MeVis Medical Solutions AG

Quarterly Report • Aug 29, 2019

Q3 | 2018 /2019 Interim Report MeVis Medical Solutions AG

KEY FIGURES (IFRS)

FIGURES IN € k		Oct. 1, 2018 - June 30, 2019	Oct. 1, 2017 - June 30, 2018	Change
Revenues		12,594	12,133	4 %
of which segment1	Digital Mammography	7,135	8,192	-13 %
	Development Services	3,060	1,583	93 %
	Other Diagnostics	2,399	2,358	2 %
EBITDA		5,746	5,140	12 %
EBITDA margin		46 %	42 %
EBIT		5,376	4,440	21 %
EBIT margin		43 %	37 %
Net financial result		390	685	-43 %
EBT		5,766	5,125	13 %
Net profit for the period		5,766	5,122	13 %
Earnings per share in € (basic)		3.17	2.81	13 %
Earnings per share in € (diluted)		3.17	2.81	13 %
		June 30, 2019	Sep. 30, 2018	Change
Equity capital		37,825	32,059	18 %
Intangible assets		10,881	11,117	-2 %
Non-current and current liabilities		3,920	6,360	-38 %
Balance sheet total		41,745	38,419	9 %
Equity ratio in %		91 %	83 %
Liquid funds2		2,738	3,477	-21 %
Employees3		94	93	1 %

¹ Excluding intersegment revenues.

² Cash

³ Full-time equivalents as of balance sheet date.

KEY SHARE DATA

As at June 30, 2019
Industry sector	Software / Medical Technology
Subscribed capital	€ 1,820,000.00
No. of shares	1,820,000
Last quotation on September 29, 2018	€ 34.40
Last quotation on June 28, 2019	€ 29.60
High/low in fiscal year 2018/2019	€ 36.40 / € 28.80
Market capitalization	€ 53.872 m
Treasury stock	0 (0 %)
Free float	17.8 %
Prime Standard (Regulated market)	Frankfurt and Xetra
Over-the-counter markets	Berlin, Dusseldorf, Munich, Stuttgart
Indices	CDAX, PrimeAS, TechnologyAS, DAXsector Soft ware, DAXsubsector Software, GEX
ISIN / WKN / Ticker symbol	DE000A0LBFE4 / A0LBFE / M3V

	KEY FIGURES (IFRS)1
	LETTER FROM THE CEO 3
	THE MEVIS SHARE4
	INTERIM MANAGEMENT REPORT Q3 2018/20196 Preamble6 Basics of the company6 Structure6 Short summary of business activities 6 Reporting segments 7 Economic report7 Earnings position7
	Financial position 8
	Net asset position8 Material events occurring after the balance sheet date8 Opportunities and risk report9 Outlook9
	INCOME STATEMENT Q1-Q3 2018/2019 10
	STATEMENT OF COMPREHENSIVE INCOME 10
	INCOME STATEMENT Q3 2018/2019 11
	STATEMENT OF COMPREHENSIVE INCOME 11
	STATEMENT OF FINANCIAL POSITION12
	STATEMENT OF CASH FLOW 13
	STATEMENT OF CHANGES IN EQUITY 14
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.	NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 201915 Basic information15 General disclosures 15 Recognition and measurement methods15 Effects of new accounting standards15 Selected notes on the balance sheet and income statement 16 Revenues16 Staff costs 16 Other operating expenses16 Depreciation and amortization 16 Net financial result 16 Income taxes17 Equity-method investments17 Other financial assets 17 Shareholders´ equity17 Other financial liabilities 17 Transactions with related parties 18 Contingent receivables and contingent liabilities18 Earnings per share18 Segment information18 Post balance sheet events19
	DISCLAIMER20
	FINANCE CALENDAR 2018/201921

LETTER FROM THE CEO

Dear Readers

We are pleased to report that our sales increased slightly in the first nine months while costs remained largely stable. At € 4,350 k, the revenues generated in the third quarter were about 12 % up on the previous year's level (€ 3,900 k) and 8 % above the second quarter (€ 4,033 k). Thus, revenues for the first nine months amounted to € 12,594 k, with a still very attractive EBIT margin of 43 %. Earnings after taxes amounted to € 5,766 k, which corresponds to undiluted earnings per share of € 3.17. The net profit for the period amounted to € 5,766 k.

We are satisfied that the change in our business structure has continued positively. However, we are now also seeing a clear decline in the Digital Mammography segment, which is down 13 % on the previous year. The decline in this segment had been predicted for some time, but was somewhat delayed by positive circumstances. At 57 %, Digital Mammography still accounts for the majority of total revenues. We expect a further sharp decline in this segment, which is why compensation through revenues in the Development Services and Other Operating Activities segments will be absolutely necessary.

Development Services developed very positively in the first nine months of our fiscal year, especially in joint projects with Varian Medical Systems and Varex Imaging Corporation. The positive trend in Europe towards the adoption of pulmonary CT screening is clearly visible. We hope that this will have a positive effect on the marketing of our products for lung cancer screening in the future. In addition to initiatives in the UK, we also see increasing ambitions in Eastern European countries to implement lung cancer screening in national programs. As I announced at our last Annual General Meeting, I would like to emphasize once again our stronger focus and investments to expand our competence in the area of artificial intelligence (AI). And in particular the expansion of the AI portfolio in the successful area of thoracic CT diagnostics and the development of innovative technologies and markets in the area of imaging components.

