Elos Medtech — Interim / Quarterly Report 2019

Oct 24, 2019

Q3 ²⁰¹⁹ INTERIM REPORT

SEK 157.1 million Consolidated net sales increased to SEK 157.1 (154.1) million in the third quarter of 2019

SEK 14.2 million The Group's operating profit increased to SEK 14.2 (11.8 ) million in the third quarter of 2019

INCREASED PROFITABILITY THROUGH EFFICIENCIES

July - September 2019

• Net sales for the third quarter increased to SEK 157.1 (154.1) million, which corresponds to organic growth of 1.9 percent. Taking into account currency conversions, growth was negative, -1.3 percent.
• The operating profit was SEK 14.2 (11.8) million. Our operating margin for the third quarter of 2019 was 9.0 percent, up from 7.7 percent in the same period in 2018.
• The profit after financial items was SEK 11.4 (7.7) million. Net financial items, which were not affected by exchange rate differences during the period (-0.9), were SEK -2.8 (-4.1) million.
• Profit after tax amounted to SEK 9.0 (6.4) million, which corresponds to SEK 1.12 (0.79) per share.
• Cash flow from operating activities was SEK 30.6 (18.4) million, and amounted to SEK 1.8 (-7.6) million after investments.

January - September 2019

• Net sales for the first nine months of the year increased to SEK 531.1 (475.8) million, which corresponds to organic growth of 11.6 percent. Taking into account currency conversions, growth was 7.1 percent.
• The operating profit for the first nine months of the year was SEK 51.2 (27.9) million, representing and operating margin of 9.6 (5.9) percent.
• The profit after financial items was SEK 40.6 (22.5) million. Net financial items were negatively affected by exchange rate differences of SEK -1.5 (2.3) million and amounted to SEK -10.6 (-5.4) million.
• Profit after tax amounted to SEK 30.9 (16.9) million, which corresponds to SEK 3.83 (2.09) per share.
• Cash flow from operating activities was SEK 87.7 (46.7) million, and amounted to SEK 0 (-11.6) million after investments.

Key performance indicators	Jul-Sep 2019	Jul-Sep 2018	Jan-Sep 2019	Jan-Sep 2018	Oct-Sep 2018/19	Jan-Dec 2018
Net sales, SEK million	157.1	154.1	531.1	475.8	700.0	644.7
Growth,%	1.9	16.3	11.6	10.9	12.1	11.6
EBITDA, SEK million*	29.3	25.1	96.0	66.6	124.7	95.3
EBITDA, %*	18.7	16.3	18.1	14.0	17.8	14.8
EBIT, SEK million*	14.2	11.8	51.2	27.9	62.2	38.9
EBIT, %*	9.0	7.7	9.6	5.9	8.9	6.0
Profit after financial items, SEK million	11.4	7.7	40.6	22.5	46.6	28.5
Profit after tax, SEK million	9.0	6.4	30.9	16.9	34.9	20.9
Earnings per share before and after dilution, SEK	1.12	0.79	3.83	2.09	4.33	2.76

Quarterly growth

+1.9%

After currency conversions the growth rate was -1.3 percent.

* EBITDA for the third quarter of 2019 was affected by the adoption of IFRS 16, as depreciation of right-of-use assets and the finance charge on the lease liability are excluded from the performance measure. For the comparative year the corresponding operating lease payments were included in EBITDA, which means that the two years are not fully comparable. The effect of depreciation of right-of-use assets and finance charges in accordance with IFRS 16 for the third quarter of 2019 is approximately SEK 1.1 million, which thus increases EBITDA for the period by the same amount. The effect on the operating profit is positive, plus SEK 0.2 million.

COMMENTS ON Q3 FROM JAN WAHLSTRÖM, CEO

The fifth quarter in a row with increased profitability. Our strategic decision to adapt the organization with a focus on cost awareness and implement improvements in production has had a direct impact on earnings, which increased from SEK 12 million to SEK 14 million. During the period we noted a tendency among customers to reduce their inventories, which meant that growth was slightly lower. We will continue to place a strong emphasis on efficiencies in order to prepare for potential changes in the trading environment and the economy.

Orthopedics remains the main driver of growth and has tremendous development potential. The robotic surgery trend is strong and Elos Medtech has recently initiated a new project in this area. The expansion of our site in Memphis has now been completed, which means that production will reach full capacity earlier than expected. We are proud to have been able to report profitable growth during the period of construction.

Dental had the strongest growth during the period, driven mainly by our contract manufacturing businesses. We have continued to develop proprietary products with a strong focus on digital denistry. As planned, we have continued to register proprietary dental products for the US market.

The decline in sales in Life Science during the quarter was due to the phasing-out of Bruel&Kjaer. This is in line with our strategy and previous communication. The polymer business in the business area is growing steadily. Market demand for our contract manufacturing services is strong. To meet this demand, we have both expanded our existing production capacity and decided to add additional production space by expanding our Skara site. Planning permission has been received and soon the first sod will be turned.

Having delivered another quarter of growth, our focus remains on improving profitability.

DENTAL

With an increase of 17 percent, Dental achieved a very strong quarterly result driven mainly by our major customers. Elos Accurate® and a digital workflow remain the key focus areas. Together with our customers we are now looking at future research projects aimed at developing new products in partnership. During the period we also registered a patent for a new drill system and implemented efficiencies through new machines with the aim of increasing profitability.

