Medistim

Quarterly Report • Oct 27, 2023

INTERIM REPORT

Sales for the third quarter ended at MNOK 124 (MNOK 117), an increase of 6.5%. Sales YTD September ended at MNOK

RESULTS 2023

Currency neutral sales of own products was down 5.6% for the quarter and up 1.2% YTD September

391 (MNOK 350), an increase of 11.6%

THIRD QUARTER FINANCIAL

Operating profit (EBIT) for the quarter ended at MNOK 34 giving a 27.0% EBIT margin (MNOK 34, a 29.2% margin). YTD September EBIT is up 4.2% and ended at MNOK 109, giving a 27.9% margin (MNOK 105, a 29.9% margin)

Regional performance varies widely this quarter: Currency neutral, AMERICAS sales is down 10% for the quarter due to fewer systems sold as capital related to the challenging macro-economy. EMEA delivers 32% growth for the quarter and 14% YTD. APAC is going through transition from distributor to direct sales channel in China, and is down 55% this quarter

Higher operating expenses is related to increased commercial activities and strengthening of the sales organizations in several countries, including the newly established direct sales organizations in Canada and China

Medistim has installed 3,300 systems in more than 60 countries. The equipment is used today in about 35% of the total number of cardiac bypass surgeries performed worldwide.

LETTER FROM THE CEO

Medistim continues to show solid financial results in the third quarter, with 6.5% sales revenues growth and an EBIT margin of 27%.

It has been a busy quarter with important conferences and exhibitions of our technologies in both Cardiac and Vascular Surgery; at the EACTS meeting in Vienna and at the ESVS meeting in Belfast, to mention the largest ones.

The supportive feedback we receive from happy current users, as well as the interest expressed by potential new ones are always feeding the Medistim team with inspiration, energy, and excitement.

This quarter we continue to see that some hospitals have tighter funds available to adopt new and innovative medical technologies, due to the escalating inflation and interest rates. This can lead to prolonged sales cycles, as well as an inclination for customers to opt for more budgetconscious Flow-only alternatives rather than the premium-priced Flow-and-Imaging systems. In the USA, where they have the option to choose the less capital-intensive alternatives Pay-Per-Procedure or Lease, we see lower capital system sales. In these circumstances, it is heartening to observe that our existing customers show no less use of our products within their practices.

When looking at the development around the world, the picture is mixed: In the EMEA region, sales is surging with 32.1% currency neutral growth for the quarter and 13.5% YTD.

The growth is coming both from the large, direct markets Germany and Spain, and from distributor markets, including Eastern European countries, Italy and Saudi Arabia.

It is encouraging to see that the EMEA growth is coming from higher sales of Flow-and-Imaging systems.

After an overall declining number of Flow-and Imaging systems and probes in the first half year,

the third quarter show volume growth both for Flow-and-Imaging systems and probes. While the growth is driven by EMEA this quarter, it confirms the feedback we get from all regions; that our High Frequency Ultrasound (HFUS) technology is continuing to gain support and is preferred by most new surgeon users.

In AMERICAS, we have sold a lower number of capital systems and fewer higher-priced Flow-and-Imaging systems, compared to last year's quarter and YTD, resulting in a currency neutral revenue decrease of 10.3% for the quarter and 5.2% YTD.

Our opportunity pipeline continues to be solid, and protracted sales projects are moving forward towards closure.

As previously reported, the APAC region is going through a substantial change this year, as Medistim has established a direct sales organization in China, which is impacting sales in the short term.

As expected, the former distributor for China closed all open sales projects, and we see some inventory build-up in the local Chinese distributor network. Consequently, sales are significantly down. Our ongoing work of building new partnerships and relations with local distributors, hospitals, and Chinese surgeon users are developing successfully, and we look forward to start harvesting from these investments as soon as the inventory situation normalizes.

Medistim continues to invest strategically in the business, and the increase in operating expenses seen for the quarter as well as YTD is related to commercial activities and strengthening the sales organization, introducing a second shift in the probe production, and increased investments in product innovation.

We are gearing for future growth and have the 1 billion NOK in annual revenues as our overriding goal. Come join the journey!

THIRD QUARTER FINANCIAL RESULTS 2023

The financial report as per September 30th 2023 has been prepared according to the IFRS (International Financial Reporting Standard) and follows IAS 34 for interim financial reporting, as do the comparable numbers for 2022.

FINANCIAL DEVELOPMENT

(Comparative numbers for 2022 in parenthesis.)

Sales and geographic split

NOTE:

Medistim has adjusted its geographic regions from the former USA, Asia, Europe and ROW to AMERICAS, Asia Pacific (APAC) and Europe, Middle East and Africa (EMEA) when reporting sales of own products. Third party sales will be reported separately without any geographic split, as sales are only in Norway and Denmark. All comparable numbers are adjusted according to the new region split.

Sales revenues in the third quarter ended at MNOK 124.1 (MNOK 116.5), a 6.5% increase. In AMERICAS sales ended at the same level as last year in NOK. USA represented 94 % of the sales in the region. For APAC there was a 48.8 % decrease in NOK. The decline was due to the former distributor for China completing projects and filling local Chinese distributor inventories in the first half year, before Medistim established its direct sales organization in the second quarter. For EMEA there was a 48.9 % increase in NOK. 93 % of sales from the region was from Europe, delivering a strong quarter both for direct operations and sales through distributors. 120 000 120 000

Year to date (YTD) September, total revenues increased with 11.6% and ended at MNOK 390.7 (MNOK 350.1). There was increase in all regions. In the AMERICAS, sales revenues increased by 5.4%, APAC increased by 7.6% and EMEA increased by 28.7 % in NOK. 60 000 80 000 100 000 60 000 80 000

Currency effect

With the same foreign currency exchange rates as in 2023, sales would have amounted to MNOK 112.8 for the quarter, which represents a currencyneutral total decline of 3.1%. Currency-neutral decline of own products was 5.6%, while third party products increased by 13.9% compared to last year.

