Medistim ASA

A very good morning from sunny Oslo and welcome to Medistim's presentation of our first quarter 2026 financial results. My name is Kari Krogstad and together with CFO Thomas Jakobsen we will together take you through the results. Before getting into the highlights, we like to start this presentation just reminding ourselves of Medicin's track record and also just highlighting that our growth over the past 10 years in sales has been close to 11%. And on our EBIT, we have been growing close to 15% over the past 10 years in a CAGR way. So that's a reminder of our promise to continue to deliver profitable growth. Let's now dive into the first quarter. So I'm very happy to be able to present another record sales quarter from Medistim. So for the first time, we are exceeding 200 million NOCs in revenues. That means 11.1% growth in NOC. We can see that we have some negative currency effects here. So if we adjust for this, we will see that the currency neutral sales development is actually up at 18.5%. And further, looking at sales of our own products, which is of course the strategic product portfolio and the most important part of our business, we see that this is up a solid 28.8%. All regions are contributing to this result. Americas is up 30.9% currency neutral this quarter. EMEA up 11.5% and Asia Pacific have a tremendous 57.5% growth. We're also noting that our third party products is down by 30.2%. And we will remember that the beginning of last year was very, very strong due to sales to new hospitals in Norway. And we couldn't expect that to be repeated in this quarter. When we look at the EBIT at 57.1 million, that is also a very, very strong operating result. It's actually the second best operating result ever, just beaten by the same quarter last year. And if we are adjusting for currency effects here, we would actually see close to 4% improvement in the EBIT for this quarter. We know that the US tariffs is making an impact this quarter, so impacting our gross margin and that's also the EBIT margin. The margin remains strong at 28.3%, a little bit lower than the same quarter last year, but still at the high level that we would like to see. Of course, very much driven by the sales, strong sales of our own products. We will note and have some explanation to some higher operating expenses this quarter. Of course, some of that is connected to the establishment of the direct operation in Japan. We are also seeing increasing higher activity levels throughout our sales organization, which is a very deliberate effect that we want to see. And we're also taking some expenses on an IT infrastructure upgrade. The General Assembly yesterday decided that we will pay out a dividend of eight NOx per share. So that will be a total of 146.2 million. So with that introduction, I will leave the word to Thomas.

Thank you very much, Kari, and good morning, everyone. I will take us through the first quarter profit and loss balance sheet and cash flow. And going directly to the profit and loss, Kari will take us through total revenue splits per region and per product. So I will not go into that detail. However, we do have a weaker gross margin in percent this quarter, and this is explained by our sales channels. We have communicated before that our margin is very much dependent upon the sales channel we are selling through, either through the distributed network or if we're direct in the market. And there's also variances between different regions. So for this first quarter, relatively speaking, we have strong sales to our distributed network, but we also have very strong sales to our APAC region, which affects gross margin and gives us a little bit weaker gross margin as such. Not much, but it is a little bit lower than our margins in the US market. And also what Kari mentioned is the tariff. The US tariff was not implemented in the first quarter 2025. We have full effect of that in 2026 and it amounts to 5.1 million. And that was an expense obviously we did not have last year. Salary and social expenses are at the same level more or less as last year but we do have additional operating expenses this quarter and that's related to a lot of activities which Kari has touched upon. We do have this IT infrastructure project which we also spoke about in the fourth quarter and in this quarter we've expensed 1.5 million related to that project. We also have the establishment of our direct operation in Japan and that has added another one and a half expenses to our P&L. We also had recruitment expenses. We recruit and grow the business continually and the recruitment expenses for this quarter was one million higher compared to last year. And last but not least, we do have a high level of commercial activities, which was 3 million higher this quarter compared to last year. And it's very much travel and face time with customers we're then talking about. Last but not least, we also have an agent commission for this quarter. This is not very normal in Medistem because we either sell through distributor or direct sales network. However, some hospitals require that they have a contract directly with Medistem, and that's happened this quarter. And these contracts are then controlled through lateral credits, which controls the cash flow. from the hospital to the manufacturer and also controls that the hospital are actually getting the delivery and secure the delivery that they're being promised. And this happened in the first quarter and then we have an agent commission then of 2.1 million which are then the return commission to our distributor for the services that they provide. So given all this, our EBITDA ends at 63.3 million, a little bit weaker than first quarter last year