ORTHOPEDICS

There is still considerable development potential in Orthopedics despite slightly lower growth this quarter. Following the completion of our site in Memphis and the validation of several new machines for new customer projects, we are now able to go into full operation. In line with our specialization goals, a new robotic surgery project with a new product line was initiated during the period.

LIFE SCIENCE

Market demand for polymer products remains high and the expansion of our Skara site will double the existing production space. Our contract manufacturing business has continued to grow and we are now exploring the possibility of adding new machining processes to become a more complete supplier for our customers. The decline for the period was expected and is directly related to the strategic phasing-out of Bruel&Kjaer.

THIS IS ELOS MEDTECH

General information about the business

Elos Medtech specializes in medical technology and has extensive expertise in development and design, along with contract manufacturing of medical devices. Customers are primarily global medical technology companies. Operations are conducted at facilities in Sweden, Denmark, China and the US with Groupwide functions for strategic marketing and IT support, production and quality management, risk management, financing and financial control in Gothenburg. The Group runs operations in the following three business areas: Dental, Orthopedics and Life Science.

Vision

To transform medical technology and improve quality of life across the globe.

Mission

In collaboration with our customers, we provide sustainable, innovative products and solutions for the global medical technology market. Our aim is to set up profitable, long-term partnerships and we strive for excellence in everything we do, for the purpose of helping people all over the world lead healthier, more active lives.

Targets

Elos Medtech's long-term financial targets are: an average annual growth rate of more than 10 percent, average operating margin (EBIT) of over 13 percent and for proprietary products to account for at least 13 percent.

Value-creating business model

Elos Medtech's business model is based on extensive experience and expertise that it has acquired in the development and contract manufacturing of medical devices and components. Customers are offered quality, expertise and innovation in a partner-based overall solution – Complete PerformanceTM. The cornerstones of Elos Medtech's value creation are higher efficiency, improved profitability and high-quality products in partnership with its customers.

Strategy

Elos Medtech's strategy is based on a sharper focus on selected market segments and in both metals and polymer. The strategy also includes a higher level of specialization and expertise in design, development, manufacturing and logistics with the highest quality assurance. With a stronger offering, it will be easier to achieve the strategic targets of more distinct positioning and continued growth.

Sustainable focus

Elos Medtech has a sustainable focus and responsibility that extends beyond just delivering high-quality products. The company applies a long-term approach to economic, social and environmental responsibility for how its operations impact its stakeholders. Elos Medtech has specified certain strategic targets to ensure that there is continual improvement in these areas. For more information, please see:

elosmedtech.com/whoweare/sustainability.

VISION • MISSION • VALUE-BASED CULTURE • SUSTAINABLE FOCUS

VALUE CREATION FOR THE COMPANY AND OUR STAKEHOLDERS

THE GROUP'S PERFORMANCE

Net sales July-September 2019

Consolidated net sales for the period increased to SEK 157.1 (154.1) million. The increase of 1.9 percent on the third quarter of last year is attributable to the business areas Dental (+17%) and Orthopedics (+13%) while Life Science posted a negative growth rate (-21%). Proprietary product development saw negative growth in the third quarter, -10.7 percent. Proprietary products accounted for 9 (10.3) percent of consolidated net sales for the period. Taking into account currency conversions, growth was negative, -1.3 percent.

Net sales January-September 2019

Consolidated net sales for the first nine months of the year increased to SEK 531.1 (475.8) million. The increase of 11.6 percent compared with the year-before period is attributable to all of the business areas: Dental (+9%), Orthopedics (+22%) and Life Science (+5%). Sales of proprietary products grew 11.1 per cent. Proprietary products now account for 10.1 (10.4) percent of consolidated net sales.

Earnings July-September 2019

The operating profit for the third quarter was SEK 14.2 (11.8) million, corresponding to an operating margin of 9.0 (7.7) percent. Consolidated net financial items, which were not been affected by exchange rate differences during the period (-0.9), were SEK -2.8 (-4.1) million. The loss after financial items was SEK -11.4 (7.7) million. Profit after tax amounted to SEK 9.0 (6.4) million, which corresponds to SEK 1.12 (0.79) per share.

Earnings January-September 2019

The operating profit for the first nine months of the year was SEK 51.2 (27.9) million, corresponding to an operating margin of 9.6 (5.9) percent. The Group's net financial items were negatively affected by exchange rate differences of SEK -1.5 (2.3) million and amounted to SEK -10.6 (-5.4) million. The profit after financial items was SEK 40.6 (22.5) million. Profit after tax amounted to SEK 30.9 (16.9) million, which corresponds to SEK 3.83 (2.09) per share. Taking into account currency conversions, growth was 7.1 percent.

Investments

The Group's investments in buildings, land, machinery, equipment, capitalized development costs and other property, plant and equipment in the third quarter totaled SEK 30.2 (26.0) million and refer mainly to expanded machine capacity and investments in doubling the production space at our factory in Memphis.

