Senzime AB (publ)

Good morning. Welcome to the presentation of our second quarter, 2026 report here in the midst of Swedish summertime. So the second quarter, a quarter characterized by continued strong growth for our sensors utilization, but continued market headwinds for new monitor sales, specifically in the US market. So US market has continued to be challenging for us over the last six months. I do note an improvement. But in parallel to this, we've been working diligently on the fundamentals and I'm happy to report that we have a 15% decrease in our operating expenses. We are reporting 27% improvement in our EBITDA and we're reporting a 46% improvement in our cash flow. And this is despite pretty much a zero growth quarter. So let me come back a little bit more on the numbers and a little bit the background of the business. Okay, so I wanted to comment on the recent announcement of our partnership with Philips. So I'm extremely pleased to announce this. This is the most important commercial agreement that we've signed so far. I would say it's the result of over 10 years of work. It's the result of our investments in innovation, in clinical and in market access. What we are planning to do is to jointly develop a portfolio of products based on each of our proprietary technologies. We will be driving the development and manufacturing. These will be our products and exactly what we are to develop and what to launch that remains confidential until it comes out to market. This is an extremely strong validation of our technology. We're partnering with the global leader in patient monitoring and also one of the global leaders as a medical device company. What it does is that it significantly expands our market reach. It will expand our reach way, way beyond the markets we are in today. And I expect this agreement to have a significant positive impact on our medium to long term financials. We're targeting new market segments. So this is importantly a complement to what we're doing today. This is a different product. It's going to complement what we are doing today with our portfolio. And the whole idea is also that it will leverage what we're doing. And I believe that the partnership has very nice synergies with the business we're in. So, I've noticed before, we have been working over the last few years with many industry partners and leaders. I think this is the recent Philips announcements is alongside with this. We're working with Fukuda in Japan, now with Philips on a more expanded level. And then we have connectivity of our solutions via GE, Massimo, Mindray, Getinge, Ascom and others. We're really driving that the unique clinical data that we are creating is now integrated into systems and electronic health records around the world. Looking a little bit more on the numbers. So we continue, of course, to expand the TetraGraph base. As I introduced, it was another tough quarter in terms of new monitor sales. We shipped out 239 monitors. in the second quarter. And the number last year was significantly higher. I mean, there's one comparable to this that we had 422 last year that were new tetragraphs that we shipped out quite quickly as upgrades. So existing customers decided to upgrade from their classic tetragraph. So there is some comparables to be noted in this perspective. TetraSense sensors continues to grow very nicely, 56% growth in kind of rolling 12 units. We shipped out about 132,000 sensors. So this corresponds to a growth of about 48% in local currencies. So we're driving utilization with the customers that we have. If you look a little bit then on the product market mix in general, so I mean, we're becoming, as I've always said, more and more a sensor and utilization company. So over 80% of the business in Q2 was disposables. US continues to be, despite the tougher macro climate, the big locomotive for us. But overall, it was a little bit of a bumpy quarter. But again, underlying with 48% growth in local currencies for disposables, while new hardware and monitors took a little bit of a hit during the quarter. If we do a little bit of a deep dive into the US, and we've had significant investments in the market, we do have our own team. If we look at sensors, they continue to grow well, 58% up, which is a good driver that utilization really works. The macro climate that I am noting here is more that the big new hospital opportunities keep getting pushed forward. I think there is a fear of inflation. Capital goods in general have had a tougher time to close. So some headwinds. I do believe still we have the opportunity to catch up many of these deals. And as I noted, some of the deals this year versus last year were compared and affected by the rollout that we did last year of the new next generation monitor. So US, I mean, if I look at the map, I've shown this before. This is just some highlights over the last 18 months. We've secured and won so many leading hospital systems all across the US. And this map is starting to get pretty messy. And this is just to mention a few of them. And then if I add on what's happened in the last couple of months, we've added more leading hospital system. So the map is starting to get really, really busy and I'm extremely proud of what we're doing in the US. To note three significant accounts or events that we press released during the quarter. The first one was entrance into one of the world's largest integrated delivery networks or IDNs. So this IDN has over 150 hospitals. We've now secured six of the hospitals within the system and really moving ourselves up the ladder. And I think we have an opportunity here that this could become the largest single account for us. We expanded. are present in a very dominant and very leading U.S. hospital systems in the southeast of U.S. So we included another 65 tetragraphs in that installation. So this account alone has now 160 systems installed and is running at about 6 million SEAC in annual recurring revenue. And the third important account was announcing a win, another big and important pediatric account. This is a nationally leading pediatric hospital in the eastern US, and we secured it via a very well-executed competitive evaluation. further announcements and further what we did during the quarter was to get the TetraGraph included in the three leading GPOs in the US. So more than about 95% of all US hospitals are some in some way have GPO agreements. This is agreements that makes them buy and procure goods at a kind of a group purchasing level, meaning that you get better prices, and it's easier to acquire it. So, so we secured among the three leading ones, this will kind of accelerate our access to about 5000 hospitals in the US. And A GPO agreement per se does not give you instant business, but it's a hunting license and we believe it will accelerate and it will make it easier to get access and win these accounts. So we did sign our first GPO agreement back in 2024. It remains intact. We have delivered quite a lot of monitors and there we are the sole source supplier. There's a lot more to come in this space that we'll come back to during this year. So in the US, we also did some organizational upgrades that we announced. Josie Wood joined us as our new vice president of sales. Josie has 20 plus years of experience in driving, growing, and been very successful in winning within the medical device space, patient monitoring. So I'm very glad to have her. She joined us on May 