Medistim — Investor Presentation 2014

Oct 23, 2014

Medistim ASA Third Quarter 2014

Kari E. Krogstad, President and CEO Thomas Jakobsen, CFO October 23rd 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 Third Quarter
• 1. Financial Statements
• 1. Business Segments Update
• 1. Implementing the Strategy

1. Highlights third quarter

Highlights third quarter 2014

• Revenue grows 17.3 %
• o Strong growth in all geographical regions
• o Sale of consumables (flow probes) up 29.3 % for the quarter and 16.4 % year to date
• o Continued sales growth in the USA, 16.2 % increase for the quarter and 11.5 % year to date
• MNOK 10.0 in EBIT for the quarter, a growth of 54.1 %. EBIT increases 8.6 % year to date and ends at MNOK 28.9
• MiraQTM Cardiac, the first product from the new system platform, was launched at EACTS in Milan and is now commercially available in Europe and some Asian countries

2. Financial statements

Profit and loss Q3 2014

Profit & loss	Q3 14	Q3 13
All numbers in NOK 1000
Sales	51 999	44 322
Cost of goods sold	12 839	11 557
Salary and sosial expenses	17 930	16 620
Other operating expenses	9 156	7 665
Total operating expenses	39 925	35 842
Op. res. before depr. and write-offs (EBITDA)	12 074	8 480
EBITDA %	23,2 %	19,1 %
Depreciation	2 052	1 975
Operating result	10 022	6 505
EBIT %	19,3 %	14,7 %
Financial income	1 751	1 780
Financial expenses	1 698	1 156
Net finance	53	624
Pre tax profit	10 075	7 129
Tax	2 248	2 774
Result	7 827	4 355

Sales per Quarter (TNOK)

Profit and loss YTD September 2014

Profit & loss	YTD Sep '14	YTD Sep '13
All numbers in NOK 1000
Sales	148 724	138 790
Cost of goods sold	38 143	35 176
Salary and sosial expenses	47 652	44 969
Other operating expenses	27 855	26 345
Total operating expenses	113 650	106 490
Op. res. before depr. and write-offs (EBITDA)	35 074	32 300
EBITDA %	23,6 %	23,3 %
Depreciation	6 161	5 678
Operating result	28 913	26 622
EBIT %	19,4 %	19,2 %
Financial income	5 292	4 992
Financial expenses	4 967	3 836
Net finance	325	1 156
Pre tax profit	29 237	27 778
Tax	9 049	9 000
Result	20 188	18 778

Sales per Quarter (TNOK)

EBIT per Quarter (TNOK)

9

Balance sheet - Assets

Balance sheet	30.09.2014	31.12.2013
All numbers in NOK 1000
Assets
Intangible assets	52 303	49 399
Fixed assets	13 204	14 061
Total intangible and fixed assets	65 507	63 460
Inventory	37 850	37 930
Customers receivables	37 055	38 781
Other receivables	7 709	8 374
Cash	33 646	19 846
Total current assets	116 261	104 930
Total assets	181 768	168 390

• Investments in new system platform increase intangible assets
• Improved cash situation as a result of:
• Reduction in accounts receivables
• Strong cashflow from operations

Balance sheet - Equity and liability

Balance sheet	30.09.2014	31.12.2013
All numbers in NOK 1000
Share capital	4 585	4 585
Premium fund	41 852	41 852
Other equity	80 593	75 198
Total equity	127 030	121 635
Total long term debt	15 042	7 753
Total short term debt	39 696	39 002
Total equity and liability	181 768	168 390

• 19.9 MNOK in interest bearing debt
• Dividend for 2013 of NOK 0.80 per share, total MNOK 14.5, paid 7th of May 2014

3. Business segments update

Flow probes and VeriQ sales in units

• All time high probe sales for a quarter, 23.7 % volume growth
• Strongest growth in Europe with 24.2 % increase for the quarter

Flow probes in units VeriQ systems in units

• Lower sales of VeriQ in Europe compared to last year, however VeriQC sales increases and make up for the shortfall
• 1 VeriQ capital sale in Q3 2014 in the USA versus 0 last year contributes to the increase in US Q3 sales revenues

Imaging probes and VeriQ C sales in units

• Strong probe sales as a consequence of strong system sales

• Strong quarter for imaging system sales in Europe and Asia, makes up for shortfall in VeriQ flow system sales
• 2 VeriQ C capital sales in Q3 2014 in the USA versus 0 last year contributes to the revenue increase in US Q3 sales revenues

Q3 revenue performance by region

Mill NOK	Q3 '14	Q3 '13	Q/Q	YTD 2014	YTD 2013	YTD14/YTD13
Europe	29,5	25,6	15,2 %	88,9	83,4	6,6 %
USA	14,1	12,2	16,2 %	39,4	35,3	11,5 %
Asia & Jp	5,6	5,3	6,0 %	13,3	11,8	12,9 %
ROW (MEA, CAN, SA)	2,7	1,2	120,0 %	7,1	8,2	-14,2 %
Total	52,0	44,3	17,3 %	148,7	138,8	7,2 %

• In Europe, there was positive development in sales of systems and probes for the quarter. Probe sales volume increased with 24.2 % and imaging sales increased from 1 to 6 units. Year to date, there was probe volume growth of 14.2%.