In view of the upcoming annual financial statements for the 2018/2019 fiscal year, we have decided to no longer prepare and publish a voluntary individual financial statement in accordance with the International Financial Reporting Standards (IFRS), but instead to publish only the required statutory annual financial statements in accordance with German Commercial Code (HGB). In the future, interim reports will also be prepared and published in accordance with the provisions of the German Commercial Code (HGB).

Based on the current business development in the first nine months of the current fiscal year, I assume that our financial position and net assets will continue to develop within this range and confirm the outlook and forecast for the 2018/2019 fiscal year: According to IFRS, we have assumed a slight decline in revenues to € 16.0 million to € 16.5 million for the 2018/2019 fiscal year, which corresponds to a slight decline in revenues to € 17.0 million to € 17.5 million according to HGB. According to IFRS, earnings before financial result and taxes (EBIT) are expected to decline significantly to € 1.5 million to € 2.0 million, which includes an expected impairment of goodwill for the Hologic (Digital Mammography) business of € 4.5 million. Such an impairment is not required under HGB, which is why earnings before financial result and taxes (EBIT) are only expected to decline to € 6.5 million to € 7.0 million.

I would also like to thank all our employees for their extraordinary commitment and our business partners, customers and shareholders for their trust!

Marcus Kirchhoff CEO

THE MEVIS SHARE

DEVELOPMENT OF THE MEVIS SHARE (12 MONTH)

The highest price recorded for the MeVis share in electronic XETRA trading over the reporting period was € 36.40 and the lowest price was € 28.80. MeVis Medical Solutions AG finished the third quarter with a share price of € 29.60 (XETRA) compared to € 34.40 at the end of September 2018 and € 36.40 at the end of the third quarter of the same period last year. As a result, the value of the MeVis share at the end of the third quarter of the current fiscal year fell by -14 % compared with the closing price at the end of the 2017/2018 fiscal year. Over the last twelve months, the MeVis share has developed negatively at -19 %. Taking into account 1,820,000 outstanding shares, the market capitalization at the end of the period was € 53.87 million.

	9 M 30.06.2019	6 M 31.03.2019	3 M 31.12.2018
Closing price in €	29.60	31.20	32.00
Period high in €	36.40	36.40	36.40
Period low in €	28.80	30.60	32.00
Market capitalization in million € (XETRA ultimo)	53.9	56.8	58.2
Number of shares	1,820,000	1,820,000	1,820,000
Price-to-earnings ratio (XETRA ultimo)	9.37	6.53	5.52
Earnings per share in € (diluted/basic)	3.17	2.39	1.45

KEY INDICATORS OF THE MEVIS SHARE

DEVELOPMENT OF THE SHAREHOLDER STRUCTURE

At the end of the reporting period, 73.65 % of the total share capital of MeVis Medical Solutions AG was held by Varex Imaging Deutschland AG, an indirect subsidiary of Varex Imaging Corporation, Salt Lake City, Utah, USA. According to the shareholder notifications we received, other institutional shareholders are HANSAIN-VEST Hanseatische Investment-GmbH with approx. 5.51 % and Hauck & Aufhaeuser Fund Services S.A. (Hauck & Aufhaeuser acquired Oppenheim Asset Management Services S.à r.l. at the end of 2017) with approx. 3.01 % of the total share capital of MeVis Medical Solutions AG. This means that around 17.83 % of the shares are currently in free float.

Fig.: Shareholder structure as at June 30, 2019 (In accordance with the shareholder notifications received by us.)

VMS Deutschland Holdings GmbH took over the majority shareholding in MeVis Medical Solutions AG in April 2015 after a voluntary public tender offer. The domination and profit-and-loss transfer agreement signed on August 10, 2015, between VMS Deutschland Holdings GmbH and MeVis Medical Solutions AG was entered into the commercial register of the Bremen local court on October 20, 2015, and thus went into legal effect. With the spin-off agreement dated December 28, 2016, the transfer of MMS AG shares from VMS Deutschland Holdings GmbH to Varex Imaging Deutschland AG was resolved with economic effect as of December 30, 2016. The object of the spin-off agreement is also the domination and profit-and-loss transfer agreement between MMS AG and VMS Deutschland Holdings GmbH. The spin-off became legally effective upon entry in the commercial register on October 12, 2017 and MMS AG therefore belongs to the Varex Group via Varex Imaging Deutschland AG, Willich, under the management of Varex Imaging Corporation, Salt Lake City, Utah, USA. Varex Imaging Deutschland AG holds 73.65 % of the total share capital of MMS AG. The domination and profit-and-loss transfer agreement now existing between Varex Imaging Deutschland AG and MMS AG obliges Varex Imaging Deutschland AG to pay the outside shareholders an annual cash payment ("compensation payment") for each full financial year for the duration of this agreement. This amounts to € 1.13 (gross) or € 0.95 (net) per share for each full financial year.

