Medistim

Investor Presentation • Oct 19, 2016

Medistim ASA Third Quarter 2016

Kari E. Krogstad, President and CEO Thomas Jakobsen, CFO October 19th, 2016

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 2015. 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 2016

	Q3 2016	Q o Q
• 10.2 % sales growth for the quarter YTD up 13.5% o Sales of own products increased with 20.3 % to o MNOK 53.6	Revenue MNOK 67.9 (61.6)	10.2%
Another record quarter for the USA with sales up o 18.5 % to MNOK 23.5 Ultrasound imaging product drives growth in Asia o and ROW	EBIT MNOK 15.9 (12.7)	26.3 %
• 26.3 % EBIT growth to MNOK 15.9 for the quarter	Currency	5.2 %
Year to date, EBIT is up 36.0 % to MNOK 46.6 o • Profit per share grows 8.8% to NOK 0.62 (0.57)	No of capital units sold: Flow systems 15	-28.6 %
	Imaging systems 18	50.0 %
• Medistim executes on its vascular strategy with workshops at the European Society of Vascular Surgery (ESVS)	Flow probes 1 607	14.5 %
conference	Imaging probes 27 Procedures (USA) 11 270	12.5 % 3.0 %

2. Financial statements

Profit and loss Q3 2016

Profit & loss	Q3 2016	Q3 2015
All numbers in NOK 1000
Sales	67 933	61 646
Cost of goods sold	15 420	13 796
Salary and sosial expenses	23 320	21 347
Other operating expenses	10 231	11 175
Total operating expenses	48 971	46 318
Op. res. before depr. and write-offs (EBITDA)	18 962	15 328
EBITDA %	27,9 %	24,9 %
Depreciation	2 978	2 670
Write offs and accruals	-	-
Operating result	15 983	12 658
EBIT %	23,5 %	20,5 %
Financial income	573	2 517
Financial expenses	1 213	952
Net finance	(640)	1 565
Pre tax profit	15 344	14 224
Tax	4 113	3 906
Result	11 230	10 317

Profit and loss Year to date

Profit & loss	YTD 2016	YTD 2015
All numbers in NOK 1000
Sales	200 627	176 807
Cost of goods sold	48 428	44 562
Salary and sosial expenses	64 409	55 724
Other operating expenses	32 492	31 180
Total operating expenses	145 329	131 466
Op. res. before depr. and write-offs (EBITDA)	55 298	45 341
EBITDA %	27,6 %	25,6 %
Depreciation	8 692	7 872
Write offs and accruals	-	3 200
Operating result (EBIT)	46 606	34 269
EBIT %	23,2 %	19,4 %
Financial income	4 126	13 637
Financial expenses	5 844	9 439
Net finance	(1 719)	4 198
Pre tax profit	44 887	38 467
Tax	11 630	10 272
Result	33 257	28 195

9

Balance sheet - Assets

Balance sheet	30.09.2016	31.12.2015
All numbers in NOK 1000
Assets
Intangible assets	53 195	55 122
Fixed assets	16 501	14 158
Total intangible and fixed assets	69 696	69 280
Inventory	56 105	46 613
Customers receivables	50 176	44 831
Other receivables	8 295	8 787
Cash	21 734	48 925
Total current assets	136 310	149 156
Total assets	206 007	218 436

• Inventory is reduced with MNOK 4.3 from previous quarter due to received compensation for returned inventory to Medtronic
• Inventory is still high, related to
• MiraQ product line introduction while maintaining the VeriQ/VeriQC products with last-time-buy of components
• Increased 3.party consignment inventory of Mentor products related to the Aleris agreement and HINAS tender

Balance sheet - Equity and liability

Balance sheet	30.09.2016	31.12.2015
All numbers in NOK 1000
Share capital	4 585	4 585
Premium fund	41 852	41 852
Other equity	112 716	109 727
Total equity	159 153	156 164
Total long term debt	3 664	7 001
Total short term debt	43 190	55 271
Total equity and liability	206 007	218 436

• 6.6 MNOK in interest bearing debt

3. Business segments update

Flow probes and systems in units

• 14.5% growh in probe sales in Q3, driven by Japan and China
• 9.4 % growth in probe sales year to date 2016

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

• Conversion from flow to flow-and-imaging systems continues
• Slow flow system sales in Europe, while other regions were at the same level as last year
• Of the 15 flow systems sold, 7 were sold in Asia, 4 in ROW, 3 in Europe and 1 in USA
• o 8 of the 15 systems were MiraQ

Imaging probes and systems in units

Imaging probes in units (incl USA)

• Imaging probe sales up 12,5 % in units compared to last year
• Outside the USA, probe sales were mainly in Asia and ROW

Imaging systems in units (VeriQC & MiraQ)

• Conversion from flow to flow-and-imaging drives 50% growth in imaging system units
• Of the 18 imaging systems sold, 8 were sold in Asia, 8 in ROW (Australia, Middle East, Pakistan) and 2 in the USA
• 9 of 18 systems were MiraQ

Q3 revenue performance by region

Mill NOK	Q3 '16	Q3 '15	Q / Q	YTD 2016	YTD 2015	Y/Y
Europe	28,3	34,2	-17,4 %	98,1	99,2	-1,2 %
USA	23,5	19,8	18,5 %	69,1	56,4	22,7 %
Asia & Jp	8,9	4,8	83,6 %	20,1	13,6	47,8 %
ROW (MEA, CAN, SA, AUS)	7,3	2,8	163,3 %	13,4	7,6	75,3 %
Total	67,9	61,6	10,2 %	200,6	176,8	13,5 %

• In Europe, Q3 was weak, since both 3.party product sales decreases by 16.1 % due to the lost Medtronic agency and own products decreased by 18.5 % due to very low system sales. YTD, own products grow 8.4% and 3. party is down by 8.9%.
• In the USA, Medistim delivers yet another all time high, following the second best quarter ever, which was Q2 2016. Q3 growth in NOK was 18.5%, currency neutral growth was 14.9%. YTD growth is 22.7% in NOK and 13.2% currency neutral.
• Both Asia/Japan and ROW are so far smaller sales territories, but with significant contribution in Q3 with strong sales of imaging products.