Similarly, YTD September sales would have amounted to MNOK 354.3, a currency-neutral growth of 1.2%.

Currency-neutral sales revenues of own products was at the same level as last year, while third party products grew by 4.8% compared to last year.

Split between recurring sales and capital sales

Sales of Medistim's own products can be split into capital sales of systems and repeating sales of probes, smartcards, and lease revenue, which are all defined as recurring revenue. For the year 2022, recurring sales were 67% of total sales of own products. YTD September 2023, the recurring sales represented 69% (65%).

10% 10 Split of sales in own products and third party products

0% 5% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 2000201200220032004200520062007200820092010211201220132014201520162017201820192020 5% 5 Sales of own products for the quarter amounted to MNOK 106.6 (MNOK 101.2). Sales of third party products ended at MNOK 17.5 (MNOK 15.3).

2000201200220032004200520062007200820092010211201220132014201520162017201820192020 YTD September, sales revenues from own products amounted to MNOK 331.8 (MNOK 293.9). Sales of third party products ended at MNOK 58.9 (MNOK 56.2).

Split of sales in Cardiac and Vascular products

For sales of own products, MNOK 86.3 (MNOK 82.3) was within the Cardiac segment and MNOK 20.3 (MNOK 18.9) was within the Vascular segment for the quarter.

YTD September, sales revenue from the Cardiac segment was MNOK 273.3 (MNOK 243.2). Sales revenue from the Vascular segment was MNOK 58.4 (MNOK 50.7).

Due to the higher growth rate that we see in Vascular sales, YTD growing 15.3%, compared to Cardiac sales growing 12.4%, Vascular is becoming an increasing part of sales of own products, making up 17.6% of own products sales YTD, compared to 16.7% for the full year 2022.This is a trend we have seen over the past several years.

Split of sales in Flow and Imaging products

For the quarter, sales revenue from Flow products was MNOK 68.5 (MNOK 65.9). Sales revenue from Imaging products was MNOK 38.1 (MNOK 35.3).

YTD September, sales revenue from Flow products was MNOK 228.7 (MNOK 191.1). Sales from Imaging products was MNOK 103.1 (MNOK 102.8).

The Imaging product portfolio has grown to become a significant part of own product sales, YTD making up 31.1% of total sales of own products, while Flow products make up 68.9%. As reported in our Q2-23 report, Imaging sales was declining in the first half of the year, and YTD September sales development is flat. It is encouraging to see that Imaging sales increases at 8.1% in Q3.

Cost of goods sold

Cost of goods sold (COGS) ended at MNOK 22.4 for the quarter (MNOK 21.9) and represents 18.0% of total sales (18.8%). This gives a gross margin of 82.0% (81.2%).

COGS ended at MNOK 78.1 YTD September (MNOK 73.7) and represents 20.0% of sales revenue (20.0%). This gives a gross margin of 80.0 % (80.0 %).

Salary, social and other operating expenses

Salaries and social expenses ended at MNOK 42.1 (MNOK 38.9) for the quarter. Other operating expenses amounted to MNOK 20.8 (MNOK 16.0), an increase of 30% .

Salaries and social expenses YTD September ended at MNOK 116.6 (MNOK 103.6). Other operating expenses amounted to MNOK 70.2 (MNOK 50.7) YTD September.

The increase in salaries and social expenses for the quarter and YTD September shows effects of recruitments done last year, strengthening the sales force in direct markets as well as in business development. The increase is also related to establishing direct presence in Canada and China. Apart for Medistim adding resources to its organization, 7.0 MNOK of the salary expense increase YTD is related to foreign exchange differences. The remaining difference is related to salary adjustments from last year.

For both the quarter and YTD, the increase in other operating expenses was related to the establishing direct representation in Canada and China, increased marketing and travel expenses, regulatory compliance, IT support and foreign exchange differences.

R&D expenses

For the quarter, MNOK 5.8 (MNOK 5.6) was spent on research and development (R&D), of which MNOK 2.7 (MNOK 2.6) was activated in the balance sheet.

YTD September, MNOK 18.6 (MNOK 16.5) was spent on research and development (R&D). For the year, MNOK 9.5 (MNOK 7.5) of the R&D expense was activated in the balance sheet.

Medistim has over the past several quarters gradually strengthened the innovation and product development teams with additional headcounts, increasing capacity and bringing new competence and capabilities. This represents critical investments for the future, enabling us to realize our strategy to intensify product innovation and to bring the next generation of product solutions to our customers.

Earnings

Operating profit before finance, tax, depreciation, and write-offs (EBITDA) for the quarter ended at MNOK 38.8 (MNOK 39.7). The result before finance and tax (EBIT) ended at MNOK 33.5 (MNOK 34.0).

YTD September, EBITDA ended at MNOK 125.8 (MNOK 122.1). The EBIT ended at MNOK 109.2 (MNOK 104.8).

Net finance ended positive with MNOK 0.1 for the quarter (negative MNOK 3.5). Similarly, YTD September, net finance ended negative with MNOK 0.4 (negative MNOK 0.6). Net finance was related to realized and unrealized gains or losses related to currency, cash in USD and EUR, and customer receivables.

The result before tax was MNOK 33.6 (MNOK 30.5) for the quarter. The result after tax for the quarter was MNOK 26.1 (MNOK 24.6). YTD September, result before tax ended at MNOK 108.8 (MNOK 104.1). Result after tax ended at MNOK 84.7 MNOK (MNOK 81.5).

The result per share for the quarter was NOK 1.43 (NOK 1.35). The result per share YTD September was NOK 4.63 (NOK 4.46). Average number of shares outstanding was 18,262,303 (18,252,290) at the end of September 2023.

Balance sheet

Equity by the end of September 2023 was MNOK 378.3 (MNOK 345.7). This equals an equity ratio of 79.7% (79.9%).

The balance sheet ended at MNOK 474.9 from MNOK 482.6 at the beginning of the year.

Inventory levels of finished goods continue to increase as supply situation has improved. In addition to building safety stocks of finished goods according to company policy, the high inventory level is to secure end of life components and ensure security stock of critical components.

