Medistim ASA

Good morning and welcome to this presentation of Medistim's third quarter and year-to-date September 2026 financial results. My name is Kari Krogstad and together with CFO Thomas Jakobsen we are here to take you through the results. As always, we like to start with a little reflection on Medicyn's track record. We've had the goal and ambition over time to deliver profitable growth, and as these nice graphs are showing, this is exactly what we have been doing. An update to this slide, this quarter is actually on the dividend side, which we can also see has been pretty consistent over the years. But this quarter we're introducing a quarterly dividend for the first time, so we're adding 2.250 NOX per share, in addition to the 8 NOX per share that we paid out earlier this year, and we'll get back to this. So let's get into this quarter's presentations. I will start with going through the highlights. Thomas will take us through the detailed financial statements. And then I will get back to commenting on the various business segments. And today I will talk a little bit about the patent study as part of our implementing the strategy section. So I'm very happy to being able to present a new sales record for a quarter from Edinstim, this quarter delivering 210 million sales revenues, which is a 25.9% increase over this quarter last year. And as we can see from this table, we do see a negative currency effect here. So when we are adjusting for this currency effect, we see that the currency neutral sales development on the total sales is actually showing growth of 31.5%. Our own products sales is up 34.6% currency neutral and we can see strong contributions from all our sales regions. Americas growing 51.7% this quarter, Asia Pacific growing 44.6%, EMEA also growing 5.5%. In addition, we're seeing a normalized growth from the third-party products this quarter at 5.3%. Then looking at the profitability at the EBIT level, we are delivering 63.1 million, which is 55.7% growth over the same quarter last year. And this means that we are delivering an EBIT margin on the high side at 30.1%, of course, driven by the strong sales of our own products. We're seeing that this quarter we have a net tariff payment effect of 2.7 million. And this is based on both the tariffs that is applicable to this quarter and this period, but also the refund that we have received of 2.7 million. I'm sure that Thomas will comment further on this. And as alluded to, the Board of Directors resolved yesterday to pay a quarterly dividend of 250 NOx per share, totaling 45.8 million under the authorization granted by the General Assembly. Then moving on to the highlights for the year-to-date period. And again, of course, with three sales record quarters behind us, that also gives us a new record for this period, surpassing 600 million for the first time. So 613.7 million NOX in revenues, 18.6% growth. Again, a negative currency effect here. And when we are adjusting for that, we are seeing that the total sales for Medistim is up 23.6% so far this year. And the own product sales growth is very strong at 30.1%. Again, all the regions are contributing strongly. Americas growing 35.1%, Asia Pacific 45%, and EMEA 12.5%. The third-party product portfolio is down 13% in the period, which is of course related to the very strong sales we had in the beginning of 2025. Then looking at profitability at the EBIT level, 185.5 million in operating profits. That means a 20.6% growth so far this year. And that also gives us a strong EBIT margin at 30.2%. If we dive into the operating expenses, we see that, of course, growing the business also comes with needs for further investments and we're seeing higher commercial activity. We're seeing the effect of having added a new direct operating team in Japan and also ongoing IT system migrations to the cloud, a project that has been ongoing for some while, is increasing the operating expenses. So with that as highlights, I will leave it to Thomas to take us through the financial statements.

