Medistim — Interim / Quarterly Report 2018

Feb 27, 2019

Medistim ASA Fourth quarter 2018

Kari E. Krogstad, President and CEO Thomas Jakobsen, CFO February 27th, 2019

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 2017. 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 fourth quarter
• 1. Financial statements
• 1. Business segments update
• 1. Implementing the strategy

1. Highlights 4th quarter

Highlights 4th quarter 2018

• Sales for the fourth quarter 2018 is the best ever for Medistim with a 19.1 % growth over Q4 2017, which was the previous all time high quarter
• o Currency neutral sales of own products up 25.5 %
• o 3rd party products down -6.9 %
• o Growth for the quarter was driven by high performance from USA and Asia
• EBIT up MNOK 11.4 to MNOK 27.8, a 69.6 % increase and the strongest operating profit for a quarter in Medistim's history
• Final results from the REQUEST study presented at EACTS in October
• The board suggests a dividend of NOK 2.25 per share

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27.02.2019	Medistim ASA Q4 2018

2. Financial statements

Profit and loss Q4 2018

Profit & loss	Q4 2018	Q4 2017
All numbers in NOK 1000			110 000
Sales	97 923	82 230	100 000 90 000
Cost of goods sold	20 999	20 576	80 000
Salary and sosial expenses	30 791	26 720	70 000 60 000
Other operating expenses	15 258	15 072	50 000
Total operating expenses	67 049	62 367	40 000
Op. res. before depr. and write-offs (EBITDA)	30 874	19 862	30 000
EBITDA %	31,5 %	24,2 %		Q2 15	Q4 15	Q2 16	Q4 16	Q2 17	Q4 17	Q2 18	Q4 18
Depreciation	3 120	3 495
Write offs	-	-
Operating result (EBIT)	27 754	16 368							EBIT per Quarter (TNOK)
EBIT %	28,3 %	19,9 %
Financial income	3 797	8 911	30 000								30,00%
Financial expenses	1 210	6 935	25 000								25,00%
Net finance	2 587	1 976	20 000								20,00%
Pre tax profit	30 341	18 343	15 000 10 000								15,00% 10,00%
Tax	6 449	5 867	5 000								5,00%
Result	23 892	12 476	-								0,00%

Sales per Quarter (TNOK)

9

Profit and loss 2018

Profit & loss	2018	2017
All numbers in NOK 1000
Sales	325 890	301 461
Cost of goods sold	79 381	72 782
Salary and sosial expenses	105 314	98 281
Other operating expenses	54 857	51 705
Total operating expenses	239 553	222 768
Op. res. before depr. and write-offs (EBITDA)	86 337	78 693
EBITDA %	26,5 %	26,1 %
Depreciation	12 361	13 223
Write offs	-	-
Operating result (EBIT)	73 977	65 470
EBIT %	22,7 %	21,7 %
Financial income	7 977	8 838
Financial expenses	7 475	7 696
Net finance	502	1 142
Pre tax profit	74 479	66 612
Tax	17 423	19 038
Result	57 055	47 574

Sales per Quarter (TNOK)

EBIT per Quarter (TNOK)

10 27.02.2019 Medistim ASA Q4 2018

Balance sheet - Assets

Balance sheet	31.12.2018	31.12.2017
All numbers in NOK 1000
Assets
Intangible assets	41 944	45 090
Fixed assets	37 198	25 744
Total intangible and fixed assets	79 142	70 834
Inventory	63 843	62 722
Customers receivables	70 807	57 307
Other receivables	8 309	5 825
Cash	47 490	54 411
Total current assets	190 449	180 265
Total assets	269 591	251 099

• Working capital continues to be high, related to increased customers receivables related to strong sales

• The board suggests a dividend of NOK 2,25 per share

Balance sheet - Equity and liability

Balance sheet	31.12.2018	31.12.2017
All numbers in NOK 1000
Share capital	4 585	4 585
Premium fund	44 172	44 172
Other equity	157 955	134 226
Total equity	206 712	182 983
Total long term debt	7 500	10 500
Total short term debt	55 380	57 616
Total equity and liability	269 592	251 099

• 10.5 MNOK in interest bearing debt
• Strong balance sheet with 76.7 % equity ratio

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27.02.2019	Medistim ASA Q4 2018

3. Business segments update

Flow probes and systems in units

Flow probes in units (excl USA) Flow systems in units (VeriQ & MiraQ capital sales)

• 17.2% increase in flow probe sales quarter over quarter driven by strong sale of the combined flow-and-imaging system