GENERAL INFORMATION ON THE SHARE

At the end of the reporting period, the Executive Board of MeVis Medical Solutions AG decided, with the approval of the Supervisory Board, to apply for the revocation of the admission to trading in the Prime Standard segment of the Frankfurt Stock Exchange. The change of the stock exchange segment serves to reduce the additional expenses associated with the listing in the Prime Standard. The revocation will take effect at the end of September 17, 2019. Trading of the shares in the regulated market (General Standard) will commence on September 18, 2019.

INTERIM MANAGEMENT REPORT Q3 2018/2019

PREAMBLE

This report covers the third quarter as well as the first nine months of the 2018/2019 fiscal year, i.e. the reporting period from October 1, 2018 to June 30, 2019. The previous year's figures stated below relate to the third quarter as well as the first nine months of the 2017/2018 fiscal year from October 1, 2017 to June 30, 2018.

BASICS OF THE COMPANY

STRUCTURE

MeVis Medical Solutions AG (hereinafter also referred to as "MMS AG", "MeVis" or the "Company") was founded in 1997 and commenced business in 1998. 73.65 % of the share capital of MMS AG is currently held by Varex Imaging Deutschland AG, Willich. There is a domination and profit-and-loss transfer agreement in place between Varex Imaging Deutschland AG, as the controlling company, and MeVis Medical Solutions AG, as the controlled company. Therefore MMS AG is part of the Varex Group through Varex Imaging Deutschland AG under the management of Varex Imaging Corporation, Salt Lake City, Utah, USA.

Varex Imaging Corporation prepares the consolidated financial statements for the largest and smallest group of entities and MMS AG is included in these. The consolidated financial statements are filed with the U.S. Securities and Exchange Commission (SEC) and can be obtained from the head office of the group parent company.

Through a joint venture with Siemens Healthcare GmbH, Munich (hereafter: "Siemens"), MMS AG holds 51 % of MeVis BreastCare GmbH & Co. KG, Bremen, (hereafter: "MBC" or "MBC KG").

SHORT SUMMARY OF BUSINESS ACTIVITIES

MMS AG develops innovative software for analyzing and evaluating image data and markets it to equipment manufacturers of medical devices and providers of medical IT platforms.

Clinical focuses are image-based early detection and diagnosis of epidemiologically important diseases such as breast, lung, liver and neurological disorders. The software applications support many of the imaging modalities available. These not only include X-ray modalities such as computed tomography, digital mammography or digital tomosynthesis, but also magnetic resonance imaging, digital sonography and the simultaneous use of multiple modalities (multimodality). MeVis supplies technologies and software applications for global medical industry leaders, meeting their needs and helping them to strengthen their technological leadership positions.

Besides the sale of software licenses, maintenance contracts and services in the field of software development for medical technology companies, MeVis also offers services to clinical end customers. These include, amongst others, three-dimensional technical visualizations ("MeVis Distant Services"), interactive online trainings to improve the diagnostic capabilities of clinicians and special online applications in teleradiology ("MeVis Online Services).

REPORTING SEGMENTS

For reporting purposes and internal governance, MeVis has three operating segments ("Digital Mammography", "Development Services" and "Other Operating Activities").

The Digital Mammography segment develops and markets software products, which support breast diagnostic imaging and intervention. Aside from the original products for digital mammography, new software applications for other imaging modalities such as ultrasound, magnetic resonance imaging and tomosynthesis were added. These products are sold to the medical technology company Hologic.

The Development Services segment comprises the assignment of software development teams, i.e. software developers, product and project managers, application specialists and test engineers, for the contract development of software modules for external customers. Major customers in this segment are the Varian Medical Systems Group, Varex Imaging Corporation and Adaptiiv Medical Technologies Inc.

The segment Other Operating Activities includes the lung, liver, neuro and MeVis Online Services product areas. In addition to the licensing and maintenance business with software products, primarily in the areas lung and neuro for OEM customers Invivo Corporation and Vital Images, Inc.,the segment includes the services of the "MeVis Distant Services" for technical visualizations used in continuing education, for publications and for presentations and research purposes, as well as MeVis Online Services, such as interactive online training ("MeVis Online Academy") to improve the diagnostic capabilities of clinical end customers.

ECONOMIC REPORT

EARNINGS POSITION

Revenues in the third quarter of fiscal year 2018/2019 amounted to € 4,350 k, about 12 % above the previous year's level (€ 3,900 k). License business increased by 25 % in the third quarter to € 1,239 k (prev. year: € 995 k), and the maintenance business by 12 % to € 1,822 k (prev. year: € 1,632 k) compared to the previous year`s period. The service business increased from € 1,270 k in the previous year's period to € 1,289 k.

Revenues in the first nine months thus amounted to € 12,594 k (prev. year: € 12,133 k) and were allocated to the segments Digital Mammography with € 7,135 k (prev. year: € 8,192 k), Development Services with € 3,060 k (prev. year: € 1,583 k) and Other Operating Activities with € 2,399 k (prev. year: € 2,358 k). With a share of 57 % (prev. year: 68 %), the Digital Mammography segment continued to be the main source of revenues.

Personnel expenses fell by 4 % to € 5,877 k (prev. year: € 6,110 k). MMS AG had 101 employees on average in the first nine months of the fiscal year 2018/2019. This corresponds to 90 full-time equivalents (prev. year: 105 employees or 95 full-time equivalents).