Financial position and liquidity

Consolidated total assets increased during the period to SEK 1,079.6 (960.7) million. The Group's equity amounted to SEK 551.6 (503.8) million. Equity per share, calculated on 8,068,000 shares, amounted to SEK 68.37 (62.44). At the end of the year, own risk capital amounted to SEK 577.9 (533.4) million, which corresponds to 53.5 (55.5) percent of total capital. The Group's equity ratio was 51.1 (52.4) percent.

The Group's cash flow from operating activities during the quarter amounted to SEK 30.6 (18.4) million. Cash flow after investments and divestiture of fixed assets amounted to SEK 1.8 (-7.6) million.

The Group's net debt increased during the period and amounted to SEK 344.5 (287.5) million. Cash and cash equivalents including unutilized bank overdraft facility amounted to SEK 126.4 (114.9) million.

Net sales, SEK million

Operating profit, SEK million

Segment reporting

The Board of Directors and management have decided to organize the business into three business areas: Dental, Orthopedics and Life Science. It has also been decided to introduce segment reporting based on this business area structure.

Historical comparative figures for net sales are presented. Quality-assured historical earnings data is not available, and no presentation of comparable data at earnings level is therefore made.

Personnel

The average number of employees in the Group in the first nine months of the year was 575, up from 562 in the previous year.

Events during the quarter

The expansion of the site in Memphis has been completed and will be inaugurated in mid-October. Simultaneously we are also launching a new robotic surgery project together with a customer. In Dental we registered a new patent for a drill system.

Events after the quarter

Our polymer business has continued to perform well and in October we took the decision to increase production capacity by expanding our site in Skara. The initial investment includes SEK 40 million.

Net sales by segment

			Growth			Growth
SEK million	Jul-Sep	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Jan-Sep	Oct-Sep	Jan-Dec
	2019	2018	2019	2019	2018	2019	2018/19	2018
Dental	54.1	46.1	17.4%	170.1	155.8	9.2%	221.0	206.7
Orthopedics	58.1	51.3	13.3%	178.4	145.7	22.4%	232.7	200.0
Life Science	44.9	56.7	-20.8%	182.6	174.3	4.8%	246.3	238.0
Total net sales	157.1	154.1	1.9%	531.1	475.8	11.6%	700.0	644.7

There are no sales between the business areas.

Key performance indicators	EBITDA	EBITDA	EBITDA	EBITDA	EBIT	EBIT	EBIT	EBIT
	SEK mil lion	%	SEK mil lion	%	SEK mil lion	%	SEK mil lion	%
	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep
	2019	2019	2019	2019	2019	2019	2019	2019
Dental	10.8	20.0%	32.4	19.1%	5.9	11.0%	17.7	10.4%
Orthopedics	10.3	17.8%	31.5	17.7%	4.8	8.3%	15.5	8.7%
Life Science	9.7	21.6%	36.9	20.2%	5.0	11.1%	22.9	12.5%
Unallocated Group income and
expenses	-1.5		-4.8		-1.5		-4.8
Total	29.3	18.7%	96.0	18.1%	14.2	9.0%	51.2	9.6%

OUR THREE BUSINESS AREAS

DENTAL

Elos Medtech is a qualified partner to globally leading dental companies. Our offer covers design, development, serial production and global distribution. We are specialized in dental implants. The offer also includes proprietary pro-

ducts in digital dental care and instruments, either on an OEM basis or under our own brand, Elos Accurate®.

ORTHOPEDICS

Elos Medtech is a focused partner for everything from design and prototypes to serial production and global distribution. We have opted to specialize in the following markets: spine, trauma and reconstruction. We collaborate with the world's leading orthopedic companies.

Dental Ortopedi Life

Dental Ortopedi Life

Dental Ortopedi Life

LIFE SCIENCE

Elos Medtech is a specialized global partner for injection molding of high-tech polymer and cutting techniques for primarily steel and brass. We also offer tool design and combination products made from polymer and aluminum, for example. The markets we focus on our diagnostics, hearing aids, diabetes, cardiovascular and neurosurgery.

BUSINESS AREA DENTAL

NET SALES SEK 54.1 million EBITDA SEK 10.8 million (20.0%) EBIT SEK 5.9 million (11.0%)

Important events in the business area during the quarter

• The business area saw strong growth during the period, driven mainly by contract manufacturing.
• Sales of proprietary products was weak, totaling SEK 14.2 (15.9) million. Although we have seen continued good growth in the digital products, Elos Accurate®.
• Together with a new partner, we are engaged in joint development projects.

Organic growth

+17%

• Patents for a new dental drill system have been approved and registered by the US Patent and Trademark Office and the European Patent Office. The patent covers a drill system used for implant surgery that consists of a drill, a guide sleeve that guides the drill during surgery and a drill stop.

Net sales and operating profit (SEK million)

BUSINESS AREA ORTHOPEDICS

NET SALES SEK 58.1 million EBITDA SEK 10.3 million (17.8%) EBIT SEK 4.8 million (8.3%)

Important events in the business area during the quarter

• The expansion of our Memphis site has been completed and new machines for several new customer projects are currently being validated. The official inauguration took place on 16 October.
• In robotic surgery a new project with a new product line has been initiated.
• At our site in Sweden new machinery has been commissioned and we have continued our drive to improve processes and update product flows to increase efficiency and profitability.