The cash position is strong and ended at MNOK 126.4 by the end of the quarter. In May, a dividend of MNOK 82.2 was paid to shareholders. The company's debt was related to lease contracts with a total of MNOK 12.7, where 4.4 was long term debt.

Return on invested capital (ROIC) is a new performance measure Medistim has implemented. ROIC for the last 12 months was 43.7%.

OPERATIONAL STATUS

Europe, Middle East and Africa (EMEA)

The region delivers a strong third quarter with a 49.8% increase in NOK, while currency neutral sales growth was 32.1%. YTD September sales increased 28.7% in NOK, while currency neutral sale increase was 13.5% after two strong quarters in a row.

Sales from direct operation increased 17.7 % in NOK while currency neutral growth for the quarter was 3.9%. Sales through distributors increased 65.8% in NOK while currency neutral sales grew 46.3%.

More than 90 % of sales from the region comes from Europe. YTD September 2023, 56% of the sales was through the direct channel and 44% of sales was through distributors.

USA, Canada and Latin America (AMERICAS)

The largest target market for Medistim is USA, and USA is representing about 95% of sales in the AMERICAS region. In the USA, Medistim offers several business models, including sales of procedures (Pay Per Procedures or 'PPP'), leasing, and capital sales.

For the quarter, AMERICAS sales revenues in NOK ended at the same level as last year at MNOK 51.7. Currency neutral sales decreased with 10.3%. YTD September sales increased with 5.4% in NOK. Currency neutral sales decreased with 5.2%.

Note

From 2023 onwards, Medistim will report on the split between the number of procedures sold based on sales of 'pay per procedure' (PPP) smart cards and estimated number of procedures from sales of probes, see table geographic split of sales in units.

For the sake of calculating market penetration in the USA, we count procedures from both PPP and capital probes sold, and for the quarter, a total of 22,115 procedures were sold, compared to last year's 22,234. 4,387 (4,462) were imaging procedures and 17,728 (17,772) flow procedures.

Capital system sales were 9 (13) units. No units were outplaced on a lease agreement (2).

YTD September, AMERICAS sales revenues in NOK increased by 5.4%. Currency neutral sales decreased with 5.2%.

A total of 65,476 procedures were sold, compared to last year's 66,746. 12,780 (12,905) were imaging procedures and 52,696 (53,841) were flow procedures.

Capital sale was 32 (40) units. In addition, 3 (7) units were outplaced on lease agreements.

Number of procedures per quarter in the USA

In the USA, about 60% of bypass surgeries are performed with no quality assurance of blood flow other than surgeons using their fingertips to check for a pulse. It is clinically proven that this method is not reliable. There is therefore a large potential and need for Medistim's products, and the company has high ambitions in the US market. So far, Medistim has achieved a market penetration of > 30% of the total market of around 200,000 bypass surgery procedures performed annually. Medistim has a market penetration of >80% in Germany, Austria, Switzerland, Spain, Scandinavia, and Japan. Medistim expects that the market penetration in the USA will continue to increase during the next years.

Medistim has strengthened its position in the region and 2023 is the first year where Medistim has a direct sales operation in Canada, from the second quarter.

In Latin America Medistim is represented through local distributors.

The declining currency neutral revenue development for the region is explained by weaker capital sales as a result of the macro-economic situation with high inflation and increased interest rates.

Asia Pacific (APAC)

For the quarter, sales revenues in NOK decreased by 48.8% to NOK 9.8. Currency neutral sales decreased with 54.9%. YTD September sales increased with 7.6% in NOK. Currency neutral sales decreased with 5.1%.

In this region, Medistim has its strongest position in China and Japan, representing 85% of sales. For the third quarter, sales to China was weak. This is a consequence of Medistim establishing a direct sales organization and terminating with the former distributor for China, who completed several projects in the first half of the year. This lead to inventory build-up in the local Chinese distributor network.

Third party products

Third party products are sold through Medistim's subsidiaries in Norway and Denmark. Sales for the quarter ended at MNOK 17.5 compared to last year MNOK 15.3. Sales YTD September ended at MNOK 60.0 compared to MNOK 56.2 last year.

PROSPECTS, TRENDS AND RISKS

Goals and vision

The company aims to develop products to meet surgeons' growing need for quality control of cardiac bypass surgery, peripheral vascular surgery, and transplant surgery. Our vision is that Medistim's solutions shall represent the "standard of care" in clinical practice and that blood flow measurements and intraoperative ultrasound imaging are made available to the benefit of every patient.

Strategy

Medistim's focus is to strengthen the company's ability to effectively commercialize its product portfolio on a global basis. One of the key routes to achieve this is closer contact with customers through a highly competent and effective sales and marketing organization. Another important strategic pathway is to engage with key opinion leaders in clinical research and produce enhanced clinical documentation for marketing purposes. Further, to grow the attention and interest in blood flow measurements, ultrasound imaging, surgical guidance and quality assurance and ensure these topics are on the agenda of the medical associations and in other relevant forums and channels.

Continuous technology and product development will secure Medistim's products and leading position within cardiac and vascular surgery in the future.

Market size and trends

On a global basis, more than 700,000 heart bypass surgeries are performed each year. The USA represents the largest market for Medistim's products, with almost 1/3 of the world market. The global number of procedures has kept stable over the past several years. The decrease in the number of procedures performed in the Western countries has been compensated by an increase in emerging markets such as China, Russia, and India. A stable to growing trend is therefore expected in the years to come.

Adding intraoperative ultrasound imaging to flow measurements more than doubles Medistim's market potential thanks to new applications and relevance and higher pricing compared to traditional flow measurement technology alone. The total market opportunity within CABG surgery is estimated to be NOK 2 billion annually. The imaging functionality makes MiraQ™ relevant in other cardiac surgeries and not just bypass surgery. Medistim estimates this additional potential to be NOK 1 billion.

The company also has a significant potential within the global vascular market, which is estimated to be more than 900,000 vascular procedures annually. Total market opportunity within vascular surgery is estimated to be over NOK 1.5 billion.