I will take us through The P&L and the financials for the third quarter and the year today, September. And we start with the P&L. I will not go in detail into the revenue line. Kari will take us through that in more detail related to both product and split of geography. What we do notice for this quarter is the improvement in gross margin going from 81.5% to 84.5%. And that despite the fact that we now are booking tariff expenses for all transactions that we import to the US. As Kari mentioned, we have received a refund of the first tariff that was set into place in 2025, which was deemed unlawful, and some of those have been refunded in the third quarter. Around 2.7 million was refunded and is booked as a reduction in cost of goods, cost of material in the third quarter. Having said that, we've also booked an expense of 5 million Norwegian krone with the existing valid tariffs. So that means that the net tariff expense for this quarter is 2.7, around 2.7 million Norwegian krone. And that is also a part of why we have somewhat improved gross margin. But the main reason is the strong sales we experience and the continued growth in Norwegian crowns of sales in the U.S. so that is the main explanation of why we go from 81.5 million to 84.5 and just as a reminder in 2025 in the third quarter we had no tariff expense since we had shipped goods to us before the tariff was valid and was selling from inventory which was not affected by the tariff Going further, salary and social expenses increases from 60.3 million to 67.8 million. Two major things to mention here. One is the direct organization in Japan. We did not have that in place in the third quarter last year. And we also had exceptionally good quarter sales-wise, especially in the US. And this affects, obviously, the commission and bonus schemes for the sales team in the US in a very positive way. And therefore, the Expenses increases. Other operating expenses also increases with 10 million. There are a lot of activities going on at the moment. I can mention the patent study, which is speeding up compared to where we were last year. We also have the IT infrastructure project, which has been expensed in this quarter. Having said that, we are Now about to go live or in October we went live on parts of this project so we do expect that going into 2027 that these type of expenses will no longer be there but we still have these expenses going into the fourth quarter. Also, the direct operation in Japan was not present in the third quarter last year and has given us additional expenses. And in addition to that, two other things, high activities related to our commercial operation, but also a higher agent commission. We do have agents in the US and also at times agent commissions in Asia Pacific. So those are the main explanation for why we have a higher operating expenses for this quarter. Even so with higher expenses and we do experience a solid improvement in EBITDA percentage from just under 28% to 33.6% and EBITDA ends at 70.6 million. Depreciation increases and this is because of our Intui cardiac software which now are being depreciated. Having said that we are still doing a lot of development work on the Intui software but that's related to vascular. EBIT ends at a solid 31 point percent up from 24.3 percent last same period last year and ends at 63.1 million. Net finance is negative. This is currency related. Last year, that was very positive and also currency related in the net 5.4. Profit before tax for this quarter ends at 61.8. Profit after tax ends at 47.8, 37, 38% increase compared to same period last year. So a solid quarter. Year to date numbers. First time after three quarters that we are over 600 million NOX in revenue. Also, when it comes to the gross margin, we are maintaining gross margin at the same level as we had last year at 82.1%, despite the tariff that we have in the US. In total, we have expensed 12.5 million of tariff expenses year-to-date September, and as we communicated earlier, the price increases in US would compensate for the additional expense that the tariff would give us. Salary and social expenses, we have the same type of explanation as for the quarter, only higher numbers. This is also the case for other operating expenses. It's the same type of activity that drives the expenses to a higher level compared to last year. EBITDA ends at 33.4% that's more or less in line with the accumulated numbers last year which ended at 33.2% EBIT ends at 30.2% versus last year 29.7% and the operating profit increases from 150 just under 154 million to 185.5 million. So this is also a record operating profit-wise after three quarters. Net finance is negative. Norwegian kron is strengthening towards US dollars and euro. And that's why we get a negative effect of 3.2 million. Profit before tax ends at 82.2 million and profit after tax ends at 140.3 million up from 121 million last year. Going further to balance sheet and tangible assets increases, we have three major projects that contributes to that. It is the ADAPT project, it's the Intuit project and also our IT infrastructure project. Inventory levels are still high, although lower than what it was at the same period last year. But again, we are securing critical components and we expect going forward to have high inventory levels as well. Accounts receivable are increasing due to higher sales, but at the same time we are improving our cash position quite positively, going from 100 million by the end of Q2 to 175.6 million by the end of the third quarter. And as Kari mentioned, the board has authorization to now decide quarterly dividends, and they did so at the board meeting yesterday. and the dividend of NOK 2.5 per share which is totaling a total payment of just under 46 million will then be paid out to our shareholders and that payment will be in early November. Looking at the equity liability, we have as always a solid balance sheet with equity more than 71%. Our obligations or long-term liabilities is related to lease contracts and extended warranties, so we have no interest bearing bank debt as such. and therefore we have a very solid balance sheet in total with a very high level of equity. Earnings per share, some key figures. These earnings per share numbers obviously develop in line with the profit and the positive development in profit. Earnings per share ends at 2.61 for the quarter and 7.67 year to date. Cash flow, very positive cash flow for this quarter and cash flow operation ends at positively at 91.5 million in addition to strong profit. We also have a change in working capital from going from the second quarter into the third quarter, which gives a positive contribution. Although if we look at the year-to-date number, we do have an increase in working capital, which then affects cash flow from operation negatively, and cash from operation year-to-date ends up 146.5 million. Investments are related to the projects I just talked about and after payment of the dividend in May, net cash year to date is negative with 36.4 million. and we're then going down from 112 to 175.6 million in cash by the end of September. But looking at the change from the second quarter to the third quarter, it's a very positive cash development where net cash increases 75.5 million going from 100 million to 175.6 million. And with that, I give the word federal to Kari. Thank you.