Organic growth

+13%

Net sales and operating profit (SEK million)

Orthopedics

BUSINESS AREA LIFE SCIENCE

NET SALES SEK 44.9 million EBITDA SEK 9.7 million (21.6%) EBIT SEK 5.0 million (11.1%)

Important events in the business area during the quarter

• The decline for the period was expected and is directly related to the strategic phasing-out of Bruel&Kjaer.
• Further production capacity in the polymer business has been installed for our existing production and for new projects.
• Planning permission has been granted for a 2,400 m² expansion of our Skara site. The expansion comprises a doubling of the existing production space, a warehouse, materials management and offices.

Organic growth

-21%

Life Science

OTHER INFORMATION

Parent company

The Parent Company is focused on key management issues and it also provide Group-wide support in IT and marketing, manufacturing, quality management, risk management, financing and financial control.

The parent company's net sales in the third quarter amounted to SEK 4.6 (6.2) million. The profit after financial items was SEK 5.2 (-1.7) million. The parent company's profit after tax was SEK 4.0 (-1.4) million. The share of own risk capital amounted to 78.7 (80.7) percent. The equity ratio was 78.4 (80.3) percent.

Significant risks and uncertainties

The Group's significant risks and uncertainties include the business risks associated with customers and suppliers and other external factors, such as the price risks for input goods. The Group also faces financial risks associated with changes in exchange rates and interest rates. A detailed description of the Group's risks and uncertainties, along with how it manages them, is provided in the Directors' Report and in Note 1 and Note 42 in the 2018 Annual Report.

Onyx Medical LLC ("Onyx"), which is a US subsidiary of Elos Medtech has become the subject of a lawsuit. The lawsuit does not specify the amount of claimed damages. Elos Medtech considers the lawsuit to be unfounded and will contest the lawsuit in its entirety.

Outlook

The company does not make forecasts.

Related party transactions

The company had no transactions with related parties during the reporting period.

Accounting policies

The consolidated financial statements for 2019 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and the Swedish Annual Accounts Act. The same applied to the company's preparation of its annual financial statements for 2018. The Parent Company's financial statements have been prepared in accordance with the Swedish Annual Accounts Act and RFR 2, Accounting for Legal Entities. This interim report has been prepared in accordance with IAS 34. The information on pages 1-19 is an integral part of this financial report.

Elos Medtech applies the guidelines issued by ESMA (European Securities and Markets Authority) on APMs (Alternative Performance Measures). These key figures are not defined or specified in IFRS but provide complementary information to investors and other stakeholders on the company's performance.

The definition of each APM is presented at the end of the interim report. For the reconciliation of each APM against the most reconcilable line item in the financial statements, see page 19.

IFRS 16 transition disclosures

The Group uses the same accounting policies, just as they have been described in the 2018 Annual Report, except for what is stated below.

IFRS 16 Leases entered into force on 1 January 2019. The Standard removes the division of leasing agreements into either operational or financial leasing for the lessee, as required by IAS 17, and instead introduces a common model for accounting for all leasing. In this model the lessee shall report (a) assets and liabilities for all leasing agreements where the leasing period exceeds 12 months, with the exception of assets of low value, and (b) depreciation of the leased assets separate from the leasing interest expense in the income statement.

Elos Medtech does not apply the standard retroactively, which means that the 2018 financial statements have not been restated. For rental agreements, the company has applied the marginal lending rate as the discount rate, taking into consideration the duration of the lease agreement. For the transition, the simplified approach has been applied, which means that the value of right-of-use asset equals the lease liability. The exception, whereby short-term leases and assets with a low value are not reported, has also been applied.

When applying IFRS16, the component of lease payments, which were previously included in operating expenses in the consolidated income statement, has been transferred to depreciation and the interest component is included in financial expenses. Initially, the standard has had an effect on how the Group reports its operating leases, increasing total assets and resulting in certain changes to KPIs. As a result of the adoption of IFRS 16, additional right-of-use assets and related additional lease liabilities of approximately SEK 20 million have been included in the opening balance as at 1 January 2019.

New accounting policies for leases from 2019 The Group as lessee

The Group's leases mainly comprise right-of-use assets relating to premises and equipment. The leases are recognized as rightof-use assets with corresponding lease liabilities on the day when the leased asset is available for use by the Group. Exceptions are made for short-term leases and leases for which the underlying asset has a low value.

Each lease payment is apportioned between the finance charge and the reduction of the outstanding lease liability. The finance charge is allocated over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

The lease term is the non-cancellable period together with any further terms for which the lessee has the option to extend the lease, when it is reasonably certain that the lessee will exercise the option, and terms for which the lessee has the option of cancelling the lease, when it is reasonably certain that the lessee will not exercise the option.

The Group's lease liabilities are recognized at the present value of the Group's fixed payments (including in-substance fixed payments). Purchase options are included in the fees when it is reasonably certain that these will be exercised to acquire the underlying asset.

Payments of penalties for terminating the lease are included if the lease term reflects the lessee exercising an option to terminate the lease. Lease payments are discounted using the interest rate implicit in the lease if this rate can be readily determined; if not, the Group's incremental borrowing rate is used.

The Group's right-of-use assets are recognized at cost and initially include the present value of the lease liability, adjusted for lease payments paid at or before the commencement date as well as initial direct costs. Restoration costs are included in the asset if a corresponding provision for restoration costs is identified. The right-of-use asset is depreciated on a straight-line basis over the shorter of the asset's useful life and the lease term.

