group's shareholders, and were released upon full repayment in February 2020.

11.2Trade payables and other liabilities

in EUR k

    

Dec 31, 2019

    

Sep 30, 2020

Trade payables

 

8,554

 

12,052

Government grants (deferred income)

 

11,289

 

10,646

Liability for Virtual Stock Option Program

 

2,769

 

Contract liabilities

3,748

3,134

Others

 

5,258

 

9,866

Trade payables and other liabilities

 

31,618

 

35,698

Non‑current

 

9,941

 

9,296

Current

 

21,677

 

26,402

Government grants mainly include investment-related government grants. These were received for the purchase of certain items of property, plant and equipment for the research and development facilities in Mecklenburg-Western Pomerania, including the Rostock facility. The grants were issued in the form of investment subsidies as part of the joint federal and state program, "Verbesserung der regionalen Wirtschaftsstruktur" (improvement of the regional economic structure) in connection with funds from the European Regional Development Fund. Additional grants received during the nine months ended September 30, 2020 are related to the purchase of certain items of property, plant and equipment amounted to EUR 390k (the nine months ended September 30, 2019: EUR 341k).

17


Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

In addition, other liabilities include a provision for outstanding invoices of EUR 4,675k (December 31, 2019: EUR 1,210k) which mainly relates to pandemic related invoices, personnel-related liabilities for vacation and bonuses totaling EUR 2,662k (December 31, 2019: EUR 2,264k), a VAT payable of EUR 963k (December 31, 2019: EUR 1,311k receivable), as well as liabilities for wage and church tax of EUR 478k (December 31, 2019: EUR 376k). Other liabilities as of September 30, 2020 do not include costs related to the July 2020 Offering, while other liabilities as of December 31, 2019 included costs relating to the IPO of EUR 565k.

12 Share-based payments

At September 30, 2020 the Group had the following share-based payment arrangements.

(i)  Equity share option - Replacement (ESOP 2017)

In 2017, the Group established a second virtual share option program ("2017 VSOP”) that entitled the management board to grant virtual share options to individuals, in regard to services they provide and their continuous commitment to the Group.

For the nine months ended September 30, 2019, the Group recognized EUR 5,299k of share-based payment expense in the statement of comprehensive income in relation to the cash-settled virtual share option programs of Centogene GmbH, which were cancelled upon completion of IPO.

In connection with the IPO (see note 1), a transfer agreement was entered into between the holders of the 2017 VSOP, Centogene GmbH and the Company in November 2019, under which the 2017 VSOP was terminated, and the option holders were granted new share options of Centogene N.V. (“ESOP 2017”). This transaction was accounted for as a replacement, no incremental fair value arose on this transaction.

The number of options granted to each holder under ESOP 2017 was based on the number of options granted to them under 2017 VSOP and the IPO price of Centogene N.V. Accordingly, 805,308 new share options were granted pursuant to Centogene N.V’s long-term incentive plan (the “Long-term Incentive Plan”), with each option representing one common share of Centogene N.V., and an exercise price equal to the nominal value of the share of Centogene N.V., which is EUR 0.12.

The options were considered vested upon the completion of the IPO, but were not exercisable in the first 180 days subsequent to the listing (lock-up period).

The remaining contractual life for the share options as at September 30, 2020 is 9.25 years (December 31, 2019: 10 years).

The share options issued under ESOP 2017 are equity-settled and the fair value of the options were fully recognized in equity under capital reserve on the date of grant, i.e. at the replacement date.

(ii) Equity share option 2019 (ESOP 2019)

In 2019, an agreement was entered into between the Company and an individual of the Supervisory Board. According to this agreement, a total of 396,522 options, each option representing one common share, were granted pursuant to the Long-term Incentive Plan to the individual Supervisory Board member with exercise price equaling to the IPO price, which is EUR 12.58 per option, on the date of the IPO of the Company. The vesting period shall be three years commencing on the day of grant, where one-third of the granted options shall be vested at the end of each year of grant, and the first year ending on March 31, 2020.

