MeVis Medical Solutions AG

Quarterly Report • Aug 22, 2017

MeVis Medical Solutions AG

KEY FIGURES (IFRS)

FIGURES IN € k		Oct. 1, 2016 - Jun. 30, 2017	Oct. 1, 2015 - Jun. 30, 2016	Change
Revenues		14,196	11,752	21 %
of which segment	Digital Mammography	8,984	9,226	-3 %
	Other Diagnostics	5,212	2,526	106 %
EBITDA		6,286	4,491	40 %
EBITDA margin		44 %	38 %
EBIT		5,327	3,143	69 %
EBIT margin		38 %	27 %
Net financial result		-211	-487
EBT		5,116	2,656	93 %
Net profit for the period		3,967	5,692	-30 %
Earnings per share in € (basic)		2.18	3.13	-30 %
Earnings per share in € (diluted)		2.18	3.09	-29 %
		Jun. 30, 2017	Sep. 30, 2016	Change
Equity capital		36,862	32,889	12 %
Intangible assets		11,890	12,718	-7 %
Non-current and current liabilities		10,795	10,114	7 %
Balance sheet total		47,657	43,003	11 %
Equity ratio in %		77 %	76 %
Liquid funds2		28,404	24,356	17 %
Employees3		94	92

¹ Revenues are allocated to the currency according to the location of the customer; comprised of indirect sales via industry customers as well as sales to clinical end customers in the segment Distant Services.

² Comprising cash, cash equivalents and securities available for sale.

³ Full-time equivalents as of balance sheet date.

KEY SHARE DATA

As at June 30, 2017
Industry sector	Software / Medical Technology
Subscribed capital	€ 1,820,000.00
No. of shares	1,820,000
Last quotation on September 30, 2016	€ 35.90
Last quotation on June 30, 2017	€ 37.25
High/low in fiscal year 2016/2017	€ 41.00 / € 35.90
Market capitalization	€ 67.795 m
Treasury stock	0 (0 %)
Free float	17.8 %
Prime Standard (Regulated market)	Frankfurt and Xetra
Over-the-counter markets	Berlin, Dusseldorf, Munich, Stuttgart
Indices	CDAX, PrimeAS, TechnologyAS, DAXsector Soft ware, DAXsubsector Software, GEX
ISIN / WKN / Ticker symbol	DE000A0LBFE4 / A0LBFE / M3V

	KEY FIGURES (IFRS)1
	LETTER TO THE SHAREHOLDERS3
	THE MEVIS SHARE 5
	INTERIM MANAGEMENT REPORT Q3/20177
	Preamble7
	Basics of the company7
	Structure 7
	Short summary of business activities 7
	Reporting segments8
	Economic report8
	Earnings position8
	Financial position9
	Net asset position9
	Material events occurring after the balance sheet date 10
	Opportunities and risk report 10
	Outlook 10
	INCOME STATEMENT Q1 - Q3 201711
	INCOME STATEMENT Q3 201712
	STATEMENT OF FINANCIAL POSITION 13
	STATEMENT OF CASH FLOW 14
	STATEMENT OF CHANGES IN EQUITY 15
	NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 201716
	Basic information 16
	General disclosures 16
	Recognition and measurement methods 16
	Effects of new accounting standards 16
	Selected notes on the balance sheet and income statement 17
1.	Revenues 17
2.	Staff costs 17
3.	Other operating expenses 17
4.	Depreciation and amortization 18
5.	Net financial result 18
6.	Income taxes 18
7.	Equity-method investments 18
8.	Current other financial assets 18
9.	Shareholders´ equity 18
10.	Other financial liabilities 19
11.	Transactions with related parties 19
12.	Contingent receivables and contingent liabilities 19
13.	Earnings per share 19
14.	Segment information 20
15.	Post balance sheet events 20
	DISCLAIMER 21

LETTER TO THE SHAREHOLDERS

from left: Marcus Kirchhoff, Dr. Robert Hannemann

Dear Shareholders, Customers, Business Associates and Employees

On the heels of a good first half of the year, the current trends continued in the third quarter. While this entailed weaker licensing business, mainly in the Digital Mammography segment, it also included growing service business and a one-time effect of € 1.8 million from the granting of extensive usage rights for the MeVisLab in December 2016. This resulted in strong sales after three quarters of € 14.2 million − up 21 % on the previous year − with attractive EBIT of € 5.3 million − a margin of 38 %.