The general trend in surgery is moving towards minimally invasive and keyhole procedures, which gives the surgeon less workspace and ability to verify in a traditional way. There is therefore an increased need to verify the desired result in the future.

Global demographic trends are an important driving force for the many cost-efficiency initiatives around the world. Focus on quality is growing, driven by the need to reduce costs, particularly related to correction of errors, the need for repeated treatments and repeated hospital admissions. Medistim therefore has a good opportunity to position its products as an important contributor to achieving these goals.

Position and Competition

Medistim's flowmeters have been in use in more than two million patients worldwide since entering the market, and the company is the clear leader in its niche. In total, Medistim has installed 3,300 systems in more than 60 countries. The equipment is used today in about 35% of the total number of bypass surgeries performed worldwide. Medistim's penetration and market share are expected to grow gradually as quality assurance in surgery is getting increasing attention and acceptance.

There are competitors that use the transit time measurement principle. Equipment from competitors is estimated to be in use in about 5% of the procedures performed. This means that in >55% of the cases where bypass surgery is performed there is no equipment in use to verify blood flow. This market represents Medistim's largest opportunity.

With Medistim's ultrasound imaging technology and MiraQ™ platform, the company has acquired another edge compared to its competitors, with unique and differentiated products that are currently alone in their segment.

Exposure towards currency

The company is exposed to EUR and USD. Exposure can vary depending on the share of its revenues and costs in USD and EUR relative to its total income and expenses. For 2023, a 10% change in the exchange rate against USD and EUR would result in an 8.5% change in sales and a 11% change in operating result. The company partly secures its positions with hedging contracts.

Global macro-economic uncertainties

Macro-economic turmoil, emerging energy crisis, inflation pressure, increasing interest rates and cost levels impact capital investments. Particularly in the USA, Medistim is experiencing prolonged sales cycles, fewer capital deals and higher priced Flow-and-Imaging deals. We believe these are signs of a conservative and cautious approach to investing in new medical equipment in the more challenging economic times.

The long-term consequences of the pandemic aftermath and growing geopolitical uncertainty are unclear but might lead to continuing challenges in the global flow of goods. Medistim is taking mitigating actions to ensure access to key components to secure production and maintain growth and profitability also for the future. Further, the company is financially solid to face future challenges, with no interest-bearing debt and an equity ratio of 80%.

SHAREHOLDER INFORMATION

The company had 75,033 Medistim shares by the end of September 2023. The share price was NOK 231.00 per share on the 30th of September 2023. For comparison, entering 2023 the share price was 231.00 per share.

The number of shares sold YTD September 2023 totaled 1.228,217. The five largest shareholders were Aeternum Capital with 1,900,219 shares, Odin Fondene with 1,800,000 shares, Fløtemarken AS with 1,285,000 shares, State Street Bank with 1,284,432 shares and Follum Invest with 970,000 shares.

Responsibility statement

The financial report per 30th of September 2023 has been prepared according to the IFRS (International Financial Reporting Standard) and follows IAS 34 for interim financial reporting, as do the comparable numbers for 2022. The board of Directors and Managing Director confirm to the best of our knowledge that the condensed set of financial statements for the period 1st of January to 30th of September 2023 has been prepared in accordance with IAS 34 "Interim Financial Reporting" and gives a true and fair view of the groups assets, liabilities, financial position and result for the period viewed in their entirety.

The board of Directors and CEO confirm that the interim management report includes a fair review of any significant events that arouse during the sixmonth period and their effect on the half yearly financial report, any significant related parties transactions, and description of the principal risks and uncertainties for the remaining six months of the year.

Risk factors for the rest of the year

The group risk and uncertainty factors remain the same as described in the annual report for 2022.

Transactions with related parties

There were no transactions between related parties in the period except for the share program to management approved by the General meeting the 24th of April this year.

8 MEDISTIM THIRD QUARTER FINANCIAL RESULTS 2023

Oslo, October 26th, 2023

Board of Directors and CEO of Medistim ASA

Øyvin A. Brøymer Chair

Ole J. Dahlberg Board member

Lars Rønn Board member

Anna Ahlberg Board member Sign. Sign. Sign.

Jon H. Hoem Board member Sign. Sign. Sign.

Tove Raanes Board member

Anthea Arff-Pettersen Board member

Kari Eian Krogstad President & CEO

Sign. Sign.

			YTD	YTD
PROFIT & LOSS	Q3 2023	Q3 2022	30.09.23	30.09.22	FY 2022
1=NOK 1000
Sales revenue	124 098	116 490	390 745	350 114	491 937
Cost of goods sold	22 350	21 892	78 149	73 714	106 485
Salary and social expenses	42 145	38 927	116 557	103 579	146 376
Other operating expenses	20 758	15 973	70 239	50 690	74 537
Total operating expenses	85 252	76 792	264 945	227 984	255 944
Operating profit before depreciation
and write-offs (EBITDA)	38 846	39 699	125 800	122 130	164 539
EBITDA%	31,3 %	34,1 %	32,2 %	34,9 %	33,4 %
Depreciation	5 329	5 681	16 617	17 353	23 288
Operating profit (EBIT)	33 517	34 017	109 184	104 777	141 251
EBIT %	27,0 %	29,2 %	27,9 %	29,9 %	28,7 %
Financial income	1 746	4 858	10 140	14 495	16 546
Financial expenses	1 671	8 355	10 505	15 131	11 748
Net finance	75	-3 497	-365	-635	4 799
Pre tax profit	33 592	30 520	108 818	104 141	146 049
Tax	7 460	5 873	24 104	22 646	32 077
PROFIT AFTER TAX	26 132	24 647	84 714	81 496	113 973
Dividend	-	-	82 180	68 396	68 396
Comprehensive income
Profit after tax	26 132	24 647	84 714	81 496	113 973
Exchange differences arising on
translation of foreign operations	-1 665	11 386	8 235	23 538	10 659
TOTAL COMPREHENSIVE INCOME	24 467	36 033	92 949	105 034	124 632

