Medistim — Interim / Quarterly Report 2014

Apr 25, 2014

Medistim ASA First Quarter 2014

Kari E. Krogstad, President and CEO Thomas Jakobsen, CFO April 25th, 2014

Disclaimer

The information included in this Presentation contains certain forward-looking statements that address activities, events or developments that Medistim ASA ("the Company") expects, projects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, which are beyond its control and are subject to certain additional risks and uncertainties. The Company is subject to a large number of risk factors including but not limited to economic and market conditions in the geographic areas and markets where Medistim is or will be operating, IP risks, clinical development risks, regulatory risks, fluctuations in currency exchange rates, and changes in governmental regulations. For a further description of other relevant risk factors we refer to Medistim's Annual Report for 2013. As a result of these and other risk factors, actual events and our actual results may differ materially from those indicated in or implied by such forward-looking statements. The reservation is also made that inaccuracies or mistakes may occur in this information given above about current status of the Company or its business. Any reliance on the information above is at the risk of the reader, and Medistim disclaims any an all liability in this respect.

Table of contents

• 1. Highlights First Quarter
• 1. Financial Statements
• 1. Business Segments Update
• 1. Implementing the Strategy

1. Highlights first quarter

Highlights first quarter 2014

• Revenue up 7.4 %	Q1 2014	Q o Q
Strong development in the imaging o business, 67 % growth in VeriQ C capital sales Strong growth in sales of own products in o	Revenue MNOK 48.9 (45.5)	7.4%
Europe, up 31.9 % Lack of capital sales explains revenue and o procedure decline in the USA	EBIT MNOK 7.2 (7.3)	0.0 %
• Operating profit (EBIT) at the same level as the previous year	Currency	6.6 %
• Development project for new system platform continues according to plan	No of products sold
	Systems 31	19.2 %
• The general meeting decided a dividend of NOK 0.8 per share (NOK 1.10)	Flow probes 1 548	4.0 %
	Procedures (USA) 7 376	-5.5 %

2. Financial statements

Profit and loss Q1 2014

Profit & loss	Q1 2014	Q1 2013
All numbers in NOK 1000
Sales	48 857	45 507
Cost of goods sold	12 982	12 191
Salary and sosial expenses	16 775	15 144
Other operating expenses	9 843	9 071
Total operating expenses	39 601	36 406
Op. res. before depr. and write-offs (EBITDA)	9 257	9 100
EBITDA%	18 9 % ,	20 0 % ,
Depreciation	2 038	1 814
Operating result (EBIT)	7 219	7 286
EBIT%	14 8 % ,	16 0 % ,
Financial income	1 112	312
Financial expenses	1 091	(200)
Net finance	21	512
Pre tax profit	7 240	7 798
Tax	2 037	2 045
Result	5 203	5 753

Sales per Quarter (TNOK)

EBIT per Quarter (TNOK)

10 11 11 11 11 12 12 12 12 13 13 13 13 14 8

Balance sheet - Assets

Balance sheet	31.03.2014	31.12.2013
All numbers in NOK 1000
Assets
Intangible assets	50 718	49 399
Fixed assets	13 542	14 061
Total intangible and fixed assets	64 260	63 460
Inventory	38 813	37 930
Customers receivables	36 354	38 781
Other receivables	8 897	8 374
Cash	20 622	19 846
Total current assets	104 687	104 930
Total assets	168 947	168 390

• Investments in new system platform increase intangible assets
• Sales confirmed late in the quarter gives a temporary increase in customer receivables

Balance sheet - Equity and liability

Balance sheet	31.03.2014	31.12.2013
All numbers in NOK 1000
Share capital	4 585	4 585
Premium fund	41 852	41 852
Other equity	80 274	75 198
Total equity	126 711	121 635
Total long term debt	6 745	7 753
Total short term debt	35 490	39 002
Total equity and liability	168 947	168 390

• 7.5 MNOK in interest bearing debt
• Dividend for 2013 of NOK 0.80 per share, total MNOK 14.5, expected to be paid medio May 2014

3. Business segments update

Flow probes and VeriQ sales in units

• Flow probe sales volume was strong in all regions in 2013
• Growth continues at 4% in Q1 2014