Our performance in detail: Sales generated in the third quarter of 2017 amounted to € 4,440 k, up 17 % compared to the same quarter in the previous year (€ 3,795 k). The development support services provided to Hologic accounted for a substantial share of this increase. As a result, sales rose year on year to € 14,196 k (prev. year: € 11,752 k) in the first three quarters. The increase in revenues resulted mainly from the sale of extensive usage rights for our tool for the development of software prototypes, MeVisLab, for € 1,800 k, which is also included in the following in the sales of the Other Diagnostics segment, as well as from the aforementioned development services for Hologic. Sales of new licenses fell by 15 % to € 4,231 k, and the maintenance business decreased by 6 %. Sales in the Digital Mammography segment decreased by 3 % to € 8,984 k (prev. year: € 9,226 k), whereas sales in the Other Diagnostics segment increased to € 5,212 k (prev. year: € 2,526 k); without the one-time effect, this corresponds to very strong growth of 35 %.

Operating costs increased in the third quarter of 2017, as planned. Personnel expenses saw a substantial 18 % increase on account of the stock options issued in 2013 and exercised in the second and third quarters of 2017. Cumulated for the first three quarters, this also corresponds to a rise of 18 %. At € 448 k (prev. year: € 474 k), other operating expenses remained constant year on year in the third quarter. Cumulated for the first three quarters, other operating expenses fell by 18 % year on year.

Driven by the rise in sales, EBITDA (earnings before interest, taxes, depreciation and amortization) increased by 40 % year on year, from € 4,491 k to € 6,286 k, despite the higher costs.

Depreciation and amortization came to € 959 k (down 29 % year on year, primarily due to lower scheduled write-downs on capitalized development costs), resulting in EBIT (earnings before interest and taxes) of € 5,327 k (up a significant 69 % on the previous year's figure of € 3,143 k) for the reporting period and a corresponding EBIT margin of 38 % (prev. year: 27 %).

The financial result improved year on year, from € -487 k to € -211 k. The earnings of the 51 % share in MeVis BreastCare GmbH & Co. KG, which is recognized at equity, was largely responsible for this.

The tax result stood at € -1,149 k. The fiscal unity is interrupted due to the change in majority shareholder in the current fiscal year. Provisions for corporation income tax and trade tax for the current fiscal year were therefore set aside in the period under review.

After-tax earnings consequently fell by € 1,725 k to € 3,967 k, which is equivalent to undiluted earnings per share of € 2.18 (prev. year: € 3.13).

As of June 30, 2017, cash and cash equivalents had risen by € 4,048 k to € 28,404 k compared to the end of the short fiscal year 2016.

We forecast a significant increase in sales to between € 17.0 million and € 17.5 million for fiscal year 2017 (October 1, 2016 to September 30, 2017). The Digital Mammography business segment will remain the main source of sales. This segment will again exclusively comprise business with our industrial customer Hologic in 2017. Earnings before interest and taxes (EBIT) are expected to rise year on year to between € 5.0 million and € 5.5 million. As in the previous reporting period, the Executive Board will regularly review its expectations during fiscal year 2017 based on current business developments.

We would like to take this opportunity to once again thank all employees for their exceptional performance as well as our business associates, customers and shareholders for their confidence in us!

Marcus Kirchhoff Dr. Robert Hannemann Chairman & CEO Member of the Executive Board

THE MEVIS SHARE

DEVELOPMENT OF THE MEVIS SHARE (12 MONTH)

The highest price recorded for the MeVis share in electronic XETRA trading over the reporting period was € 41.00, and the lowest price was € 35.90. MeVis Medical Solutions AG finished the third quarter with a share price of € 37.25 (XETRA) compared to € 35.90 on September 30, 2016, the end of the short fiscal year 2016, and € 39.22 at the end of the first half of the year. Although the value of the MeVis share has somewhat declined, it still increased by almost 4 % at the end of the third quarter of the current fiscal year, compared to the closing price at the end of the short fiscal year 2016. The MeVis share performed positively over the last 12 months at +31 %. Market capitalization was around € 67.80 million at the end of the period, in relation to the 1,820,000 shares in circulation. The number of registered deposit accounts at the end of the period, at 683, did not change significantly compared to September 30, 2016 (681 deposit accounts).

VMS Deutschland Holdings GmbH took over the majority shareholding of 73.52 % of the total share capital in MeVis Medical Solutions AG in April 2015 after a voluntary public tender offer. The domination and profit and loss transfer agreement signed on August 10, 2015 between VMS Deutschland Holdings GmbH and MeVis Medical Solutions AG was entered into the Commercial Register of the Bremen local court on October 20, 2015 and thus came into legal effect. As part of the domination and profit and loss transfer agreement, VMS Deutschland Holdings GmbH undertook to acquire upon the request of any outside shareholder the latter's MeVis shares in return for a cash settlement in the amount of € 19.77 per share. Alternatively, VMS Deutschland Holdings GmbH guarantees those outside shareholders of MeVis Medical Solutions AG who do not wish to make use of the settlement offer, for the duration of the domination and profit and loss transfer agreement,

the annual payment of a compensatory amount per fiscal year of MeVis Medical Solutions AG for every registered share of MeVis Medical Solutions AG with a pro rata share in the share capital of € 1.00 per share in the amount of € 1.13 gross / € 0.95 net.