that ended at 64.7. Depreciation increases. We do have additional lease obligations, which is the reason for the increased depreciation. And our operating profit ends at 57.1 million and an EBIT margin of 28.3%. That's weaker than the first quarter last year, but I think, you know, look at the big picture, the fiscal year 2025, our EBIT margin was 28%. So we are well in line with what we communicated earlier, that our EBIT margin should be in the high 20 area. Net finance is negative. We have experienced a strengthening of the Norwegian krone, especially towards US dollars, but also towards euro. So the net effect of finance is negative by 5.5 million. And profit before tax then ends at 51.5 million and profit after tax ends at 40.3 million. Looking at our balance sheet, our intangible assets increases. We have two major development projects ongoing which are recognized as an asset in our balance sheet, but we also have this IT infrastructure project which I mentioned in the P&L. Basically what we're doing with the IT infrastructure project is that mainstream code and setup are expensed and MetaSteam unique code and setup is recognized as asset. So it's a combination of those two. Inventory level, same level as the end of the year. So the increase in our working capital is related to accounts receivables that increases from 86 million to 104 million. Cash position is solid, ends at just under 210 million, a little bit below the cash position by the end of the year, and I will comment that a little bit further later on in the cash flow statement. Equity is strong, ends at over 74% and we have no interest bearing bank debt. Haven't had that for many years. Our long term liabilities are related to two things. We have lease obligations of a total of 46.2 million, where 11.6 million is short term. And the deferred revenue is extended warranty contracts, two to three year contracts, which then revenue are then recognized over that time period. All in all, we do have now decided that we are going to pay out a dividend and that will be paid, I think, estimated 18th of May. That will obviously affect our equity when we are then closing the second quarter, 146 million. So we'll then reduce our total equity and equity percent, but it's still a solid equity as such. Earnings per share still solid, more than two Norwegian krones per share this quarter. And we do have also a strong equity position, as you can see, 70.9% by the end of the year, increased now to 74.3%. Cash flow. We do experience that our cash flow from operation is relatively weak this quarter and there are reasons for that. First of all, we have prepayments of income tax of 14.1 million. We do have the increase in working capital related to increase in our accounts receivables. But we also have what is called here other, which are accrued expenses in 2025 that we now have paid out in the first quarter. And a lot of this is related to commissions and also yearly bonuses that has been achieved based upon the results that Medistem delivered in 2025. So net cash flow operation is then 7.2 million. In addition to that we have investments related to our development project and the IT infrastructure project and also we have paid lease obligations of 2.9 million so net negative cash flow is then 2.3 million which then leaves us with a cash position pretty much the same as we entered the year into with so 210 million. And with that, I leave the word to Kari. Thank you.

Yes, and let's then dive into our business segments update, starting with the flow and imaging systems sold in units. So this is obviously our most important part of the product portfolio since it's our absolutely unique product offering. We are the only company out there providing combined flow measurements and high frequency ultrasound technology in the same system, which is providing really high value both to cardiac surgeons and to vascular surgeons. And as you know, we are selling this product as about double the price of a flow only system. So this is very important for us to see a continued uptake and adoption of this technology. For the quarter, we see it's a good quarter for us. We sold 28 systems this quarter. EMEA and Asia Pacific sold more than the same quarter last year. America is down by four units this quarter. These typically vary from quarter to quarter, but all in all, a strong quarter for flow and imaging unit sales. When we are selling these systems, the imaging probe sales tend to follow and we're also seeing therefore strong imaging probe unit sales this quarter. And here Americas is up by two units, EMEA up by seven and Asia-Pacific down by one unit. When you look at the flow-only systems, it's also very reassuring to see that this is also growing. So strong flow system unit sales this quarter, up eight units quarter over quarter. And Americas is up, EMEA is a bit down here. We recognize that they had a higher flow in imaging sales, so these tend to sort of level out a little bit. And then we're seeing that Asia-Pacific growth by 10 units this quarter, and this is very much driven by growth in our sales to China. When it comes to flow probes in units, we see that there's a very strong continuation of growth here, so up 27% this quarter, and a really strong contribution from all the territories. And as we know that the strong capital system sales are driving the probe sales across all of these regions. Looking a little bit more into the regions, starting with Americas. So Americas this quarter delivered sales revenues of 84.8 million NOX. And if we adjust to the same currency as we had last year, we look at an underlying growth of 30.9 for the quarter. As we know, the US is the majority of Americas and looking at US in