Positive currency effects for Q3 with 3.2 MNOK and YTD with 9.1 MNOK.

Average actual exchange rate for USD 8.41 and EUR 9.38 versus last year USD 7.90 and EUR 8.81.

Q3 revenue performance by product

Mill NOK	Q3 '16	Q3 '15	Q/Q	YTD 2016	YTD 2015	Y/Y
Procedures (USA)	20,9	18,4	13,4 %	61,6	51,7	19,2 %
Flow probes	18,1	15,4	17,8 %	53,0	44,2	19,8 %
Flow systems (VeriQ & MiraQ)	3,7	3,1	18,4 %	12,1	9,2	30,9 %
Imaging systems (VeriQ C & MiraQ)	8,4	5,1	63,6 %	18,2	13,0	40,4 %
Imaging probes	1,2	0,9	28,7 %	2,6	2,1	21,7 %
3rd party	14,4	17,1	-16,2 %	50,3	55,2	-8,9 %
Other	1,3	0,4	192,1 %	2,9	1,5	101,4 %
Total revenues	67,9	60,6	12,2 %	200,6	176,8	13,5 %

• Procedure sale in the USA: In number of procedures, pure Flow procedures are up 1.2 % while imaging procedures are up 16.5 % in Q3. YTD flow procedures increase with 7.8 % while imaging procedures increase with 26.6 %.
• Flow probes revenue: Strong 14.5 % growth in units for the quarter due to strong sales in Asia. YTD unit probe sales increased with 9.4 %.
• Flow systems: The Q3 growth in revenue is driven by favorable currency. In Europe, we sold 8 less flow systems compared to last year, while other regions were at the same level as last year. YTD, the number of flow systems is flat compared to last year.
• Imaging systems and probes: Total system units sold in Q3 was 18, up 6 units from last year. Positive development in Asia and Australia (ROW) for the quarter and year to date.
• 3rd party products: As expected, sales is down from last year due to of the loss of the Medtronic agency.

4. Implementing the strategy

17

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 & 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

RESULTS YTD 2016

• Revenues up by 22.7 % in NOK
• 13.2 % growth in USD
• Number of procedures up by 9.7 %
• o 7.8 % growth in flow procedures
• o 26.6 % growth in imaging procedures

High performance US sales organization

• o 61 % increase in capital sales
• Q3 best quarter ever in the USA
• o 9 completely new accounts
• o 1 TTFM account converted to Imaging

19

Growth opportunities – in vascular markets

• 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 & 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

20

Building position at the European vascular conference 2016 (ESVS - European Society of Vascular Surgery)

• Cooperation initiated with the ESVS organization
• o Key opinion leader relationship building
• o Rise awareness and get quality assessment and surgical guidance on the society's agenda
• 2 Medistim workshops with leading surgeons as speakers

20 largest share holders (per 12. October 2016)

Shareholder	Number of shares	Shares in %
INTERTRADE SHIPPING	3 850 000	21,00 %
SALVESEN & THAMS INV	1 862 500	10,16 %
SKAGEN VEKST	1 070 072	5,84 %
FOLLUM CAPITAL AS	1 000 000	5,45 %
STENSHAGEN INVEST AS V/Lars Hatletveit	961 729	5,24 %
PROTECTOR FORSIKRING Filipstad Brygge 1	784 155	4,28 %
HOLBERG NORDEN VERDIPAPIRFONDET V/HOLBERG FONDSFORVA	559 486	3,05 %
BUANES ASBJØRN JOHN	519 936	2,84 %
SKANDINAVISKA ENSKIL A/C CLIENTS ACCOUNT	487 044	2,66 %
DYVI INVEST AS	446 154	2,43 %
GRANDEUR PEAK INTERN BROWN BROTHERS HARRI	420 559	2,29 %
VEVLEN GÅRD AS	393 959	2,15 %
VERDIPAPIRFONDET HAN NORGE	346 154	1,89 %
CITIBANK EUROPE PLC S/A SEB SA UCITS	316 023	1,72 %
BNP Paribas Sec. Ser S/A ITALIAN RESIDENT	309 276	1,69 %
HOLBERG NORGE VERDIPAPIRFONDET V/HOLBERG FONDSFORVA	253 118	1,38 %
Danske Invest Norge	250 000	1,36 %
The Bank of New York BNY MELLON	246 626	1,34 %
BANK JULIUS BÄR & CO S/A CLIENTS ASSETS	200 000	1,09 %
MEDI-STIM AS	186 000	1,01 %
Total 20 largest	14 462 791
Total number of shares outstanding	18 337 336
20 largest % of total	78,87 %