Examination by the auditors

This report has been examined by the company's auditors.

Gothenburg, 24 October 2019 Elos Medtech AB (publ)

The Board of Directors

Auditor's report on the review of condensed interim financial information

Elos Medtech AB (publ) corp. ID no. 556021-9650

Introduction

We have reviewed the condensed interim financial information (interim report) of Elos Medtech AB (publ) as at 30 September 2019 and for the nine-month period ended on this date. Responsibility for preparing this interim report in accordance with IAS 34 and the Annual Accounts Act rests with the Board of Directors and Chief Executive Officer. Our responsibility is to express a conclusion on this interim report based on our review.

Focus and scope of the review

We have performed our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review involves posing questions, primarily to persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and significantly narrower scope than a full audit conducted in accordance with ISA and generally accepted auditing standards. The review procedures performed in a review do not enable us to obtain a degree of certainty that would make us aware of all important circumstances that would have been identified if an audit had been conducted. The conclusion based on a review therefore does not have the same certainty as a conclusion based on an audit.

Conclusion

Based on our review, we have not discovered any circumstances that would give us reason to consider that the interim financial statement has not, in all material respects, been prepared, in respect of the Group, in accordance with IAS 34 and the Annual Accounts Act and, in respect of the parent company, in accordance with the Annual Accounts Act.

Gothenburg, 24 October 2019 KPMG AB

Johan Kratz Authorized Public Accountant

CONDENSED CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

SEK million	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Oct-Sep	Jan-Dec
Income statement	2019	2018	2019	2018	2018/19	2018
Net sales	157.1	154.1	531.1	475.8	700.0	644.7
Cost of goods sold	-109.3	-110.3	-367.2	-345.4	-488.1	-466.3
Gross profit	47.8	43.8	163.9	130.4	211.9	178.4
Selling expenses	-9.2	-9.5	-30.1	-30.2	-40.1	-40.2
Administrative expenses	-21.9	-19.4	-72.0	-61.3	-91.3	-80.6
Development costs	-3.2	-3.8	-12.9	-11.2	-21.0	-19.3
Other operating income/expenses	0.7	0.7	2.3	0.2	2.7	0.6
Operating profit	14.2	11.8	51.2	27.9	62.2	38.9
Financial income	-	0.1	-	0.1	-	0.1
Financial expenses	-2.8	-3.3	-9.1	-7.8	-12.3	-11.0
Exchange differences	-	-0.9	-1.5	2.3	-3.3	0.5
Profit after financial items	11.4	7.7	40.6	22.5	46.6	28.5
Taxes	-2.4	-1.3	-9.7	-5.6	-11.7	-7.6
Profit after tax	9.0	6.4	30.9	16.9	34.9	20.9
Profit attributable to: Parent company shareholders	9.0	6.4	30.9	16.9	34.9	20.9
Statement of comprehensive income
Profit after tax	9.0	6.4	30.9	16.9	34.9	20.9
Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gains and losses	-9.2	-2.8	-9.2	-2.8	-11.5	-5.1
Tax	2.0	0.6	2.0	0.6	2.5	1.1
	-7.2	-2.2	-7.2	-2.2	-9.0	-4.0
Items that may be reclassified to profit or loss
Translation differences for the period	16.4	-7.1	29.7	20.3	32.3	22.9
Tax	-1.5	0.3	-2.3	-1.5	-2.6	-1.8
	14.9	-6.8	27.4	18.8	29.7	21.1
Other comprehensive income, net	7.7	-9.0	20.2	16.6	20.7	17.1
Comprehensive income	16.7	-2.6	51.1	33.5	55.6	38.0
Comprehensive income attributable to:
Parent company shareholders	16.7	-2.6	51.1	33.5	55.6	38.0
EBITDA, %	18.7%	16.3%	18.1%	14.0%	17.8%	14.8%
EBIT, %	9.0%	7.7%	9.6%	5.9%	8.9%	6.0%
Depreciation/amortization charged to earnings	15.1	13.3	44.8	38.7	62.5	56.4
Earnings per share before and after dilution, SEK *	1.12	0.79	3.83	2.09	4.33	2.76
Average number of shares (thousands)	8,068	8,068	8,068	7,440	8,068	7,598
Number of shares (thousands) at the end of the period	8,068	8,068	8,068	8,068	8,068	8,068

* Attributable to parent company shareholders' share of profit after tax.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION, IN SUMMARY

SEK million
Balance sheet	30 Sep 2019	30 Sep 2018	31 Dec 2018
Assets
Intangible assets	296.6	281.2	278.5
Property, plant and equipment	459.4	368.4	374.0
Financial fixed assets	2.6	8.5	2.4
Other current assets	263.3	260.7	253.4
Cash and bank balances	57.7	41.9	49.0
Total assets	1,079.6	960.7	957.3
Equity and liabilities
Equity	551.6	503.8	508.5
Non-current liabilities	358.0	281.0	294.0
Current liabilities	170.0	175.9	154.8
Total equity and liabilities	1,079.6	960.7	957.3