Yes, so let's go through the various business segments here. And starting with the unit sales of our flow and imaging systems. So the flow and imaging systems is our flagship product, definitely. And it's a very unique product. We have no competition on this type of product out in the market. It's the highest value and therefore also the highest priced product that we're selling. So of course success in growing utilization and also new customers for this technology is vital for Medistim. This quarter we're seeing 27% increase in the number of flow and imaging systems compared to this quarter last year. And we're seeing that Americas is really taking the lead here with significant growth in number of units for the quarter. We also see that Europe, Middle East, Africa is showing growth here, while Asia Pacific in this quarter is down by four units. But of course, when we see continued high volume sale of this high value product, this drives revenue, especially when the growth comes from the Americas where we are getting the best prices. So this is something we are very happy to see. Imaging probes, so the probe that works together with these flow and imaging systems. This quarter, we are seeing strong quarterly sales in Americas, which is increasing 30% in units. In the same quarter, Asia Pacific and EMEA is down with some units. So this points to quarterly variation that we're seeing, I would say, in all product categories and in all regions from quarter to quarter and something that we need to keep in mind. If we move then further on to the flow-only systems in unit sales, here we're also looking at a healthy 22% increase in number of flow systems sold. Americas is down by three units, of course, directly related to the very strong growth in the flow and imaging units that we just talked about. Asia-Pacific at the same level as last year, while EMEA is showing a good quarter with growth of eight units. Flow probes in unit sales growing 8.7% this quarter. This quarter, Americas is seeing a slower quarter after several quarters of growth. Asia Pacific, on the other hand, showing very strong uptake on the probe sales, reminding that this sales is going through the distributor network in China and not necessarily directly out to the end users. EMEA is at the same level as last year, but overall 8.7% growth. Looking at the business from the geographical side, starting with Americas delivering 116.9 million NOX in revenues for the quarter, and then looking at the currency neutral growth, that is 51.7%, so extremely solid. We have shown very strong sales in flow and imaging systems, also with very high following sales of imaging probe. This is of course the main reason and explanation why we're seeing this tremendous development for the quarter. We also pointed to weaker unit sales on flow probes, systems and PPP lease procedure sales, but this is also partly compensated by price increases. USA is accounting for about 95% of revenues from Americas. Canada is accounting for 4.5% and was increasing 65% in the quarter. So South America, Latin America is a very, very small region here. Diving a little bit further into the unit sales development in the USA. First, starting with the system volumes, we saw that we had growth in units, especially on the capital sales and for the quarter, we have then sold 19 units, a solid growth over the same quarter last year, and we're pretty flat for year to date. But year-to-date, we are seeing the effect of the increased flow and imaging unit sales. So not only good for the quarter, but also positive, very positive year-to-date. When it comes to total flow procedures, so we're seeing negative development for the quarter, already alluded to the former quarters where we've seen very solid growth. And year-to-date, we are looking at the 14.1% growth in number of flow procedures. Also when it comes to imaging procedures, seeing solid growth for the quarter and also for the year to date. There is a lot of quarterly variations and I think it's very important that we are always keeping the longer time periods in mind and as this The graphs are showing the number of cardiac and vascular flow procedures sold per year in the USA has been growing very nicely, both on the cardiac side and on the vascular side. A little bit stagnation there on the vascular side, which is related to the dynamics around the intubate on cardiac and not being available for vascular and ultimate systems so far. Getting back to that later on. Asia Pacific, 33.6 million in sales, current neutral growth of 44.6. It's definitely China that is driving