• In the US, strong contribution from capital system sales is the main explanation for the increase of US Q3 revenues of 16.2 %.

• Both Asia/Japan and ROW are so far smaller sales territories for Medistim, and quarterly performance varies significantly. In Q3, both system sales and probe sales increase.

Positive currency effects for the quarter with 2.3 MNOK and 6.2 MNOK YTD.

Q3 revenue performance by product

Mill NOK	Q3 '14	Q3 '13	Q/Q	YTD 2014	YTD 2013	14/13
Procedures (USA)	12,3	11,4	7,9 %	34,3	32,3	6,4 %
Flow probes	16,1	12,4	29,3 %	44,4	38,1	16,4 %
Flow systems (VeriQ)	3,5	3,9	-10,0 %	10,4	11,9	-12,4 %
Imaging systems (VeriQ C)	5,0	2,2	131,1 %	11,4	9,2	24,1 %
Imaging probes	0,5	0,3	77,0 %	1,4	1,7	-15,6 %
3rd party	14,3	14,2	1,2 %	45,5	44,7	1,9 %
Other	0,3	0,0	#DIV/0!	1,2	1,0	29,5 %
Total revenues	52,0	44,3	17,3 %	148,7	138,8	7,2 %

• Procedure sale in the USA: The total number of procedures is up by 3.2 % for the quarter, driven by capital-based procedures. Imaging procedures growth was up 70 %.

• Flow probes revenue: The number of probes sold are up by 23.7% for the quarter. Year to date, the volume is up 7.8 %.
• VeriQ flow systems: Lower system sales in Q3 in Europe compensated by increased VeriQ C sales.
• VeriQ C imaging systems and probes: VeriQ C sales increase in all regions except ROW.
• 3 rd party products: Minor growth for the quarter and YTD - recovering from loss of major agency in 2013.

4. Implementing the strategy

Performance USA

• Second consecutive strong quarter
• Revenue up by 16.2% in Q3, 11.5% YTD
• Number of procedures up by 3.2% (Q3 '13 was a strong quarter), 9.1 % YTD
• 70 % growth in imaging procedures in Q3, 45.8% YTD
• Internal promotion for new President of Medistim USA
• 3 capital sales (1 VeriQ and 2 VeriQ C) in Q3, 9 YTD

Medistim at EACTS 2014, Milan, Italy

• European Association for Cardio-Thoracic Surgery (EACTS)

• 4500 participants

Medistim at EACTS 2014, Milan, Italy The Booth

Medistim at EACTS 2014, Milan, Italy Launching MiraQ™ Cardiac

• Features adapted for cardiac surgery
• Field upgradable to Imaging
• Focus on ease of use

Medistim at EACTS 2014, Milan, Italy Marketing messaging

EACTS, Milano, Italy Medistim Satellite Symposium

"Optimizing intraoperative decision making during CABG: Luck or science?"

How can the use of high-resolution epicardial ultrasonography and TTFM during graft quality assessment secure the basis for intraoperative decision making?

Moderator: Prof. David Taggart, University of Oxford

Medistim Satellite Symposium, EACTS

Speakers

Prof. Gabriele Di Giammarco, MD University of Chieti, Italy

• Adressed the role of combined high-resolution epicardial ultrasonoghraphy (HR-ECUS) and transit time flow measurements (TTFM) in 333 CABG patients
• "The main result of this study is the increase of positive predictive value (PPV) from 10% with TTFM to almost 100% of TTFM and HR-ECUS combined."
• Important findings to avoid unnecessary graft revisions and increase the confidence in TTFM

Medistim Satellite Symposium, EACTS

Speakers

Prof. Hirokuni Arai, MD, PhD

Tokyo Medical and Dental University, Japan

Adressed the issue of increased risk of errors in anastomosis construction during off-pump CABG due to the suturing process being technically more demanding than in surgery on the arrested heart

"[…] In this case, high frequency epicardial ultrasound demonstrated its ability to detect an anastomosis error, that was not identified by TTFM alone."

Shows the ability to detect imperfections with the use of intraoperative ultrasound, and better understand borderlineTTFM findings