Other operating expenses were above previous year's level and totaled € 1,569 k (prev. year: € 1,428 k). These expenses mainly consisted of rental/leasing expenses of € 402 k (prev. year: € 417 k), legal and consulting costs of € 162 k (prev. year: € 116 k), travel expenses of € 162 k (prev. year: € 167 k) as well as audit costs of € 136 k (prev. year: € 69 k).

EBITDA (earnings before financial result, taxes, depreciation and amortization) totaled € 5,746 k in the reporting period (prev. year: € 5,140 k). Accordingly, the EBITDA margin was at 46 % (prev. year: 42 %).

As expected, depreciation, amortization and impairments of intangible assets and property, plant and equipment fell by 47 % to € 370 k (prev. year: € 700 k), while amortization of capitalized development costs declined by € 260 k to € 24 k (prev. year: € 284 k) and thus they are fully amortized.

EBIT (Earnings before financial result and taxes) amounted to € 5,376 k in the reporting period (prev. year: € 4,440 k). At 43 %, the EBIT margin improved compared with a previous year's value of 37 %.

The financial result declined significantly in the reporting period to € 390 k (prev. year: € 685 k). The change compared with the previous year is due to the development of the balance of income and expenses from exchange rate differences of € 494 k (prev. year: € 120 k) and the deterioration in the result of the 51 % share in MeVis BreastCare GmbH & Co. KG of € -216 k (prev. year: € 461 k), which is recognized at equity and interest income in the amount of € 127 k (prev. year: € 117 k).

Thus EBT (earnings before taxes) came to € 5,766 k in the reporting period (prev. year: € 5,125 k). Accordingly, the EBT margin increased slightly to 46 % compared to the previous year's value of 42 %. The tax result came to € 0 k (prev. year: € -3 k).

Net profit after taxes therefore amounted to € 5,766 k (prev. year: € 5,122 k).

Undiluted earnings per share increased to € 3.17 (prev. year: € 2.81).

FINANCIAL POSITION

Cash flow from current operating activities came to € 5,135 k (prev. year: € 3,120 k) in the reporting period. This comprises earnings before financial result and taxes (EBIT) of € 5,376 k (prev. year: € 4,440 k), adjusted for depreciation in the amount of € 370 k (prev. year: € 700 k), changes in other non-cash expenses/income of € 47 k (prev.year: € -1 k), interest received in the amount of € 276 k (prev. year: € 4 k), taxes paid in the amount of € -965 k (prev. year: € -72 k), changes in trade receivables and other assets in the amount of € -65 k (prev. year: € -1,090 k), and changes in trade payables and other liabilities in the amount of € 96 k (prev. year: € -861 k).

The cash flow from investing activities amounted to € -4,686 k in the reporting period (prev. year: € -18,426 k) and consisted of cash outflows for investments and a cash outflow of € 4,500 k to Varex Imaging Deutschland AG for short-term funds (prev. year: € 2,000 k). In the previous year, Varex Imaging Deutschland AG was granted a loan with a disbursement amount of € 16,225 thousand.

Cash flow from financing activities amounted to € -1,619 k (prev. year: € 9,368 k), due to the payment to Varex Imaging Deutschland AG for the remaining amount from the profit transfer for the fiscal year 2017/2018. In the previous year, the profits of the financial years 2016 and 2016/2017 were paid out in the total amount of € 9,368 k.

The liquidity-relevant change in cash and cash equivalents amounted to € -739 k in the reporting period (prev. year: € -24,535 k).

NET ASSET POSITION

As of the balance sheet date the liquid funds amounted to € 2,738 k (September 30, 2018: € 3,477 k). They consist solely of cash.

Total assets increased by € 3,326 k to € 41,745 k as of the end of the first nine months (September 30, 2018: € 38,419 k). The equity ratio increased to 91 % (September 30, 2018: 83 %). Equity covered 121 % of fixed assets (September 30, 2018: 103 %), and fixed assets amounted to 298 % of current assets (September 30, 2018: 437 %). Fixed assets in relation to total assets decreased to 75 % (Asset intensity September 30, 2018: 81 %).

The increase in assets is mainly due to the development of other financial assets, which include the transfer of funds to Varex Imaging Deutschland AG. As a result of the profit for the period, equity rose by 18 % to € 37,825 k (September 30, 2018: € 32,059 k) and current liabilities fell to € 888 k (September 30, 2018: € 2,661 k) as a result of tax liabilities paid and the payment of the profit transfer for the 2017/2018 fiscal year. There were no other significant changes in liabilities.

MATERIAL EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

There have been no transactions of material significance for the Company after the reporting date.

OPPORTUNITIES AND RISK REPORT

No material changes have occurred with regard to the risk situation of the Company since the beginning of the fiscal year. Therefore, the statements, made in the opportunities and risk report of the annual financial statements for the fiscal year as of September 30, 2018, remain valid.

OUTLOOK

This report has been prepared in accordance with International Financial Reporting Standards (IFRS). Due to its corporate structure, MeVis Medical Solutions AG has only been required to prepare annual financial statements in accordance with §§242 et seq. in conjunction with §§264 et seq. of the German Commercial Code (HBG) since fiscal year 2014, which ended on December 31, 2014. Since fiscal year 2014, the preparation and publication of IFRS individual financial statements has been voluntary for information purposes. Since then, only interim reports prepared in accordance with IFRS were published.