• 34 % decrease compared to Q4 17 which was the best system sales quarter ever for Medistim
• Compared to other quarters sales level is continuing at good rate

Imaging probes and systems in units

Imaging probes in units (incl USA)

• 34 % increase of imaging probes
• Record sales of imaging probes for a quarter

Imaging systems in units (VeriQC & MiraQ capital sales)

• 105% increase in sales of imaging systems
• Record sales of imaging systems for a quarter
• Contributes to drive increased sale of consumable flow probes

Q4 and YTD revenue performance by region

Mill NOK	Q4 '18	Q4 '17	Q / Q	2018	2017	Y/Y
Europe	38,8	40,0	-3,2 %	154,8	150,3	3,0 %
USA	38,8	27,5	41,0 %	113,1	104,6	8,2 %
Asia & Jp	13,8	5,7	143,7 %	38,7	27,0	43,4 %
ROW (MEA, CAN, SA, AUS)	6,5	9,0	-27,5 %	19,3	19,6	-1,7 %
Total	97,9	82,2	19,1 %	325,9	301,5	8,1 %

• In Europe, sales decreased with 3.2 % in Q4. Sale of own products was at the same level as last year while 3. party products decreased with 6.9 %. For the year own products increased with 6.5 % while third party decreased with 0.8 %.
• In the USA, sales in NOK increased with 41 %, and currency neutral sales was up 43 %. For 2018 the growth was 8,2 % in NOK and currency neutral growth was 10 %.
• Both Asia/Japan and ROW are so far smaller sales territories with significant quarter to quarter variation. Q4 2018 was a very strong quarter for China in particular. The growth for the year is driven by sales to China as well.

Positive currency effects for the full year 2018 vs 2017 was 1.9 MNOK .

Average actual exchange rate for USD 8.13 and EUR 9.60 versus last year USD 8.27 and EUR 9.33.

Q4 and YTD revenue performance by product

Mill NOK	Q4 '18	Q4 '17	Q/Q	2018	2017	Y/Y
Procedures (USA)	27,5	21,6	27,3 %	89,5	86,0	4,0 %
Flow probes	25,0	22,9	8,9 %	85,7	78,9	8,7 %
Flow systems (VeriQ & MiraQ)	7,8	9,4	-17,7 %	32,5	23,3	39,3 %
Imaging systems (VeriQ C & MiraQ)	19,2	8,7	121,0 %	39,9	32,0	24,9 %
Imaging probes	1,9	1,5	32,4 %	4,3	4,2	3,0 %
3rd party	16,6	17,8	-6,9 %	71,1	71,7	-0,8 %
Other	0,0	0,3	-113,8 %	2,9	5,4	-46,7 %
Total revenues	97,9	82,2	19,1 %	325,9	301,5	8,1 %

• Procedure sale in the USA: The total number of procedures increased with 19.7 % in Q4 and increased with 7.7 % in 2018. The variation in NOK compared to volume growth is due to currency.
• Flow probes: 17.2 % increase in units but only 8.9 % increase in NOK for the quarter, due to higher sales through the distributor sales channel. For the full year 2018 number of units increased with 5.2 %, while sales in NOK increases with 8.7 % due to favorable currency.
• Flow systems: 34.2 % decrease in units and 17.7 % decrease in NOK for the quarter. In 2018 growth in units was 9.5 % in units and 39% in NOK. The higher growth in NOK is driven by higher level of direct sales, system product configuration and currency.
• Imaging systems and probes: Imaging systems increase with 106 % in units and 121 % in NOK. In 2018 number of units is up 35.7 % and NOK revenue up 24.9 % due to less sales in direct markets and more units sold through distributors. Probe revenue at the same level for the year.
• 3 rd party products: Weak quarter with a 6.9 % decline. Sale at the same level as last year for the year.