			YTD	YTD
KEY FIGURES	Q3 2023	Q3 2022	30.09.23	30.09.22	FY 2022
Equity share	79,7 %	79,9 %	79,7 %	79,9 %	76,2 %
Earnings per share	1,43	1,35	4,64	4,47	6,25
Earnings per share diluted	kr 1,43	kr 1,35	kr 4,63	kr 4,46	kr 6,24
Average shares outstanding in 1000	18 262	18 252	18 262	18 246	18 248
Average shares outstanding in 1000
diluted	18 287	18 281	18 287	18 275	18 277

BALANCE SHEET	30.09.2023	30.09.2022	31.12.2022
1=NOK 1000
Assets
Deferred tax	5 078	3 255	3 591
Activated development	28 371	18 997	21 940
Goodwill	14 128	14 128	14 128
Intangible assets	47 578	36 381	39 660
Machinery and equipment	48 122	54 064	51 312
Other fixed assets	5 892	5 877	5 793
Fixed assets	54 014	59 941	57 104
Total tangible and fixed assets	101 592	96 322	96 764
Inventory	145 927	103 309	114 333
Customers receivables	81 238	93 411	101 657
Other receivables	19 718	14 829	17 263
Cash	126 422	124 557	152 641
Total current assets	373 305	336 107	385 894
TOTAL ASSETS	474 897	432 429	482 659
Equity and liability Share capital	4 585	4 585	4 585
Share premium reserve	44 172	44 172	44 172
Other equity	329 510	296 932	318 934
Total equity	378 267	345 689	367 692
Long term debt
Lease obligations	4 150	11 712	10 020
Deferred income	222	5 536	5 126
Total long term debt	4 372	17 248	15 145
Short term debt
Accounts payable	36 683	15 183	30 258
Tax and social liabilities	50 707	53 958	69 214
Other short term debt	4 869	350	350
Total short term debt	92 259	69 491	99 822

CHANGE IN EQUITY	30.09.2023	30.09.2022	31.12.2022
1=NOK 1000
Equity start of period	367 692	306 052	306 052
Profit for the period	84 714	81 496	113 973
Dividend	-82 180	(68 396)	-68 396
Other		(48)	-
Medistim shares		3 235	5 404
Changes in exchange rates	8 235	23 350	10 658
EQUITY END OF PERIOD	378 461	345 689	367 692

CASH FLOW ANALYSIS	30.09.2023	30.09.2022	31.12.2022
1=NOK 1000
Result for the period	84 714	81 496	113 973
Depreciation	16 617	17 353	23 288
Paid taxes	-19 812	-13 466	-19 167
Change in working capital	-4 749	-35 807	-40 003
Other	-2 675	31 200	36 466
Other cash flow from operation	-10 619	606	584
Cash flow from operation	74 095	80 776	114 556
Cash flow from investments	-12 819	-13 272	-21 102
Lease obligations	-5 314	-5 367	-7 312
Dividend	-82 180	-68 396	-68 396
Cash flow from financing (lease/dividend)	-87 494	-73 763	-70 304
Change in cash for the period	-26 218	-4 933	23 150
Cash at start of period	152 641	129 490	129 490
Cash by the end of period	126 422	124 557	152 641

ACCOUNTING PRINCIPLES

Medistim ASA is a public company listed at the Oslo stock exchange. Medistim ASA is incorporated in Norway. The main office is located in Økernveien 94, 0579 Oslo, Norway. The Medistim group's business is within developing, producing, service, leasing and distribution of medical devices. The board of Directors and the CEO authorized these financial statements for issue on October 26th 2023.

Basis for preparation of financial statements The financial statement for the group is prepared in accordance with International Financial Reporting standard (IFRS) as adopted by the EU for interim reports according to IAS 34 Interim Financial reporting.

The annual accounts for the group and the group has been prepared based on historical cost with exception of financial derivatives which are measured at fair value. The consolidated accounts have been prepared using consistent accounting policies for similar transactions and events.

The accounting principles for the group for 2023 are the same as for the principles used in the annual report for 2022. This report provides an update of previously reported information.

REVENUE RECOGNITION AND SEGMENTS

Group revenue can be split in three different categories that have different risk and return on investment profile. The split is according to the company's internal reporting structure. The categories are as follows:

• 1. Revenue from sale of capital equipment (MiraQ) and consumable (probes)
• 2. Revenue from lease of equipment (MiraQ & probes)
• 3. Distribution and sales of third party products

Category 1 and 2 covers the same equipment (MiraQ system) and consumables (probes). This is the products that are developed and produced by Medistim and is distributed through local partners unless Medistim has local representation.

1. Sale of capital equipment and consumable:

The sale of the equipment and the sale of the consumables are considered separate deliveries (performance obligations).

Revenue recognition varies with shipping and delivery terms that decide the timing of when the customer takes over control of the goods.

Payment terms varies from 30 to 90 days. The Group provides warranties for general repairs of defects that existed at the time of sale. This is considered an ordinary assurance type warranty, and not a separate performance obligation. A warranty provision is recognized, see note 21

2. Revenue from lease of equipment and probes:

The group has a range of contracts related to lease of equipment and probes and can be split in two categories:

• Payment per procedures
• Lease of equipment and sale of probes

Payment per procedure:

Under this model, the equipment and probes are placed at the customer site free of charge. Medistim owns all equipment placed at the customer site. For the customer to be able to use the equipment a procedure (smart card) must be purchased. One procedure equals one surgery. The customer purchases a smart card that makes the system available for use.

The agreement is considered a lease with variable lease payments. Revenue is variable and recognized related to the actual use of the equipment and probes. For Medistim this means that revenue is recognized when a new card is shipped to a customer. There are two types of customers, flow customers and flow and imaging customers. Flow customers purchases a flow procedure, while flow and imaging customers purchase both a flow procedure and an imaging procedure. It is therefore a split of revenue between flow procedures and imaging procedures. Revenue is recognized when smartcards are purchased by the customer. The customer is dependent upon the smartcard in order to open the equipment and probe for use. The agreements are operational since equipment is returned when the agreement expires.