SUMMARY STATEMENT OF CHANGES IN EQUITY

SEK million	30 Sep 2019	30 Sep 2018	31 Dec 2018
Opening balance	508.5	369.0	369.0
New issue	-	101.5	101.7
Redemption of warrants	-0.2	-0.2	-0.2
Effect of changed tax rate	0.3	-	-
Dividend	-8.1	-	-
Total comprehensive income	51.1	33.5	38.0
Closing equity	551.6	503.8	508.5

KEY PERFORMANCE INDICATORS GROUP

		Jan-Sep 2019	Jan-Sep 2018	Jan-Dec 2018
Return on operating capital	%	6.0	4.9	5.1
Return on equity	%	7.8	5.2	4.8
Share of own risk capital	%	53.5	55.5	56.0
Solvency	%	51.1	52.4	53.1
Net debt	SEK million	344.5	287.5	287.4
Investments excl. acquisitions and lease assets	SEK million	89.1	58.3	79.9
Average number of employees		575	562	572
Equity per share	SEK	68.37	62.44	63:02
Dividend	SEK	0:00	0.00	1:00

KEY PERFORMANCE INDICATORS BY SEGMENT

		Growth				Growth
SEK million Net sales by segment	Jul-Sep 2019	Jul-Sep 2018	Jul-Sep 2019	Jan-Sep 2019	Jan-Sep 2018	Jan-Sep 2019	Oct-Sep 2018/19	Jan-Dec 2018
Dental	54.1	46.1	17.4%	170.1	155.8	9.2%	221.0	206.7
Orthopedics	58.1	51.3	13.3%	178.4	145.7	22.4%	232.7	200.0
Life Science	44.9	56.7	-20.8%	182.6	174.3	4.8%	246.3	238.0
Total net sales	157.1	154.1	1.9%	531.1	475.8	11.6%	700.0	644.7

There are no sales between the business areas

SEK million Key performance indicators	Jul-Sep 2019	EBITDA EBITDA, % Jul-Sep 2019	Jan-Sep 2019	EBITDA EBITDA, % Jan-Sep 2019	EBIT Jul-Sep 2019	EBIT, % Jul-Sep 2019	EBIT Jan-Sep 2019	EBIT, % Jan-Sep 2019
Dental	10.8	20.0%	32.4	19.1%	5.9	11.0%	17.7	10.4%
Orthopedics	10.3	17.8%	31.5	17.7%	4.8	8.3%	15.5	8.7%
Life Science	9.7	21.6%	36.9	20.2%	5.0	11.1%	22.9	12.5%
Unallocated Group income and
expenses	-1.5		-4.8		-1.5		-4.8
Total	29.3	18.7%	96.0	18.1%	14.2	9.0%	51.2	9.6%

QUARTERLY RESULTS FOR THE GROUP

SEK million	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Quarterly results	2019	2019	2019	2018	2018	2018	2018
Net sales	157.1	184.1	189.9	168.9	154.1	166.0	155.7
Cost of goods sold	-109.3	-128.0	-129.9	-120.9	-110.3	-123.3	-111.8
Gross profit	47.8	56.1	60.0	48.0	43.8	42.7	43.9
Sales, admin and develop
ment costs	-34.3	-41.1	-39.6	-37.4	-32.7	-36.8	-33.2
Other operating items	0.7	0.6	1.0	0.4	0.7	-0.7	0.2
Operating profit	14.2	15.6	21.4	11.0	11.8	5.2	10.9
Net financial items	-2.8	-3.1	-3.2	-3.2	-3.2	-2.4	-2.1
Exchange differences	-	-3.9	2.4	-1.8	-0.9	2.4	0.8
Profit after
financial items	11.4	8.6	20.6	6.0	7.7	5.2	9.6
Taxes	-2.4	-2.0	-5.3	-2.0	-1.3	-1.8	-2.5
Profit after tax	9.0	6.6	15.3	4.0	6.4	3.4	7.1

CONSOLIDATED STATEMENT OF CASH FLOWS, IN SUMMARY

SEK million	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Oct-Sep	Jan-Dec
Cash flow	2019	2018	2019	2018	2018/19	2018
Profit after net financial items	11.4	7.7	40.6	22.5	46.6	28.5
Reversal of depreciation and impairments	15.1	13.3	44.8	38.7	62.5	56.4
Non-cash items	-1.5	1.9	1.7	-0.8	5.4	2.9
Tax paid	-0.7	2.1	-5.4	-1.0	-16.2	-11.8
Change in working capital	6.3	-6.6	6.0	-12.7	8.8	-9.9
Cash flow from operating activities	30.6	18.4	87.7	46.7	107.1	66.1
Investments in fixed assets	-30.2	-26.0	-89.1	-58.3	-110.7	-79.9
Sale of fixed assets	1.4	-	1.4	-	1.4	-
Operating cash flow	1.8	-7.6	0.0	-11.6	-2.2	-13.8
New share issue/redemption of warrants	-0.1	-0.1	-0.3	101.3	-0.2	101.4
Change in bank overdraft facility	-0.1	4.9	-9.7	-41.9	-8.2	-40.4
Loans raised	40.7	31.9	88.4	45.1	97.6	54.3
Repayment of loans	-37.4	-33.6	-63.1	-60.4	-64.9	-62.2
Dividend	-	-	-8.1	-	-8.1	-
Cash flow for the period	4.9	-4.5	7.2	32.5	14.0	39.3
Cash flow for the period, in total	4.9	-4.5	7.2	32.5	14.0	39.3
Cash and cash equivalents at the beginning of the period	51.8	47.0	49.0	9.6	41.9	9.6
Exchange difference in cash and cash equiva lents	1.0	-0.6	1.5	-0.2	1.8	0.1
Cash and cash equivalents at the end of the period	57.7	41.9	57.7	41.9	57.7	49.0