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27.02.2019	Medistim ASA Q4 2018

4. Implementing the strategy

Growth opportunities – in developing Medistim markets

Emerging, high-growth economies (e.g. brIC)	4
Developing Medistim markets (e.g. USA, UK, Fra)	2
Strong Medistim markets (e.g. Jp, Nordic, Germany) >50% CABG share	1		3
GEOGRAPHIES APPLICATION AREAS	CABG surgery (2 BNOK)	Vascular surgery (>1 BNOK)		Other open (1 BNOK)	heart surgery

• 1. Convert the routine Flow market to a Flow-and-Imaging market by establishing Surgical Guidance and Quality Assessment as the new standard of care through
• o Early adopter & KOL support
• o REQUEST study
• o Ease conversion from flow to imaging with MiraQ
• 2. Achieve routine use of both Flow and Imaging by fighting ignorance, indifference and ease-of-use objections through
• o Clinical marketing, Guidelines and Educational programs
• o Product innovation for ease of use
• o Increased sales force capacaity
• 3. Build and strengthen position in vascular surgery
• o Dedicated system (MiraQ Vascular) & probes
• o Build position with societies and KOLs
• 4. Offer an entry-level solution to reach emerging, pricesensitive, high-growth markets

Performance US sales organization

Number of procedures per year

RESULTS 2018

• o Revenues up 8.2 % in NOK, to MNOK 113.1, due to unfavorable currency
• Total number of procedures up by 7.7 %
• o 7.7 % growth in flow procedures
• o 7.8 % growth in imaging procedures
• Continued growth in new customers
• o 14 completely new accounts in Q4, 35 YTD

Growth opportunities – in developed Medistim markets

Emerging, high-growth economies (e.g. brIC)	4
Developing Medistim markets (e.g. USA, UK, Fra)	2
Strong Medistim markets (e.g. Jp, Nordic, Germany) >50% CABG share	1		3
GEOGRAPHIES APPLICATION AREAS	CABG surgery (2 BNOK)	Vascular surgery (>1 BNOK)		Other open (1 BNOK)	heart surgery

• 1. Convert the routine Flow market to a Flow-and-Imaging market by establishing Surgical Guidance and Quality Assessment as the new standard of care through
• o Early adopter & KOL support
• o REQUEST study
• o Ease conversion from flow to imaging with MiraQ
• 2. Achieve routine use of both Flow and Imaging by fighting ignorance, indifference and ease-of-use objections through
• o Clinical marketing, Guidelines & Educational programs
• o Product innovation for ease of use
• o Increased sales force capacity
• 3. Build and strengthen position in vascular surgery
• o Dedicated system (MiraQ Vascular) & probes
• o Build position with societies and KOLs
• 4. Offer an entry-level solution to reach emerging, pricesensitive, high-growth markets

REQUEST

Clinical Study 2018 EACTS

____________

Prof. DP Taggart Oxford University

Prof. G Di Giammarco University of Chieti

…..

…..

Dr. J Puskas Mount Sinai St Luke's

Dr. D Wendt University of Essen

…..

…..

Dr. G Trachiotis George Washington University

Dr. T Kieser University of Calgary

…..

….. Prof. AP Kappetein Erasmus MC Rotterdam

Final results from the REQUEST study

In the hands of experienced cardiac surgeons (40% OPCABG and 55% of patients with 2 or more arterial grafts), and state-of-the-art surgical procedure, HFUS & TTFM for surgical guidance and graft assessment was associated with a 25% change to planned surgical strategy 3% graft revision rate and low-level in-hospital MACCE rates (especially mortality and stroke)

20 largest shareholders (per February 25th 2019)

Shareholder	Number of shares	Shares in %
INTERTRADE SHIPPING AS	4 003 500	21,83 %
SALVESEN & THAMS INVEST AS	1 862 500	10,16 %
SWEDBANK ROBUR SMABOLAGSFOND	1 375 246	7,50 %
Skandinaviska Enskilda Banken AB	1 041 753	5,68 %
FOLLUM CAPITAL AS	1 000 000	5,45 %
State Street Bank and Trust Comp	882 111	4,81 %
Skandinaviska Enskilda Banken S.A.	845 616	4,61 %
Skandinaviska Enskilda Banken AB	657 828	3,59 %
BUANES	494 936	2,70 %
HSBC TTEE MARLB EUROPEAN TRUST	420 656	2,29 %
GRANDEUR PEAK INTERNATIONAL OPPORT	420 559	2,29 %
HOLBERG NORGE	410 000	2,24 %
Danske Bank A/S	278 061	1,52 %
BNP Paribas Securities Services	270 201	1,47 %
RBC INVESTOR SERVICES BANK S.A.	251 463	1,37 %
Danske Invest Norge Vekst	250 000	1,36 %
NN PARAPLUFONDS 1 N.V.	212 707	1,16 %
Nordnet Bank AB	206 035	1,12 %
Bank Julius Bär & Co. AG	200 000	1,09 %
Danske Bank A/S	188 310	1,03 %
Total 20 largest	15 271 482
Total number of shares outstanding	18 337 336
20 largest shareholders in %	83,28 %