The individual agreement contains a minimum use clause. The duration of the agreement is 1-3 years, but divided into 12-month cycles, so minimum usage applies for 12 months at a time. If minimum usage is not achieved, Medistim has the right to extract the equipment from the customer site.

Lease of systems and sales or lease of probes:

Under this model, the customer leases the system and purchases probes when needed. The system revenue is recognized on a straight-line basis over the lease term. Probe revenue is recognized when the probe is delivered to the customer.

When probes are leased the expected probe consumption according to the contract is recognized on straight line basis but on a regular adjusted for actual probe consumption.

Other terms in the agreements

If a customer with a pay per procedure or lease agreement does not handle the equipment properly, the customer is liable towards Medistim to compensate for the damage and repair. It happens that customers after too low consumption want to keep the equipment. In such cases, the customer may purchase the equipment. In this case, this is registered as a system sale.

3. Third party sales

Sale of other third party medical equipment is recognized when the equipment is delivered to the customer. Payment from customers are mainly due within 30 days.

Other revenue in the P&L includes service, spare parts, grants and other revenue that is not own products or third party products.

SEGMENTS

The Group's activities are divided into strategic business units that are organized and managed separately. The division is also in accordance with the Group's internal reporting structure. The main divisions are sale of own products and sale of 3rd party products. Sale of own products has two business models, the capital model and the lease model.

Own Products: Medistim sells its own products either through a lease or as capital.

Medistim has a flexible business model in the US and leaves it up to the customer whether they want to lease the equipment or purchase the capital equipment and buy probes as consumable. Most customers in the US lease the equipment. The lease model in the USA has been successful since it does not demand upfront capital to have the equipment available. Medistim has direct representation in the USA, which makes it manageable to handle the lease model properly. However, several customers prefer to invest in the equipment and purchase probes as consumables and Medistim promotes both solutions.

The lease model has not been successful outside USA. It is often so that hospitals have a policy that the equipment they use must be hospital property. In addition, Medistim can only follow up this model properly where the company has direct representation, since lease customers require Medistim property at the customer site. Medistim serves around 60 distributors around the world. To follow up assets placed at customer sites in a global scale, and have distributors to manage Medistim assets, is considered to be to complex and risky.

Third party products

Distribution of third party products:

Distribution and sale of third party products is a separate segment. The group sells medical devices from third party manufacturers in Norway and Denmark. The product portfolio is carefully selected and mainly instruments and consumables within surgery.

Transactions between internal business units are performed at market terms. Revenue, cost and result for each segment includes transaction between the segments. On group level these transactions are eliminated.

RESEARCH AND DEVELOPMENT

Research cost is expensed as incurred. Cost to internal development of technology or software is capitalized as an intangible asset when it is demonstrated that :

• it is technical feasible to complete the asset,
• the company has the recourse to complete the project
• the product will generate future economic benefits, and
• expenditure can be reliable measured.

Cost capitalized include materials, salary and social expenses and other expenses that can be allocated to the development of the asset. Internally developed intangible assets are amortized on a straight-line basis over the expected useful life. Amortization starts when the asset is available for use. Intangible assets not ready for use, is tested for impairment on a yearly basis. Capitalized development costs are written down when a new product is ready for sale, or an improved product is ready for sale. Internally develop intangible asset is tested for impairment on a regular basis by discounting expected cash flow generated from the asset. If the discounted value is lower than the carrying amount the asset is written down.

INVENTORY

Inventory is valued at the lower of cost, using the FIFO principle, and net realizable value. Production cost includes the cost for components, cost of conversion (including direct labor cost) and other cost in bringing the inventories to their present location and condition. Net realizable value is the estimated sales price in the ordinary course of business less cost of completion and selling cost.

GOODWILL

Business combinations are accounted for using the acquisition method.

Goodwill is recognized as the difference between the aggregate of the consideration transferred and the amount of any non-controlling interest less the fair value of the net identifiable assets at the acquisition date. Goodwill is not depreciated, but is tested for impairment at least annually.

			YTD	YTD
GEOGRAPHIC SPLIT OF SALES	Q3 2023	Q3 2022	30.09.23	30.09.22	FY 2022
1=NOK 1000
USA	48 739	50 398	154 757	150 085	198 087
Canada	2 049	670	5 413	2 256	3 298
Latin America	879	763	2 067	1 568	2 223
Total AMERICAS	51 668	51 831	162 237	153 910	203 608
China	942	9 610	25 876	20 015	37 154
Japan	4 516	3 824	17 354	19 408	25 601
Rest of APAC	4 361	5 762	11 025	10 980	16 245
Total APAC	9 819	19 196	54 255	50 403	79 000
Europe	42 063	27 933	109 298	83 949	124 812
MEA	3 078	2 197	5 977	5 620	8 684
Total EMEA	45 141	30 129	115 275	89 569	133 496
Third party products\other	17 471	15 334	58 979	56 232	75 833
TOTAL SALES	124 098	116 490	390 745	350 114	491 937