In view of the forthcoming annual financial statements for fiscal year 2018/2019, we have decided to no longer prepare voluntary IFRS individual financial statements, but instead to publish only the statutory annual financial statements prepared in accordance with German Commercial Code (HGB). In future, the interim reports are therefore also prepared in accordance with the German Commercial Code (HGB). Quarterly reports or announcements will not be published in future.

The forecast for the 2018/2019 fiscal year published as part of the IFRS financial statements remains valid and we are holding on to it:

For fiscal year 2018/2019, a slight decline in revenues to € 16.0 million to € 16.5 million is expected. The expected revenue decline in the Digital Mammography segment will only be partially offset by the forecast revenue growth in the Development Services and Other Operating Activities segments. Earnings before financial result and taxes (EBIT) are expected to decline significantly to between € 1.5 million and € 2.0 million. This includes an expected impairment of goodwill for the Hologic (Digital Mammography) business of € 4.5 million.

The following forecast for fiscal year 2018/2019 corresponds to the wording of the forecast already published by us in the annual financial statements prepared in accordance with the German Commercial Code at the end of fiscal year 2017/2018 as of September 30, 2018. We also continue to adhere to this forecast for the 2018/2019 fiscal year:

For fiscal year 2018/2019, a slight decline in revenues to € 17.0 million to € 17.5 million is expected. The expected revenue decline in the Digital Mammography segment will only be partially offset by the forecasted revenue growth in the other segments. Accordingly, earnings before financial result and taxes (EBIT) are expected to decline to € 6.5 million to € 7.0 million.

An impairment of goodwill for the Hologic business (Digital Mammography) is not necessary under German Commercial Code (HBG), as no goodwill is reported under German Commercial Code (HBG).

As in the previous reporting period, the Executive Board will regularly review its expectations during fiscal year 2018/2019 based on current business developments.

Bremen, August 29, 2019

Marcus Kirchhoff CEO

INCOME STATEMENT Q1-Q3 2018/2019

for the period October 1, 2018 through June 30, 2019

FIGURES IN € k	Notes	Oct. 1, 2018 - June 30, 2019	Oct. 1, 2017 - June 30, 2018
Revenues	1	12,594	12,133
Other operating income		915	860
Cost of material		-317	-315
Staff costs	2	-5,877	-6,110
Other operating expenses	3	-1,569	-1,428
Earnings before financial result, taxes, deprecia tion and amortization (EBITDA)		5,746	5,140
Depreciation, amortization and impairment of intangible and tangible assets	4	-370	-700
Earnings before financial result and tax (EBIT)		5,376	4,440
Share of profit of equity-method investments		-216	461
Interest income		127	117
Other net financial result		479	107
Net financial result	5	390	685
Earnings before tax (EBT)		5,766	5,125
Income tax	6	0	-3
Net loss/profit for the period		5,766	5,122
Earnings per share in €	13
Basic		3.17	2.81
Diluted		3.17	2.81

STATEMENT OF COMPREHENSIVE INCOME

for the period October 1, 2018 through June 30, 2019

FIGURES IN € k	Notes	Oct. 1, 2018 - June 30, 2019	Oct. 1, 2017 - June 30, 2018
Net loss/profit for the period		5,766	5,122
Items that are never recognized as profit or loss		0	0
Items that have been or could be recognized as profit
or loss		0	0
Other comprehensive income		0	0
Total comprehensive income		5,766	5,122

INCOME STATEMENT Q3 2018/2019

for the period April 1, 2019 through June 30, 2019

FIGURES IN € k	Notes	Apr. 1, 2019 - June 30, 2019	Apr. 1, 2018 - June 30, 2018
Revenues	1	4,350	3,900
Other operating income		304	342
Cost of material		-80	-117
Staff costs	2	-2,095	-2,125
Other operating expenses	3	-641	-478
Earnings before financial result, taxes, deprecia tion and amortization (EBITDA)		1,838	1,522
Depreciation, amortization and impairment of intangible and tangible assets	4	-109	-218
Earnings before financial result and tax (EBIT)		1,729	1,304
Share of profit of equity-method investments		-32	17
Interest income		43	40
Other net financial result		-332	1,396
Net financial result	5	-321	1,453
Earnings before tax (EBT)		1,408	2,757
Income tax	6	0	-1
Net loss/profit for the period		1,408	2,756
Earnings per share in €	13
Basic		0.77	1.51
Diluted		0.77	1.51

STATEMENT OF COMPREHENSIVE INCOME

for the period April 1, 2019 through June 30, 2019

FIGURES IN € k	Notes	Apr. 1, 2019 - June 30, 2019	Apr. 1, 2018 - June 30, 2018
Net loss/profit for the period		1,408	2,756
Items that are never recognized as profit or loss		0	0
Items that have been or could be recognized as profit or loss		0	0
Other comprehensive income Total comprehensive income		0 1,408	0 2,756