The contractual life for the share options as at December 31, 2019 is ten years and the weighted average fair value of options outstanding was EUR 9.08. The share options issued under “ESOP 2019” will be equity-settled and the fair value of the options were recognized in equity under capital reserve, based on the fair value on the date of grant, and will be charged to profit or loss over the vesting period by using the graded vested approach. For the three and nine

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Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

months ended September 30, 2020, the Group recognized EUR 336k and EUR 1,728k respectively, of share-based payment expense in the statement of comprehensive income.

(iii) Long-Term Incentive Plan (LTIP)

In 2019, the Company established a Long-Term Incentive Plan (“LTIP”) that entitled the Supervisory Board or the Management Board, as applicable, to grant share-based awards to members of the Supervisory Board, members of the Management Board, employees, officers and certain other service providers. Under the LTIP, the maximum number of shares underlying awards made under the LTIP (excluding awards granted in replacement of other awards in connection with an acquisition, merger or business combination) shall not exceed 13% of the Company’s issued share capital immediately following the completion of the initial public offering of the Company's ordinary shares, provided that, on January 1, 2020 and on January 1 of each calendar year thereafter, such maximum number shall be increased with an additional number of shares equal to 3% of the Company’s issued share capital on such date (or any lower number of Shares as determined by the Supervisory Board).

Effective as of September 11, 2020, the Supervisory Board granted members of the Management Board the following options and restricted stock units ("RSUs") under the LTIP:

a.to the Company’s Chief Executive Officer: 36,175 Options and 72,350 RSUs;
b.to the Company’s Chief Financial Officer: 16,250 Options and 32,250 RSUs; and
c.to the Company’s Chief Information Officer: 15,000 Options and 30,000 RSUs.

Effective as of September 11, 2020, the Management Board granted 87,500 options and 75,000 RSUs to other key current and former executive officers.

Apart from one award that immediately vested in full on the grant date and another award that vests in three equal tranches on each anniversary of its date of first employment, all other awards referred to above shall vest in three equal tranches from January 1 following the grant date, in accordance with the following vesting schedule:

i.one third of the awards vest on January 1, 2021;
ii.one third of the awards vest on January 1, 2022; and
iii.one third of the awards vest on January 1, 2023.

All of the foregoing awards vest in full upon the occurrence of a change of control as defined by the LTIP, unless the holder is no longer eligible to participate in the LTIP at that time.

The options referred to above vest only if the 20-trading day volume-weighted average stock price of the Company's shares preceding the vesting date of each tranche exceeds the exercise price of USD 11.60. This hurdle is considered a market condition. Therefore, expenses would not be reversed, if the tranches do not ultimately vest. The RSUs referred to above have no performance-based vesting criteria. RSUs represent a right to receive a payment equal to the value of the RSU at the exercise date. The company has a choice to settle either in cash, in shares or a combination thereof. In line with this policy both types of awards are to be settled in shares and expire on the 10th anniversary of the grant date.

The fair value of the options as of the grant date was determined using a Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. The input variables include stock price volatility of 75% based on other public companies in the relevant industry, and risk-free interest rate of 0.8% to estimate the probability of satisfying the market conditions and the resulting fair value of the award.

For the three and nine months ended September 30, 2020, the Company recognized EUR 812k of share-based payment expenses in the statement of comprehensive income in relation to these awards under the LTIP plan.

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Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

13 Commitments

Future payments for non-cancellable leases

The Group has various lease contracts in relation to the expansion of the Rostock headquarters and leasing of the Frankfurt laboratory, Airport Berlin, Airport Düsseldorf, Airport Frankfurt and additional laboratory space in Hamburg. The future lease payments and utilities for these non-cancellable lease contracts are EUR 380k within one year, EUR 1,838k within five years and EUR 5,012k thereafter (December 31, 2019: EUR nil).

The Group has various non-cancellable lease contracts of office equipment and storage spaces which had a lease term of less than 12 months or were related to leases of low-value assets, and therefore the short-term lease recognition exemption was applied to these contracts. The future lease payments for these non-cancellable lease contracts are EUR 75k within one year (December 31,2019: EUR 72k) and EUR 23k within five years (December 31, 2019: EUR 36k).