11th. Jen Sanders, she's been with us for five years. She was promoted to be our Vice President of Clinical and Med Affairs. And then I just wanted to highlight that Wolfgang Rehm, who's been an advisor to us, joined us as an ordinary board member. He's extremely operational and helping, but Wolfgang has a A history of being, among others, CEO of Draeger, the anesthesia and patient monitoring company. He was also the CEO of parts of Siemens and running the US business within ultrasound. So very strong knowledge in how to conquer the US market. So we continue also to lead. We continue to drive innovation, continue to be the leader in this field. We did announce during the quarter that we rolled out our new TetraSense. This is a European-made sensor, and that's important because it's produced with a minimum environmental footprint. It uses novel technologies, and by this, it's a more eco and sustainable product. And because of disposables in general, there's an overarching interest, specifically from European accounts, to have sustainable products used in the operating room. So I'm very happy about this, and this also gives us better unit economics in general. We also announced the launch of Tetra Analytics. This is a very powerful cloud-based analytics software. It's AI ready, and what it does is that it gives you, visualizes the data from TetraGraph systems. and I think it can turn it into clinical insights. And this is all about driving utilization. So very powerful tool used in clinical practice to make sure that the tetragraph are used as expected and then follow trends to make sure you are compliant to guidelines. We had two important market approvals and expansions. So we got another FDA clearance. I'm pretty proud of it that we filed with the FDA in early April and already in mid May, it was cleared. So a number of features that we have now on our future roadmap to be launched. And then we also announced that we got regulatory approval from Anvisa, which is the Brazilian equivalent to the FDA. So we have secured a partner. We have secured first orders. And in general, we've had some good success in the Latin American markets recently. So we're now active in Chile, in Mexico, Nicaragua, And now in Brazil, and I think these are markets that typically follow a lot what's going on in the US. And there's also local guidelines supporting our products. Little bit more on the numbers, so let's start by looking at the gross margin, so the gross margin continues to improve. And this is a consequence of getting a little bit better paid for the products, continuously lower the cost of production and a more favorable product mix with more sensors. Tariffs, of course, and currency effects continue to affect these numbers. But if I look at overall, the reported gross margin of the quarter was 65.7, which is an improvement over the last couple of quarters. So we're really moving in the right direction. I do believe that the gross margin will continue to improve. Thanks to products, new business models and we're also now we just received a few days ago our first repayment from the US tariffs. We received $116,000 and I have about $350,000 more that we are expecting likely coming in over the next couple of quarters. Back to the fundamentals. As noted initially, operating expenses continue to decrease. We have an extremely cost conscious and very efficient way of running our business and continue to drive costs down. So we reduce costs in a quarter with about 6 million SEK down to 34.2. So we've decreased it over the six months with about 10%. If we look at EBDA, we're continuing to make progress, a 27% improvement. This was about 6.3 million SEK. So now reducing it to minus 17.3 million SEK and it's moving towards, and this is a result of better gross margin and lower operating expenses. And then to the cash flow that took the biggest improvement, 46%, equivalent to 13.1 million SEK, driven by improved results, of course, but also by very diligent work on optimizing the working capital levels. So we have 37.1 million SEK in cash end of the quarter and then we have another 42.5 million SEK in a credit facility. Okay, a little bit short on the investor base. The overall cap short remains fairly the same on top. I think the notable change is Tin Ny Teknik, the fund. They reduced their shareholding with just under 1.3 million shares. So those shares have been for sale over the market for some time. So just to recap again, two seconds, what is it we do again? So remember Senzyme, we have our world-class unique system, the TetraGraph, that is used in the operating room. It connects to our disposable sensor that stimulates the patient with small electrical impulses. And by doing this, then we can measure when is it the right timing to intubate the patient? When is it time to to get them on the ventilator. And then we can manage the patient throughout the procedures to make sure that everybody gets the right individualized dose of paralytic drugs. And then we define exactly when is it safe to turn off the ventilator and let the patient breathe on its own. So it's a way of personalizing anesthesia and making sure that nobody leaves the operating room with paralysis. And this is all based on over 40 years of research and we have over 100 patents in the area. And remember, these tetragraphs are used typically in the operating room with the anesthesiologist, very often in robotic surgery. And by using this type of technology, it's been shown that you can eliminate complications. So you can move the traditional 40% of patients moving out of operating rooms still paralyzed to zero. And by individualizing monitoring, you can reduce the cost of drugs significantly. Okay, so to wrap this up, what are the key takeaways of the second quarter report? One is the evidence of our hard work in improving the business fundamentals. We continue to drive actions to move Senzyme rapidly towards profitability. And this is shown by an increased gross margin. It continues to increase quarter over quarter. We continue to decrease our operating expense level down by 15%. We continue to improve our EBDA as well as our cash flow. And our goal that by the end of the year within the fourth quarter to show positive cash flow remains intact. Number two, we're seeing a very strong underlying momentum in our sensor sales. We're growing at nearly 50% rate. So the business model works very well. Utilization is going up. And if I look specifically on our key US accounts, they're moving very nicely in the right direction. We're rolling out innovations to further drive and improve utilization, and we keep winning new accounts around the world. And then number three, we're leading a very unique clinical and technology shift. And I am again extremely pleased to have announced the Phillips Agreement, a long-term agreement It's a landmark agreement for us where our technology portfolio is validated and this will drive significant revenues for Senzyme over the mid to long term. In parallel to that, our core business, we have the new US GPO agreements that I think will open up for more business. And we have a world-class team working very hard every day to execute on the mission and vision. And I think we're moving very nicely in the right direction despite some macro headwinds. So thank you for listening and make sure to join us on our mission as we safeguard every patient's journey to wake up securely after anesthesia. Thank you.