STATEMENT OF FINANCIAL POSITION

as of June 30, 2019

FIGURES IN € k	Notes	June 30, 2019	Sep. 30, 2018
Non-current assets Intangible assets		10,881	11,117
Property, plant and equipment		268	215
Joint venture/Equity investments	7	1,668	1,885
Trade receivables		1,636	1,636
Other financial assets		16,796	16,411
		31,249	31,264
Current assets
Trade receivables		3,041	3,286
Other financial assets	8	4,660	287
Other assets		57	105
Cash		2,738	3,477
		10,496	7,155
ASSETS		41,745	38,419
Equity capital	9
Subscribed capital		1,820	1,820
Capital reserve		7,475	7,475
Revaluation reserve		82	139
Retained earnings		28,448	22,625
		37,825	32,059
Non-current liabilities
Provisions		327	327
		327	327
Current liabilities
Provisions		163	163
Trade payables		449	336
Other financial liabilities	10	888	2,661
Deferred income		1,276	1,228
Other liabilities		473	336
Income tax liabilities		344	1,309
		3,593	6,033
EQUITY AND LIABILITIES		41,745	38,419

STATEMENT OF CASH FLOW

for the period October 1, 2018 through June 30, 2019

	FIGURES IN € k	Notes	Oct. 1, 2018 - June 30, 2019	Oct. 1, 2017 - June 30, 2018
	Earnings before financial result and tax (EBIT)		5,376	4,440
+	Depreciation and amortization and impairments	4	370	700
+/-	Other non-cash expenses/income		47	-1
+	Interest received		276	4
-	Tax paid		-965	-72
+/-	Decrease/increase in trade receivables and other assets		-65	-1,090
-/+	Decrease/increase in trade payables and other li abilities		96	-861
=	Cash flow from operating activities		5,135	3,120
-	Payments for investments in property, plant and equipment		-186	-99
-	Payments for investments in intangible assets (excl. development cost)		0	-102
-	Payments for granting loans1		0	-16,225
-	Payments for short-term funds transfers		-4,500	2,000
=	Cash flow from investing activities		-4,686	-18,426
-	Payments to shareholders (profit transfer)	8,10	-1,619	-9,368
=	Cash flow from financing activities		-1,619	-9,368
	Change in cash and cash equivalents		-1,170	-24,674
	Effect of exchange rates on cash and cash equivalents		431	139
+	Cash at the beginning of the period		3,477	29,735
=	Cash at the end of the period		2,738	5,200

¹Reclassification from cash flow from financing activities to cash flow from investing activities as in the Annual Report of 2017/2018

STATEMENT OF CHANGES IN EQUITY

for the period October 1, 2018 through June 30, 2019

FIGURES IN € k	Subscribed capital	Capital reserve	Revaluation reserve	Retained earnings	Total
Balance on Oct. 1, 2017	1,820	7,475	226	22,990	32,511
Net profit	0	0	0	5,122	5,122
Total comprehensive income	0	0	0	5,122	5,122
Transfer from revaluation re serve to retained earnings based on amortization	0	0	-66	66	0
Balance on June 30, 2018	1,820	7,475	160	28,178	37,633
Balance on Oct. 1, 2018	1,820	7,475	139	22,625	32,059
Net profit	0	0	0	5,766	5,766
Total comprehensive income	0	0	0	5,766	5,766
Transfer from revaluation re serve to retained earnings based on amortization	0	0	-57	57	0
Balance on June 30, 2019	1,820	7,475	82	28,448	37,825

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2019

BASIC INFORMATION

GENERAL DISCLOSURES

MeVis Medical Solutions AG ("MMS AG", "MeVis" or "Company" for short) was incorporated at the end of 1997 and commenced business in 1998. It has its registered office in Bremen/Germany. Its address is Caroline-Herschel-Str. 1, 28359 Bremen. MMS AG is registered in the Commercial Register of the District Court of Bremen (HRB 23791 HB).

73.65 % of the share capital of MMS AG is currently held by Varex Imaging Deutschland AG, Willich. There is a domination and profit-and-loss transfer agreement between Varex Imaging Deutschland AG, as the controlling company, and MeVis Medical Solutions AG, as the controlled company. Therefore MMS AG is part of the Varex Group through Varex Imaging Deutschland AG under the management of Varex Imaging Corporation, Salt Lake City, Utah, USA.

Varex Imaging Corporation prepares the consolidated financial statements for the largest and smallest group of entities and MMS AG is included in these. The consolidated financial statements are filed with the U.S. Securities and Exchange Commission (SEC) and can be obtained from the head office of the group parent company.

The interim financial statements of MeVis Medical Solutions AG, Bremen as at June 30, 2019 were prepared in accordance with Section 315a (1) of the German Commercial Code (HGB) in line with the rules and regulations in force on the balance sheet date and approved by the European Union of the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). Accordingly, this interim report as at June 30, 2019 was prepared in conformity with IAS 34 "Interim Reporting". The notes to the interim financial statements are presented in abridged form in line with the option provided by IAS 34. The interim financial statements and interim management report have neither been audited nor subjected to accounting review.

RECOGNITION AND MEASUREMENT METHODS

The interim financial statements from October 1, 2018 to June 30, 2019 use the same recognition and measurement policies as the individual financial statement according to IFRS for the fiscal year 2017/2018. The interim financial statements as of June 30, 2019 must therefore be read in conjunction with the individual financial statements according to IFRS for the fiscal year as of September 30, 2018.