Future payment obligations

As of September 30, 2020, the Group concluded agreements with suppliers, for goods and services to be provided subsequent to September 30, 2020 with a total payment obligation of approximately EUR 7,131k (December 31, 2019: EUR 802k).

14 Contingent Liabilities

In May 2016, the Company was informed in writing by the Universitair Medisch Centrum Utrecht (‘‘UMCU’’) that a claim had been initiated against UMCU regarding a prenatal diagnostic test that the Company conducted at their request which failed to identify a specific mutation present in a patient. On November 8, 2018, the UMCU and Neon Underwriting Limited formally filed a legal claim in the local court in Rostock, Germany against the Company alleging that the Company’s negligence in performing the test resulted in the misdiagnosis of the patient. UMCU is seeking recovery for compensatory damages as a result of the alleged misdiagnosis. By court order of November 8, 2018 the Regional Court of Rostock set the amount in dispute at EUR 880k.

On November 12, 2018, the Company submitted a notice to the Regional Court of Rostock of the intention to defend against the claim. On January 3, 2019, the Company filed a motion to dismiss in which the Company denied the merits of the claim. UMCU and Neon Underwriting Limited responded to this motion on March 15, 2019 with a statement of reply, and the parties made several court filings setting out their arguments since. By order dated June 3, 2019, the Regional Court of Rostock provided a first set of questions to be answered by an expert witness. Following a request by the Court, the Director of the Institute of Genetics at the University of Bonn recommended a professor for human genetics from the University of Aachen be appointed as an expert witness in this case. The Company agreed to such recommendation.

As of September 30, 2020, the dispute amount was EUR 1.3 million. The claim was assigned to a new judge, due to an illness of the preceding judge, while the decision to appoint the recommended expert witness has not yet been finalized.

The Company intends to continue to rigorously defend its position and considers that it is not probable the legal claim towards the Company will be successful and as a result has not recognized a provision for this claim as of September 30, 2020. In addition, in case a settlement would be required, the Company believes that the corresponding liability will be fully covered by the respective existing insurance policies.

The higher regional court of Rostock issued a final decision by which it renders a contract entered into between the State of Mecklenburg-Western Pomerania (“MVP”) and the Company for Corona testing as invalid with retroactive effect under a public procurement litigation case. Under this contract, the Company has invoiced and received a total amount of EUR 2.3 million. Since the contract was rendered invalid, MVP now has a claim under German law against the Company for repayment of the full amount invoiced and received. The Company at the same time has a claim against MVP for compensation for the value of services provided in expectation of the validity of the contract.

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Notes to the unaudited interim condensed consolidated financial statements as of December 31, 2019 and September 30, 2020 and for the three months and nine months ended September 30, 2019 and 2020

In the typical scenario, the amounts of these two claims would equal each other and could be offset against each other. However, there can be no assurance that MVP will take the view that the amount of its claim equals and offsets the amount of the Company’s claim. To the extent MVP’s claim exceeds the Company’s claim against MVP, Centogene may ultimately have a payment obligation, which could materially adversely affect the Group’s financial position and results of operations.

15 Subsequent Events

Leadership transition

On October 20, 2020 the Company announced that Prof. Arndt Rolfs, the Company’s founder and former Chief Executive Officer (CEO), has decided to step down as CEO of Centogene as of October 20, 2020, and that Andrin Oswald, M.D., will join the Company as CEO effective December 1, 2020. Prof. Rolfs has agreed to serve as an advisor during the transition period until December 31, 2020.

The financial impact of the departure of Prof. Rolfs, in the fourth quarter of 2020, are additional expenses relating to one full year’s base salary aggregating to EUR 565k, as well as additional share-based payment expenses of EUR 162k and EUR 620k respectively relating to all LTIP options and RSUs granted in 2020 that would vest immediately.

LTIP grant of restricted stock units

In October 2020, 251,500 RSUs granted to employees were issued, subject to the terms of the LTIP, the applicable award agreement and the terms specified in the authorization from the Supervisory Board for this purpose. The awards will vest in three equal tranches over a three-year period from January 1, 2021 to January 1, 2023.

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