this growth. Very strong quarter, 59.5% growth for the quarter, reaching 17.8 million. The sales are going through the local Chinese distributors, and we have to expect quarterly variations. So I will not commit to this level of growth every quarter. Very positive to see that Japan is starting to deliver. As we said in the former quarter, we are busy developing the pipeline and have now started to sell the first systems into the customers in the Japan market. So 35.7% growth, 9 million this quarter, and we are building momentum into the next quarters. We see a weaker quarter sales from the other Asian distributors, down 8.4% this quarter, but looking at the year-to-date figures, we're up 41.6%. So again, very important to always keep in mind the longer periods development. Europe, Middle East and Africa delivers 36.9 million in sales, currency neutral growth of 5.5%. A good quarter for our direct markets, Spain, Germany, UK, Scandinavia, together delivers 14.8% enough for the quarter. Sales through distributor decreased 17.5% for the quarter, but year to date, it's a similar growth actually. So again, always keep that in mind. Third-party products, as already mentioned, 5.3% growth for the quarter. So that is taking this part of our business back to a more normalized growth rate. And the third-party product portfolio sales is now making up around 11% of the total Medistim revenues. So summarizing, we're seeing that the total Americas region grew 40.6%. This is then in NOC, so it's not currency neutral. This is in Norwegian currency. 40.6% for the quarter. We see that USA is definitely the driver here, but Canada is also contributing. And we're also seeing very positive development for the year-to-date period. Asia-Pacific, 33% growth. We see that China is the driver. Japan is now coming as a great contributor for the third quarter. The year-to-date figures have not caught up yet. And then we see that the rest of Asia-Pacific, the distributors have a bad quarter, but are delivering very well for the year-to-date period. EMEA in total flat for the quarter in Norwegian currency, showing 7.9% year to date. And here we see that it's Europe that is really driving the development this year, while Middle East Africa is a little bit behind. So this in total brings the total sales to the 25.9% growth for the quarter and 18.6% growth for year to date September. Taking a look into the split of our cardiac versus vascular product portfolios, we see that we have very strong cardiac segment sales in this quarter. So 35% growth in the cardiac product portfolio, also 31.4% year to date. So definitely driving this. And we're now starting to see that most of the, or more and more of the systems that we're selling is with the Intui software inside on the cardiac side. So 39% of all the mercury cardiac systems sold this quarter was with Intuinside. If we look at the USA in isolation, as much as 80% of the systems were with Intuinside. So this will of course only continue to grow until all of our new sales of mercury cardiac systems is with Intuinside. We're seeing the flat development on the vascular surgery side, and as also explained in the second quarter presentation, this is reflecting a temporary product mix effect, not a shift in underlying demand. and we are accounting this to the customers. Some of them who would otherwise have gone for an ultimate system now have been choosing a cardiac system with the Intui software and that impacts the sales recognition since sale of an ultimate system is divided 50% to cardiac and 50% to vascular. So this is a temporary effect. If we look at the total sales of our own products split into the flow portfolio and the imaging portfolio, we see that the flow products is growing 15.4%, 22.2% year to date. But we are seeing that the imaging product portfolio is really coming back as the big growth driver for us, which is something that we really like to see. 57.9% for the quarter and 28.6% for The year to date period. And while we have pointed to that it's really USA who is driving this growth, we are seeing growth of the imaging products in all the regions. Closing off now with just looking at the split between recurring and capital revenue, and we're defining recurring revenues as revenues from sales of flow and imaging probes, PPP smart cards, and also lease contracts. And we see that for the last 12 months period, the recurring revenues makes up 68% of the total. Then I will take the opportunity to this time talk about vascular surgery and our strategy to build a position within vascular surgery. But let me start by