EFFECTS OF NEW ACCOUNTING STANDARDS

MMS AG's interim financial statements as of June 30, 2019 including the previous year's figures have been prepared in accordance with IFRS as endorsed by the European Union as of September 30, 2018. The same accounting and valuation principles were applied that were used in preparing the individual financial statements according to IFRS for the fiscal year as at September 30, 2018 and in addition, IAS 34 "Interim reporting" was applied. New announcements of the IASB applicable as at June 30, 2019 had no material impacts on the MeVis financial statements.

SELECTED NOTES ON THE BALANCE SHEET AND INCOME STATEMENT

1. REVENUES

Revenues break down by type as follows:

	Oct. 1, 2018 -	Oct. 1, 2017 -
FIGURES IN € k	June 30, 2019	June 30, 2018
Maintenance (software service contracts)	5,292	5,107
Services (consulting and trainings)	3,780	3,503
Software and licenses	3,522	3,519
Hardware	0	4
	12,594	12,133

2. STAFF COSTS

The average headcount was 101 (prev. year: 105). This is equivalent to an average of 90 full-time positions (prev. year: 95). The average figures include 4 testers (as a rule, students employed on a negligible part-time basis) (prev. year: 4).

3. OTHER OPERATING EXPENSES

FIGURES IN € k	Oct. 1, 2018 - June 30, 2019	Oct. 1, 2017 - June 30, 2018
Rental/leasing expenses	402	417
Travel expenses	162	167
Legal and consulting costs	162	116
Cost of preparing and auditing financial statements	136	69
Vehicle costs	98	97
Maintenance/repairs	97	116
Telephone and internet expenses	73	62
Office supplies	73	44
Energy costs	45	44
Events/conferences	33	42
Cleaning expenses	32	31
Training costs	31	39
Others	225	184
	1,569	1,428

4. DEPRECIATION AND AMORTIZATION

FIGURES IN € k	Oct. 1, 2018 - June 30, 2019	Oct. 1, 2017 - June 30, 2018
Amortization of industrial property rights and
similar rights and customer bases	212	266
Amortization of capitalized development expenses	24	284
Depreciation of property, plant and equipment	134	150
	370	700

5. NET FINANCIAL RESULT

The net financial result as of June 30, 2019 amounted to € 390 k (prev. year: € 685 k). It mainly consisted of the balance of income and expenses from exchange rate differences of € 494 k (prev. year: € 120 k), the result derived from equity-method investments amounting to € -216 k (prev. year: € 461 k) and interest income € 127 k (prev. year: € 117 k).

6. INCOME TAXES

Income tax expenses in the previous year mainly resulted from withholding tax on capital.

7. EQUITY-METHOD INVESTMENTS

Financial assets concern the equity interest of 51 %, valued in accordance with the equity method, in the MeVis BreastCare GmbH & Co. KG, Bremen, as well as the MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen.

8. OTHER FINANCIAL ASSETS

FIGURES IN € k	June 30, 2019	Sep. 30, 2018
Loans	16,800	16,411
Other receivables	4,654	134
Interest receivables from loans	0	153
Other	2	0
	21,456	16,698

The loan of USD 19.2 million granted to Varex Imaging Deutschland AG has been in place since October 16, 2017 and bears interest at a rate of 1 % per annum. The fair value of the loan receivable essentially corresponds to the book value.

Other receivables include € 4,500 k (September 30, 2018: € 0 k) due from Varex Imaging Deutschland AG, Willich, resulting from a transfer of funds during the year and € 154 k (September 30, 2018: € 134 k) due from MeVis BreastCare GmbH & Co. KG, Bremen.

9. SHAREHOLDERS´ EQUITY

Revaluation reserve

The assets and liabilities of MBS KG had to be completely revalued in connection with the acquisition of the 49 % interest in MBS KG from Siemens AG and the subsequent full consolidation of MBS KG in 2008. To the extent that this increase in value was attributable to the 51 % interest in MBS KG already held by the Company, the difference had to be allocated to the revaluation reserve. The amount of € 1,688 k allocated comprised intangible assets of € 2,411 k less deferred taxes of € 723 k thereon. Amounts corresponding with the amortization recognized on these assets are transferred proportionately to retained earnings. With the merger of MBS KG into MMS AG in the fiscal year 2013, the values from the revaluation reserve were also transferred into the individual IFRS financial statements.

	Oct. 1, 2018 -	Oct. 1, 2017 -
FIGURES IN € k	June 30, 2019	June 30, 2018
Status as at October 1	139	226
-Transfer of the amount corresponding to write-downs and the as sociated deferred taxes to retained earnings, without an impact on
profit and loss	-57	-66
Status as at June 30	82	160

10. OTHER FINANCIAL LIABILITIES

Current other financial liabilities

FIGURES IN € k	June 30, 2019	Sep. 30, 2018
Staff liabilities	888	1,042
Liabilities to affiliated companies	0	1,619
	888	2,661

The liabilities to affiliated companies in the previous year related to the transfer of the profit under commercial law for the fiscal year 2017/2018 based on the existing domination and profit and loss transfer agreement with Varex Imaging Deutschland AG in the amount of € 7,619 k, which were offset against claims of € 6,000 k from transfers of funds to Varex Imaging Deutschland AG during the year.