isolation, the currency neutral growth was 33%. And we have increased our prices significantly in the US and the growth this quarter, we see that about 50% of the 33% is coming from price increases. It's then very reassuring to see that we have good system volume sales as capital, although not as high as the same record quarter last year, and also very strong FlowPro volume growth at 46%. Canada has a little bit weaker quarter in the beginning of this year, while the Latin American distributors delivered a strong quarter, but of course from a much lower base. Diving a little bit further into the US, so we can see here in the table the system sales and also the outplacements on PPP or lease contracts. And the total number of units that we have then sold or outplaced these quarters is 14 versus 18 last year. So we're seeing this fewer number of systems sold, but we also see strong sales of consumables to the capital customers. If we look in the second table, the number of procedures from flow probes to capital customers, we see that that is growing by the high 35%. We're also seeing very high growth of imaging probes to capital customers of 15%. So new customers are increasingly coming in as capital accounts. And we also see that some of the current PPP or lease customers tend to convert to capital. So this is a trend that is continuing. To the right in this slide, we have split out the flow procedures, splitting out the cardiac part of these procedures and the vascular part. So now we can follow the development of flow procedures to cardiac, here highlighted in orange. either by year or by quarter. And this means that it's very easy to calculate the penetration or the adoption of our technology in the US in cabbage. So the cardiac number for 2025 is about 80,000 procedures. And then considering a market of around 200,000 procedures, that leads us to a share of 40% covered by Medistim in the US cabbage market. So hopefully this will be useful to follow going forward. Moving on to Asia-Pacific. So here we're delivering 42.7 million in sales, making this currency neutral. The increase is actually 57.5%. And we see that the sales to China is making up the majority of this and growing as high as 74.6% for the quarter. And we have continued to explain that we have to expect quarterly variations in our sales to China, because we do have, of course, sales office with our own staff, but we still rely on local distributors and agents, and that will inevitably result in some quarterly variability. Japan, it is a new era for us in Japan and Q1 was the final quarter where we're selling through a distributor there. So it was on the low side at 2.7 million, much lower than the same quarter last year. But this also means that there will be no inventory build up in the distribution channel as we saw in China when we went direct there. So we know that when we are starting to sell from the second quarter onwards, that will be through our own team and there should be no unexpected inventory issues going forward. We also see this quarter quite strong contribution from the other Asia-Pacific distributors, up 105%, and contributing then in total with 14.7 million. In Europe and Middle East, the region delivered 52.1 million NOX in sales in the first quarter. Currency neutral, this corresponds to an increase of 11.5%. We note that our direct markets delivered sales in line with the prior year, so no big change there. while the distributor sales is actually providing the growth contribution this quarter, going up 26% currency neutral. And just thinking back at the EMEA performance also through 2025, varying quite a lot. Direct markets from time to time contributing very strongly and in other quarters a bit weaker. So I expect to see a bit variation going forward here as well. But really good news that we in the first quarter are already growing by 11.5% currency neutral. That's very encouraging. The third-party products, as mentioned in the introduction here, the revenue is down 30%. And we are reminded that the first quarter last year represented an exceptionally strong comparable, because we sold a lot of ophthalmology products to two new hospitals in Norway. So we could not plan for or expect to repeat that sales in this quarter. Other than that, we have a highly diversified product portfolio and it's Mentor, iCare and AMI, which are the biggest contributors in the whole portfolio. This table is just summarizing the growth in NOC from the direct markets and also from the distributor parts and regions. So I will not go through the details here. Of course, we are following closely the development of the vascular sales since this is the new market that we are establishing a position in. In this specific market, we see that growth is missing in the vascular segment. It's just 1% up from the same quarter last year. We see that the cardiac sales growth was 24.5, so really at the high side and is then, of course, responsible for being the driver of the total growth this quarter. Still, vascular sales is accounting for 17% of our own product sales, which is not a bad proportion. It was a little bit higher than when we looked at the 2025 numbers. But here we are just expecting the vascular growth to continue going forward will be in line with what we've seen in previous years. We also follow the split of flow portfolio versus the imaging product portfolio closely. And we can see this quarter that both the flow products and the imaging products are contributing nicely to the total growth, 23% from the flow products and 12.6% from the imaging products. So that is a solid performance as well. Closing up here now, taking a look at the recurring versus capital revenues, and we can see that this quarter