CONDENSED PARENT COMPANY INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME

SEK million	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Oct-Sep	Jan-Dec
Income statement	2019	2018	2019	2018	2018/19	2018
Net sales	4.6	6.2	13.7	18.4	19.9	24.6
Cost of goods sold	-0.2	-	-0.5	-	-0.5	-
Gross profit	4.4	6.2	13.2	18.4	19.4	24.6
Selling expenses	-1.9	-2.6	-5.6	-8.1	-8.6	-11.1
Administrative expenses	-6.8	-6.2	-22.9	-20.3	-28.9	-26.3
Other operating income/expenses	0.1	0.1	0.1	0.1	0.1	0.1
Operating profit	-4.2	-2.5	-15.2	-9.9	-18.0	-12.7
Financial income	2.5	3.2	7.4	8.5	10.6	11.7
Financial expenses	-0.8	-1.2	-3.0	-2.8	-4.3	-4.1
Exchange differences	7.7	-1.2	11.9	8.1	13.4	9.6
Profit after financial items	5.2	-1.7	1.1	3.9	1.7	4.5
Appropriations	-	-	-	-	0.4	0.4
Taxes	-1.2	0.3	-0.4	-1.0	-0.8	-1.4
Profit after tax	4.0	-1.4	0.7	2.9	1.3	3.5

* Profit after tax is the same as comprehensive income for the year.

CONDENSED PARENT COMPANY BALANCE SHEET

SEK m
Balance sheet	30 Sep 2019	30 Sep 2018	31 Dec 2018
Assets
Intangible assets	2.8	4.2	3.8
Property, plant and equipment	0.5	0.7	0.7
Financial fixed assets	415.5	416.2	417.3
Other current assets	33.2	22.5	13.5
Cash and bank balances	23.0	28.7	34.3
Total assets	475.0	472.3	469.6
Equity and liabilities
Equity	366.7	373.5	374.3
Untaxed reserves	7.2	7.5	7.2
Provisions	6.1	5.3	5.5
Non-current liabilities	46.2	42.5	51.4
Current liabilities	48.8	43.5	31.2
Total equity and liabilities	475.0	472.3	469.6

RECONCILIATION BASIS FOR ALTERNATIVE PERFORMANCE MEASURES

SEK million	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Oct-Sep	Jan-Dec
Organic growth	2019	2018	2019	2018	2018/19	2018
Reported net sales	157.1	154.1	531.1	475.8	700.0	644.7
Net sales compared to the same period last year	154.1	132.5	475.8	429.0	624.7	577.9
Change in net sales	3.0	21.6	55.3	46.8	75.3	66.8
Growth,%	1.9	16.3	11.6	10.9	12.1	11.6
Net sales from acquired operations	-	-	-	-	-	-
Adjusted net sales from acquisition effects	157.1	154.1	531.1	475.8	700.0	644.7
Organic growth,%	1.9	16.3	11.6	10.9	12.1	11.6
Net sales adjusted for currency fluctuations
Currency fluctuations	5.1	9.1	20.2	12.1	27.1	19.0
Currency-adjusted net sales of the same period last
year	159.2	141.6	496.0	441.1	651.8	596.9
Change,%	-1.3	8.9	7.1	7.9	7.4	8.0

	Jul-Sep	Jul-Sep	Jan-Sep	Jan-Sep	Oct-Sep	Jan-Dec
EBITDA	2019	2018	2019	2018	2018/19	2018
Reported operating profit	14.2	11.8	51.2	27.9	62.2	38.9
Depreciation/amortization and impairment	15.1	13.3	44.8	38.7	62.5	56.4
EBITDA	29.3	25.1	96.0	66.6	124.7	95.3

The Board of Directors and management have decided to remove comparative figures for non-recurring items in the Reconciliation Basis for Alternative Performance Measures report.

Own risk capital	30 Sep 2019	30 Sep 2018	31 Dec 2018
Equity	551.6	503.8	508.5
Deferred tax liability	26.3	29.6	27.3
Own risk capital	577.9	533.4	535.8
Net debt Non-current interest-bearing provisions for pensions	30 Sep 2019 56.2	30 Sep 2018 41.6	31 Dec 2018 44.7
Non-current interest-bearing liabilities	275.5	209.9	222.1
Current interest-bearing liabilities	70.5	77.9	69.6
Total liabilities	402.2	329.4	336.4
Cash and cash equivalents	-57.7	-41.9	-49.0
Net debt	344.5	287.5	287.4
Cash and cash equivalents including unutilized bank overdraft facility and framework agree
ments	30 Sep 2019	30 Sep 2018	31 Dec 2018
Cash and cash equivalents	57.7	41.9	49.0
Utilized bank overdraft facility	-	-7.9	-9.4
Bank overdraft facilities granted and framework
agreements	68.7	80.9	67.5
Cash and cash equivalents including unutilized bank overdraft facility and

framework agreements 126.4 114.9 107.1

Definitions of Alternative Performance Measures

Alternative Performance Measures are financial measures of the company's earnings trend, financial position and cash flow that are not defined in IFRS. These performance measures are intended to serve as important supplementary performance measures of the Group's earnings and position and the purpose is to provide a better understanding of the business. Alternative Performance Measures that are presented in the interim reports should not be regarded as a replacement to terms and concepts in accordance with IFRS. They are instead intended as a supplement. These performance measures do not need to be comparable with similar performance measures used by other companies. The reconciliation basis for calculating some of these performance measures is provided on page 18 of this report.