Staff liabilities mainly relate to costs for the 13th salary and bonus payments.

11. TRANSACTIONS WITH RELATED PARTIES

There have been no material changes in the relationships with related parties since the IFRS individual financial statements for the 2017/2018 financial year.

12. CONTINGENT RECEIVABLES AND CONTINGENT LIABILITIES

In comparison with the contingent receivables and contingent liabilities presented the individual financial statement according to IFRS for the fiscal year 2017/2018, no changes occurred in the first nine months of the current fiscal year.

13. EARNINGS PER SHARE

Earnings per share equal the profit on continuing activities or profit (after tax) divided by the weighted average number of shares outstanding during the financial year. Earnings per share (fully diluted) are calculated on the assumption that all securities, stock options and stock awards with a potentially dilutionary effect are converted or exercised.

The weighted average of shares outstanding is determined by taking account of shares redeemed and reissued subject to a chronological weighting.

As of the balance sheet date, there were no more outstanding stock options.

	June 30, 2019	June 30, 2018
Net result for the period in € k	5,766	5,122
Weighted average of shares outstanding during the reporting period
- basic	1,820,000	1,820,000
Dilution through stock options	0	0
Weighted average of shares outstanding during the reporting period
- diluted	1,820,000	1,820,000
Basic earnings per share in €	3.17	2.81
Diluted earnings per share in €	3.17	2.81

14. SEGMENT INFORMATION

As of June 30, 2019, the Company's activities were divided into the reportable segments of Digital Mammography, Development Services, and Other Operating Activities. The management of each of these segments reports directly to the Management Board of MMS AG in its capacity as the responsible corporate body.

The Development Services segment became significant in the fiscal year 2017/2018 because the revenues of this segment exceed the quantitative threshold of at least 10% of the Company's total revenues as defined in IFRS 8.13 (a). Accordingly, the prior year comparatives have been restated in accordance with IFRS 8.18.

Since the Digital Mammography and Development Services segments together account for more than 75 % of MMS AG's revenues, the non-reportable business segments were combined and presented in the "Other Operating Activities" category. Segment net profit and loss, which corresponds to earnings before financial result and tax (EBIT), constitutes the key benchmark for assessing and controlling the earnings position of a particular segment.

The segments break down as follows:

	Digital Mammography		Development Services		Other Operating Activities		Total
	Oct. 1 - June 30		Oct. 1 - June 30		Oct. 1 - June 30		Oct. 1 - June 30
FIGURES IN € k	2018/ 2019	2017/ 2018	2018/ 2019	2017/ 2018	2018/ 2019	2017/ 2018	2018/ 2019	2017/ 2018
Segment revenues	7,135	8,192	3,060	1,583	2,399	2,358	12,594	12,133
Depreciation and amortization	-210	-561	-69	-22	-91	-117	-370	-700
Operating expenses	-1,245	-2,686	-2,056	-566	-2,893	-3,173	-6,194	-6,425
Result of operating activities	5,680	4,945	935	995	-585	-932	6,030	5,008
Other operating income	176	367	320	76	419	417	915	860
Other operating expenses	-301	-629	-549	-123	-719	-676	-1,569	-1,428
Segment net profit/loss	5,555	4,683	706	948	-885	-1,191	5,376	4,440

15. POST BALANCE SHEET EVENTS

No material events occurred after the balance sheet date.

Bremen, August 29, 2019

Marcus Kirchhoff

CEO

DISCLAIMER

FORWARD-LOOKING STATEMENT

This report contains forward-looking statements which are based on management's current estimates of future developments. Such statements are subject to risks and uncertainties, which MeVis Medical Solutions AG is not able to control or estimate with any precision, e.g. future market conditions and the general economic environment, the behavior of other market participants, the successful integration of new acquisitions and government acts. If any of these uncertainties or imponderabilities materialize or if the assumptions on which these statements are based prove to be incorrect, this may cause actual results to deviate materially from those expressly or implicitly contained in these statements. MeVis Medical Solutions AG does not intend and is under no obligation to update the forward-looking statements in the light of any events or developments occurring after the date of this report.

DEVIATIONS FOR TECHNICAL REASONS

Deviations may occur between the accounting data contained in this report and that submitted to the Bundesanzeiger for technical reasons (e.g. conversion of electronic formats). In the case of any doubt, the version submitted to the Bundesanzeiger will prevail.

This report is also available in a German-language version. In case of any doubt, the German-language version takes priority over the English-language one.

The report is available for downloading in both languages in the internet at: http://www.mevis.de/en/investor-relations/financial-reports/

FINANCE CALENDAR 2018/2019

Date Event

January 29, 2019	Annual Report 2017/2018
February 26, 2019	Interim Report for Q1 2018/2019
March 21, 2019	Annual General Meeting, Bremen
May 23, 2019	Interim Report for H1 2018/2019
Sep. 2019	Fall Conference, Frankfurt am Main
August 29, 2019	Interim Report for Q3 2018/2019

MeVis Medical Solutions AG

Caroline-Herschel-Str. 1 28359 Bremen Germany

Phone +49 421 22495 0 Fax +49 421 22495 999 info@mevis.de

www.mevis.de