Note 1 Revenue split and segments

GEOGRAPHIC SPLIT OF SALES IN NUMBER OF UNITS	Q3 2023	Q3 2022	YTD 30.09.23	YTD 30.09.22	FY 2022
AMERICAS PPP and lease:
Flow procedures (PPP/card based)	6 992	7 092	21 725	21 837	30 005
Imaging and flow procedures (PPP/
card based)	2 687	2 452	8 480	7 395	10 713
Flow systems (PPP or lease)	-	-		3	4
Flow and imaging systems (PPP or lease)	-	2	3	4	4
Capital sales:
Flow systems	3	6	14	14	17
Flow and imaging systems	6	7	18	26	32
Flow probes	427	419	1 371	1 318	1 707
Imaging probes	17	16	43	51	60
APAC
Flow systems	5	12	52	46	75
Flow and imaging systems	7	7	20	26	34
Flow probes	317	927	1 788	1 950	3 296
Imaging probes	6	16	44	37	48
EMEA
Flow systems	17	17	39	48	57
Flow and imaging systems	15	8	33	21	35
Flow probes	1 260	1 014	3 492	3 321	4 943
Imaging probes	21	9	42	45	63
TOTAL SALES IN UNITS
PPP and lease revenue:
Flow procedures (PPP/card based)	6 992	7 092	21 725	21 837	30 005
Imaging and flow procedures (PPP/ card based)	2 687	2 452	8 480	7 395	10 713
Flow systems (PPP or lease)	-	-	-	3	4
Flow and imaging systems (PPP or lease)	-	2	3	4	4
Capital sales:
Flow systems	25	35	105	108	149
Flow and imaging systems	28	22	71	73	101
Flow probes	2 004	2 360	6 651	6 589	9 946
Imaging probes	44	41	129	133	171

GEOGRAPHIC SPLIT OF SALES PER			YTD	YTD
PRODUCT GROUP	Q3 2023	Q3 2022	30.09.23	30.09.22	FY 2022
1=NOK 1000
AMERICAS PPP and lease:
Flow procedures (PPP/card based)	16 771	16 075	52 236	47 777	61 096
Imaging and flow procedures (PPP/
card based)	8 544	8 387	27 746	23 242	32 693
Capital sales:
Flow systems	3 445	4 647	13 862	11 929	14 579
Flow and imaging systems	9 698	10 886	29 131	36 212	44 984
Flow probes	10 805	9 543	33 266	27 365	41 256
Imaging probes	2 405	2 291	5 996	7 385	9 000
Total sales AMERICAS	51 668	51 830	162 237	153 910	203 608
APAC
Flow systems	1 529	2 807	13 145	10 643	17 654
Flow and imaging systems	4 555	5 217	13 088	15 262	19 925
Flow probes	4 182	10 064	25 789	21 951	38 106
Imaging probes	400	1 108	2 233	2 547	3 315
Total sales APAC	10 666	19 196	54 255	50 403	79 000
EMEA
Flow systems	7 009	4 514	13 448	13 152	17 431
Flow and imaging systems	10 604	6 176	21 250	14 592	21 524
Flow probes	24 743	18 230	76 951	58 284	89 820
Imaging probes	1 938	1 211	3 625	3 541	4 721
Total sales EMEA	44 294	30 131	115 275	89 569	133 496
TOTAL SALES
PPP and lease revenue:
Flow procedures (PPP/card based)	16 771	16 075	52 236	47 777	61 096
Imaging and flow procedures (PPP/
card based)	8 544	8 387	27 746	23 242	32 693
Capital sales:
Flow systems	11 983	11 969	40 456	35 724	49 664
Flow and imaging systems	24 857	22 279	63 469	66 066	86 433
Flow probes	39 729	37 837	136 006	107 600	169 182
Imaging probes	4 743	4 610	11 855	13 473	17 036
Total sales own products	106 627	101 157	331 766	293 882	416 104
Sales of third party products	17 471	15 334	58 979	56 232	75 833
TOTAL SALES	124 098	116 491	390 745	350 114	491 937

SPLIT OF EBIT PER SEGMENT	Q3 2023	Q3 2022	YTD 30.09.23	YTD 30.09.23	FY 2022
1=NOK 1000
EBIT from Medistim products	31 273	31 993	100 542	95 135	128 653
EBIT margin from Medistim products	29,3 %	31,6 %	30,3 %	32,4 %	30,9 %
EBIT from third party products	2 244	2 025	8 642	9 641	12 598
EBIT margin from third party products	12,8 %	13,2 %	14,7 %	17,1 %	16,6 %
TOTAL EBIT	33 517	34 017	109 184	104 777	141 251
EBIT margin	27,0 %	29,2 %	27,9 %	29,9 %	28,7 %

SPLIT OF SALES BETWEEN CARDIAC SURGERY, VASCULAR SURGERY AND THIRD PARTY PRODUCTS	Q3 2023	Q3 2022	YTD 30.09.23	YTD 30.09.23	FY 2022
1=NOK 1000
Sales within cardiac surgery	86 306	82 283	273 332	243 192	346 550
Sales within vascular surgery	20 321	18 874	58 434	50 691	69 554
Sales of third party products	17 471	15 334	58 979	56 232	75 833
Total sales	124 098	116 491	390 745	350 114	491 937

SPLIT OF SALES BETWEEN FLOW PRODUCTS, IMAGING PRODUCTS, AND THIRD PARTY PRODUCTS	Q3 2023	Q3 2022	YTD 30.09.23	YTD 30.09.23	FY 2022
1=NOK 1000
Flow products	68 484	65 881	228 697	191 100	279 943
Imaging products	38 144	35 276	103 069	102 782	136 161
Sales of third party products	17 471	15 334	58 979	56 232	75 833
Total sales	124 098	116 491	390 745	350 114	491 937

Note 2 Salary Expenses

			YTD	YTD
SALARY EXPENSES	Q3 2023	Q3 2022	30.09.23	30.09.23	FY 2022
1 = NOK 1000
Salary	31 455	28 410	78 997	68 619	97 697
Employers tax	4 575	3 586	14 261	11 976	15 778
Bonus/commision	2 529	4 038	12 566	15 942	25 237
Cost for contribution pension plan	2 364	2 177	6 685	5 492	5 590
Compensation to the Board	668	521	1 700	1 300	1 558
Other social costs	554	196	2 348	250	517
Total salary and social cost	42 145	38 927	116 557	103 579	146 376

Note 3 Intangible assets and goodwill

INTANGIBLE ASSETS AND GOODWILL	PRODUCT UNDER DEV.	COMPLETED PRODUCT	GOODWILL	TOTAL INTANGIBLE ASSETS
1 = NOK 1000
Historic cost 31.12.2022	11 851	81 928	14 128	107 907
Internal additions	7 218			7 218
External additions	2 300			2 300
Additions under development				-
Historic cost 30.09.2023	21 369	81 928	14 128	117 425
Accumulated depreciation and write downs	-	71 839	-	71 839
Depreciations for the year	3 088		-	3 088
Total depreciation as of 30.09.2023	3 088	71 839	-	74 927
Carrying amount 30.09.2023	18 281	10 089	14 128	42 498