Sales adjusted for currency fluctuations

Change in net sales adjusted for changes in exchange rates attributable to translation of subsidiaries compared with the same period last year.

Organic growth

Change in net sales adjusted for sales from acquired and divested operations compared to the same period last year.

EBITDA

Operating profit before depreciation/amortization and impairment.

EBITDA, %

Operating profit before depreciation/amortization and impairment as a percentage of the net sales from operations.

Own risk capital

The total of the reported amount of equity, any minority interests and deferred tax liability.

Net debt

Interest-bearing financial liabilities and provisions for pensions less cash and cash equivalents.

Cash and cash equivalents including unutilized bank overdraft facility

Cash and bank balances plus the amount of granted overdraft facility less the amount of utilized bank overdraft facility.

Nomination Committee

In accordance with decision at Elos Medtech´s AGM on April 23, 2019, the three largest shareholders in terms of the number of votes and the two major equity shareholders at the month end of August 2019 appointed the following persons to be included in Elos Medtech´s Nomination Committee ahead of the AGM 2020: Thomas Öster, appointed by the family Öster, Ulf Runmarker, appointed by the family Runmarker, Bo Nilsson, appointed by the family Nilsson, Bengt Belfrage, appointed by Nordea Fonder and Ulf Hedlundh, appointed by Svolder AB. Chairman of the Nomination Committee is Bengt Belfrage, appointed by the Nomination Committee. The chairman of the board Yvonne Mårtensson is adjunct to the Nomination Committee.

Shareholders who would like to submit proposals to the Elos Medtech Nomination Committee can send an email to valberedning@elosmedtech.com with the headline "To the Nomination Committee" or by mail to Elos Medtech AB, Torsgatan 5B, 411 04 Göteborg, marked "To Nomination Committee", at the latest 13 January 2020.

Financial information

The Year-End Report 2019 will be published on 18 February 2020. The Annual Report 2019 will be published in April 2020. Interim Report Jan - March 2020 will be published on 5 May 2020. Interim Report Jan - June 2020 will be published on 12 August 2020.

Interim Report Jan - Sep 2020 will be published on 20 October 2020.

The Year-End Report 2020 will be published on 24 February 2021.

The Annual General Meeting for 2020 will be held on 21 April 2020.

For more information, please contact:

Jan Wahlström, President and CEO, +46 (0)70-212 18 89 jan.wahlstrom@elosmedtech.com

Ewa Linsäter, Group CFO, +46 (0)76-33 32 33 ewa.linsater@elosmedtech.com

Publication

This information in this report is information that Elos Medtech AB (publ) is required to publish under the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted (by the contact person specified above) for publication on 24 October 2019 at 14:00 (CET).

Elos Medtech AB (publ) is a Swedish limited liability company, whose B shares are listed on Small Cap, NASDAQ Stockholm AB. Elos Medtech's corporate governance is based on Swedish legislation and the listing agreement with NASDAQ Stockholm AB.

Elos Medtech AB (publ)

Torsgatan 5B SE-411 04 Gothenburg Reg. No: 556021-9650 info@elosmedtech.com www.elosmedtech.com

FIND US HERE

Elos Medtech AB

Torsgatan 5B SE-411 04 Gothenburg SWEDEN info@elosmedtech.com Ph. +46 10 171 20 00 Reg. No: 556021-9650

Elos Medtech Microplast AB

Hästhagsgatan 2 SE-532 37 Skara SWEDEN info.microplast@elosmedtech.com Ph. +46 511 257 00 Reg. no: 556344-0790

Elos Medtech Timmersdala AB

Bäckedalsvägen 5 SE-540 16 Timmersdala SWEDEN info.timmersdala@elosmedtech.com Ph. +46 511 44 06 00 Reg. no: 556055-1201

Elos Medtech Pinol A/S

Engvej 33 DK-3330 Gorlose DENMARK info.pinol@elosmedtech.com Ph. +45 48 21 64 00 Reg. No: 13746184

Elos Medtech Tianjin Co. Ltd.

D5-3, Rong Cheng San Zhi Lu Xeda International Industrial City Xiqing Economic Development Area 300385 Tianjin CHINA info.tianjin@elosmedtech.com Ph. +86 22 23 82 86 60 Reg. No: 91120 111 697 431 125P

Elos Medtech Onyx LLC

1800 North Shelby Oaks Drive Memphis, TN 38134 USA info.onyx@elosmedtech.com Phone: +1 901 323 6699 Fax. +1 901 454 0295 FDA Reg. No.: 1043653