Flow probes in units VeriQ systems in units

• Same number of VeriQ sold in first quarter 2014 as in 2013
• Only 1 VeriQ capital sale in Q1 2014 in the USA versus 2 last year contributes to the decline in US Q1 sales revenues

Imaging probes and VeriQ C sales in units

• Slower probe sales after a strong Q4

Imaging probes in units VeriQ C systems in units

• Strong quarter over quarter growth in imaging systems, following a strong fourth quarter 2013
• No VeriQ C capital sales in Q1 2014 in the USA versus 2 last year contributes to the decline in US Q1 sales revenues

Q1 revenue performance by region

Mill NOK	Q1 '14	Q1 '13	Q/Q	2013
Europe	31,9	26,7	19,5 %	114,6
USA	10,7	12,8	-16,4 %	45,9
Asia & Jp	4,4	3,6	22,2 %	19,2
ROW (MEA, CAN, SA)	1,9	2,4	-20,8 %	11,3
Total	48,9	45,5	4,9 %	191,0

• In Europe, there was positive development in sales of own products for both systems and probes, increasing by 32 %. 3rd party sales increased by 9.6 %.

• In the US, the lack of capital system sales is the main explanation for the drop in total US Q1 revenues of 16.4 %.
• Both Asia/Japan and ROW are so far smaller sales territories for Medistim, and quarterly performance varies significantly. In Q1, Japan drove the growth in Asia with 4 VeriQ C.

Positive currency effects for the quarter with 3.2 MNOK.

Q1 revenue performance by product

Mill NOK	Q1 '14	Q1 '13	Q/Q	2013
Procedures (USA)	10,4	10,6	-1,9 %	42,9
Flow probes	14,4	12,6	14,3 %	51,1
Flow systems (VeriQ)	4,2	4,1	2,4 %	17,1
Imaging systems (VeriQ C)	3,1	3,2	-3,1 %	13,9
Imaging probes	0,5	0,3	66,7 %	2,7
3rd party	16,1	14,7	9,5 %	62,6
Other	0,2	0,0	#DIV/0!	0,7
Total revenues	48,9	45,5	7,5 %	191,0

• Procedure sale in the USA: The total number of procedures is down by 5.5% for the quarter, driven by lower number of card-based procedures sold. Capital-based procedures increased by 15.8 %. Imaging procedures growth was up 38 %.
• Flow probes revenue: The positive trend from last year continues.
• VeriQ flow systems: Strong system sales development continues with 19% growth outside the USA, however, the lack of US capital sales this quarter explains the moderate overall growth.
• VeriQ C imaging systems and probes: 67% growth outside the US, no contribution from US capital sales this quarter.
• 3rd party products: 9.5 % increase for the quarter, recovering from loss of major agency in 2013.

4. Implementing the strategy

USA Game plan USA

PERFORMANCE 2013

• Sales revenues down by 5.4% for the year and total number of procedures was down by 2.2%
• Lower number of capital sales (systems and probes) was the direct cause of the lower revenues: 5 units sold in 2013 vs 12 in 2012
• Card-based procedures up 2.3% and capital-based procedures was down by 19.8%

GAME PLAN 2014

• Transitioning into new leadership
• Organization structure optimization
• Alignment around key priorities:
• o Effective targeting of vascular market
• o Increase utilization at current cardiac accounts
• o Customer driven choice of business & pricing models
• o Win new large and strategic (KOL) hospitals
• Triggers:
• o Optimized incentive plans
• o Measuring sales productivity
• o Identifying and sharing best practices

USA Implementation update

PERFORMANCE Q1

• Revenues down by 16.5%
• Number of procedures down by 5.5%
• o Card-based procedures down by 7.9%
• o Capital-based procedures up by 15.8%

STATUS GAME PLAN IMPEMENTATION

• Regaining confidence in winning
• o 11 new accounts, including Barnes Jewish Hospital, St.Louis, Missouri
• o 3 VeriQ (TTFM) accounts converted to VeriQ C (combined TTFM and imaging) accounts, and 38 % growth in imaging procedures
• o Positive experience from vascular evaluations
• o Deals closed due to more flexible, customer driven choice of business & pricing models
• o Strong pipeline in development
• Efficiency initiatives
• o More careful qualification of accounts prior to entering clinical evaluation to increase success rate
• o Measuring and increasing sales productivity
• Strategic initiatives
• o Partnering with teaching institutions