emphasizing how important engagement with surgeons and key opinion leaders is to build awareness, generating interest and ultimately driving adoption of our technology. And here we can see the growth in publications featuring Medistim's technologies over the years across cardiac, vascular and transplant surgery. So steadily growing. And the surgical community is truly global with surgeons collaborating, sharing experience across borders. And this is reflected in the geographical distribution of the publications. And we see that Japan, the United States, Germany and China is leading the clinical research. And when we compare the annual number of publications with our sales revenues, it seems to be some kind of correlation here. So this is just to stress how important these clinical projects and collaborations is for developing our business. It's really our key marketing investments. I'd also like to highlight the REQUEST study, a registered study published in 2020 that demonstrated the clinical value of combining flow measurement with high frequency ultrasound for graft assessment during CABG surgery. And this study showed how our technologies provide real-time guidance, prompting surgeons to change their planned surgical approach in as much as 25% of the patients. The request study also reported a very low rate of adverse events and this study has played a pivotal role in driving the adoption of imaging. It's a similar transformation we aim to drive in vascular surgery through the patent study on peripheral bypass. And peripheral bypass is our number one target segment within vascular surgery because it's a sizable market segment and it's a market segment where both the flow measurement and the high frequency ultrasound are really, really important technologies and tools to help in this surgery. So peripheral bypass is a revascularization treatment for patients with critical limb threatening ischemia, CLTI. And the purpose here is really to reduce the risk of having to amputate a limb. The timing for the onset of the patent study was really great because there was a recent clinical trial that was finalized and published, really showing that while endovascular treatment has been the first choice for these patients, a recent study has shown that open surgery is a better alternative in certain patients. It really fits very well with an interest and a sentiment in this field right now where the surgeons are more open to also consider open surgical alternatives. So what is the patent study and why is it important? So the situation today is that the clinical need for improved completion control is really there because about 20% of peripheral bypasses fail within the first year. And there is no standard completion control existing today. While we know and experience that hospitals in the Nordic countries, as well as Germany, they use both flow and imaging, but there is very little published clinical documentation on this. So the purpose of this study was to document the clinical benefits of the combined use of flow and imaging, and then recommend a standardized protocol for completion control. And the objectives, the primary endpoint is growth patency rate at one year. So of course, we want to have a higher success rate than the current clinical practice is showing with the 20% of failing bypasses. And the design of this study is it's a prospective non randomized international multicenter trial in 450 patients suffering from CLTI, which is an advanced stage of peripheral artery disease. And we're extremely proud of the investigative team for this study and also to have Professor Michael Conti as the lead investigator, who was the first author of the 2019 Global Guidelines on CLTI Management. We couldn't have gathered, I think, a stronger investigative team for such a study. And today, 14 sites are now actively enrolling patients. Five more sites are in process. And after a slow start, patient enrollment is now progressing very well and is expected to be completed by the end of 2027. Then there will be a one-year follow-up, and this period will then run through the end of 2028, and then analysis and publication is expected to come in 2029. And while we are waiting for the final results, we expect investigators to begin presenting and publishing clinical cases, sharing their experience with peers and building awareness, interest and desire among more surgeons to try our technologies. Just as we saw during the request study. So this is a short update on where we are with the patent study right now, and I think with that we can open up for questions.