we are seeing 20% growth in our recurring revenues, which is quite in line with also how the capital revenues are growing. And the last 12 months takes us to a 70% share of recurring revenues of the total, which is quite in line with the historical levels. Then a few comments on our strategy. Just to go through this really quickly, we have a strong position in the coronary bypass segment, so the cardiac segment, and we have some markets with really high market share with our Medistim technology. Japan, China, the Nordic countries, the German-speaking countries and other European countries as well, with really high share, up to 80 to 90% of the procedures covered. and here it is important for us to continue to convert the dominant flow only install base to a flow and imaging install base so this is gradually increasing and ongoing we are also working to grow our adoption in what we regard as under-penetrated markets, including the US at 40%. Of course, it's growing, but still regarded as under-penetrated in our view. And clinical marketing, the studies that we are doing, really critically important in order to get that traction. Flexible pricing and business models are important in some particular areas. We've mentioned India before. There are other areas also where we are finding different business models and ways of making our products available and affordable to the customers. So that's a part of our strategy. And as I mentioned, building a position in Vaskler has been a focus for quite some time already, and we are getting traction there. Last but not least, to expand our direct market coverage and getting closer to our customers, that leads us into the change that we announced the 2nd of February this year, that we're opening our direct sales office in Japan. So as of 16th of March, we are direct. we have now a very solid team in place we have 10 employees there and a very experienced leader with background from the vascular area which is really very important and provides optimism in terms of breaking into a vascular market also in japan We know that Japan is the strongest market for us in terms of the market penetration. 90% of the cabbage surgery procedures are already supported with our technology. And the question is then how to continue this growth. So by getting closer to the end users, we want to get higher traction of the conversion from flow only systems to flow and imaging systems. Of course, we get the, let's say, the one-off effect of capturing the distributor margin. So that's also important. And then we will then seek to untap this potential from vascular procedures as well. So last year, we had sales through our Japanese distributor of about 21 million NOx. And that gives some idea about what we could expect for this year, taking into account that the distributor margin would be now going to Medistim. As also mentioned in the previous quarterly presentation, but related to the first quarter, I want just to remind that we are now sponsoring a new randomized clinical trial in CABG surgery. the so-called smart flow trial. And being a large randomized clinical trial comparing the use of flow technology versus no use of flow technology, this could be a breakthrough into providing the evidence to make our technology being eligible for guideline inclusions in the United States, which is the country where we are lacking that kind of support. And the lead investigator of the trial, Professor Mario Gaudinho, well known, really one of the, well, I would say the stars on the cabbage heaven at this time. He was also the first author of the circulation paper that we have been referring to many, many times, which is an absolutely critical consensus paper stating that this group of highly renowned surgeons are saying that TTFM should be used in every cabbage case. But this paper is also concluding that there is a lack of randomized clinical data, and this is now the project that they want to go through. So we know that the first patients have been enrolled in this trial. It is going to be 1,242 patients enrolled, and there will only be Medistim's MIRAQ flow measurement system that will be used. That will be mandatory and then we will of course also encourage the surgeons to use the imaging component while this is not mandatory. It will be a relatively big trial with 20 centers in US, Canada, Europe and Asia, so good coverage there. And the goals of the study to begin with is to determine whether TTFM reduces the rate of graft failure. This will be checked within one to three months of the surgery and it's going to be documented by coronary CT angiography. Then the idea is that this provides a platform to continue the study and evaluate the impact of TTFM on the longer-term clinical outcomes. Then we're talking about myocardial infarction, repeated vascularization, survival and quality of life. And these are the outcomes that are relevant for guidelines consideration. So we really believe and hope that the whole platform study will be prolonged into this long-term clinical outcomes study. So exciting days. Our involvement here, of course, it's a scientifically independent trial, but we are making a limited financial contribution of US$500,000, which will be supporting the study over the course of the trial. At the side of, of course, the main objective, which is to provide this evidence, is also providing us with an opportunity to facilitate upgrade of the imaging at the sites that are currently not imaging users. So that's, let's say, a very interesting business opportunity. And then we will also encourage and help the centers to get hold of the newest Intui software. So this is also a great opportunity. Yes. Then I think we can open up for questions.