Note 4 Specification of inventory

SPECIFICATION OF INVENTORY	30.09.2023	30.09.2022
1=NOK 1000
Raw material	74 914	54 263
Work in progress	7 844	2 467
Finished goods	48 725	42 836
Spare parts	9 422	9 694
Third party products	12 250	12 001
Inventory provision	-7 228	-6 928
TOTAL	145 927	114 333

Finished goods are measured at cost which includes cost for components and internal labor cost. Work in progress is valued at the total of the component cost and labor cost. It is necessary for the company to keep an additional security inventory for critical components for own developed products. Due to a strict regulatory regime within medical device, it takes time to introduce new devices or components. At the same time the tendency is that electronic components life circle is shorter. For this reason, inventory level is high to secure future deliveries for Medistim developed products.

Note 5 Financial income and expense

FINANCIAL INCOME AND EXPENSE	Q3 2023	Q3 2022	YTD 30.09.23	YTD 30.09.22	FY 2022
1 = 1000 NOK
Interest income	460	53	1 175	226	920
Other financial income	-	-	-	-	1 199
Gains on foreign exchange	1 287	4 806	8 967	14 270	14 427
Total financial income	1 747	4 859	10 141	14 496	16 546
Loss on foreign exchange Loss on hedging contracts	-1 646 -	-8 411 -	-8 677 -1 780	-15 024	-11 363 -
Interest cost on loans	-	-			-
Other financial expenses	-26	56	-49	-106	-385
Total financial expenses	-1 671	-8 356	-10 505	-15 131	-11 748
Net financial expenses	76	-3 497	-364	-635	4 799

Note 6 Alternative Performance Measures

ALTERNATIVE PERFORMANCE MEASURES	FY 2019	FY 2020	FY 2021	FY 2022	LTM SEPT 2023
1 = 1 MNOK
Numerator: Net income	70	69	91	114	117
Denominator: Invested capital
(avg)	198	214	196	230	256
Non-current assets	108	100	97	97	102
Plus: Current assets	162	174	177	233	247
Minus: Current liabilities	-71	-59	-78	-100	-92
Equals: Invested capital	198	214	196	230	256

Return On Invested Capital: In the numerator, 12 months rolling net profit is used. As denominator, the capital that circulates the business is used. For Medistim, this is noncurrent assets plus current assets minus current liabilities.

	RATES YTD	RATES YTD
RECONCILIATION OF CURRENCY NEUTRAL REVENUE	SEPT 2023	SEPT 2022
Year
USD average rate for the year	10,47	9,42
EUR average rate for the year	11,35	10,01
GBP average rate for the year	13,03	11,85
DKK average rate for the year	1,52	1,34
		REVENUE
		2023 WITH
SPLIT OF REVENUE IN USD, EUR AND NOK	2023	2022 RATES
1 = NOK 1000
Sales in USD
Procedural revenue Imaging and flow	79 981	71 960
Capital sales MiraQ flowmeasurement instruments	13 862	12 472
Capital sales MiraQ imaging and flowmeasurement instrument	29 131	26 209
Flow probes	33 266	29 930
Imaging probes	5 996	5 288
Sales in EUR
MiraQ flowmeasurement instrument	26 593	23 454
MiraQ imaging and flowmeasurement instrument	34 338	30 284
Imaging probes	5 858	5 167
Flowmeasurement probes	102 740	90 610
Other	-	-
Revenue in USD and EUR	331 766	295 375
Revenue in NOK	58 979	58 979
TOTAL REVENUE	390 745	354 354

Other Alternative Performance measures:

Profit before R&D, depreciation and impairment:	Margin after cost of goods, salary and social expenses and other operating expenses are deducted except for R & D expenses
EBITDA:	Earnings before interest, taxes, depreciation and amortization. Corresponds to operating profit before depreciations and impairment loss.
EBIT:	Earnings before interest and taxes. Corresponds to operating result.
Currency neutral growth:	Compares this years sales with previous year sale when sale in foreign currency is recalculated using the same average currency rate in the reporting period to get a neutral comparison
Working capital:	Inventory plus accounts receivable minus accounts payable

RECONCILIATION OF WORKING CAPITAL	YTD SEPT 2023	2 022	GROWTH
1 = 1000 NOK
Accounts receivable in balance sheet at year end	81 238	101 657	-29%
Inventory in the balancesheet at year end	145 927	114 333	196%
Accounts payaple in balance sheet at year end	-36 683	-30 258
Working capital	190 482	185 733	-10%

Note 7 Events after 30.09.2023

The Board of Directors has no knowledge about other events after 30.09.2023 that will affect the interim report and financial statement as of 30.09.2023.

marketing@medistim.com www.medistim.com

Medistim ASA (Head office) Økernveien 94 0579 Oslo Norway Phone +47 23 05 96 60

Medistim ASA (Manufacturing) Bromsveien 17 3183 Horten Norway

Phone +47 33 03 17 26

Medistim Norge AS Økernveien 94

0579 Oslo Norway Phone +47 23 03 52 50

Medistim Danmark ApS Søgade 16

4100 Ringsted Denmark Phone +45 23 800 300 Medistim USA Inc. 14000 25th Ave N. Ste. 108 Plymouth, MN 55447

USA Phone +1 763 208 9852

Medistim Deutschland GmbH Bahnhofstr. 32 82041 Deisenhofen Germany Phone +49 (0) 89 62 81 90 33

Medistim Spain S.L.

Calle Balmes 173, 4º, 2 08006 Barcelona, Spain Phone +34 911 238 318

Medistim UK Limited

34 Nottingham South Ind Est Ruddington Lane Wilford NG11 7EP Nottingham, UK Phone +44 (0) 115 981 0871