	9 M Jun. 30, 2017	6 M Mar. 31, 2017	3 M Dec. 31, 2016
Closing price in €	37.25	39.22	37.95
Period high in €	41.00	41.00	41.00
Period low in €	35.90	37.30	37.30
Market capitalization in million € (XETRA ultimo)	67.8	71.4	69.1
Number of shares	1,820,000	1,820,000	1,820,000
Price-to-earnings ratio (XETRA ultimo)	12.82	10.06	3.90
Earnings per share in € (basic)	2,18	1.95	2.43
Earnings per share in € (diluted)	2,18	1.95	2.40

KEY INDICATORS OF THE MEVIS SHARE

DEVELOPMENT OF THE SHAREHOLDER STRUCTURE

In the first three quarters of 2017 VMS Deutschland Holdings GmbH headquartered in Darmstadt, an indirect subsidiary of Varian Medical Systems, Inc., Palo Alto, California, USA, held 73.65 % of the share capital of MeVis Medical Solutions AG. As of December 31, 2016, VMS Deutschland Holdings GmbH granted Varex Imaging Deutschland AG, Willich, a power of attorney to exercise its voting rights not bound by any instructions. Other institutional shareholders are the HANSAINVEST Hanseatische Investment-GmbH with approximately 5.51 % and Oppenheim Asset Management Services S.à.r.l. with approximately 3.01 % of the total share capital of MeVis Medical Solutions AG according to shareholder notifications received by us. Around 17.82 % of shares are currently in free float ownership.

INTERIM MANAGEMENT REPORT Q3/2017

PREAMBLE

As resolved during the Annual General Meeting on June 7, 2016, MeVis Medical Solutions AG, Bremen, (hereafter: "MMS AG" or "Company") has changed its fiscal year. The Company's fiscal year starts on October 1 and ends on September 30 of the following year. Accordingly, the third quarter of fiscal year 2017, which is reported upon here, covers the period from April 1 to June 30, 2017. The previous year's figures indicated below refer to the second quarter of fiscal year 2016, the period from April 1 to June 30, 2016. Therefore, in this report, the third quarter of fiscal year 2017 is compared with the second quarter of fiscal year 2016.

BASICS OF THE COMPANY

STRUCTURE

Through a joint venture with Siemens Healthcare GmbH, Munich (hereafter: "Siemens"), MMS AG holds 51 % of MeVis BreastCare GmbH & Co. KG, Bremen, (hereafter: "MBC" or "MBC KG").

MMS AG has belonged to the Varian Group under the leadership of Varian Medical Systems, Inc., Palo Alto, California, USA, via VMS Deutschland Holdings GmbH, Darmstadt since April 21, 2015. MMS AG and VMS Deutschland Holdings GmbH concluded a domination and profit and loss transfer agreement on August 10, 2015, which was approved by the General Meeting of the shareholders on September 29, 2015. This was entered in the Commercial Register on October 20, 2015.

With the spin-off agreement dated December 28, 2016, the transfer of MMS AG shares from VMS Deutschland Holdings GmbH to Varex Imaging Deutschland AG was resolved with economic effect as of December 30, 2016. Object of the spin-off agreement is also the domination and profit and loss transfer agreement between MMS AG and VMS Deutschland Holdings GmbH. Varex Imaging Deutschland AG is managed by Varex Imaging Corporation, Salt Lake City Utah, USA, which has emerged as a spin-off from Varian Medical Systems, Inc., Palo Alto, California, USA. The spin-off becomes legally effective upon entry into the commercial register.

SHORT SUMMARY OF BUSINESS ACTIVITIES

MMS AG develops innovative software for analyzing and evaluating image data and markets it to equipment manufacturers of medical devices and providers of medical IT platforms.

Clinical focuses are the image-based early detection and diagnosis of epidemiologically important diseases such as breast, lung and prostate cancer as well as neurological disorders. The software applications support many of the imaging modalities available. These not only include X-ray modalities such as computed tomography, digital mammography or digital tomosynthesis, but also magnetic resonance imaging, digital sonography and the simultaneous use of multiple modalities (multimodality). MeVis supplies technologies and applications for global medical industry leaders, meeting their needs and helping them to strengthen their leadership positions.

In addition to the sale of software licenses and corresponding maintenance contracts, MeVis offers services to clinical end customers. These include three-dimensional technical visualizations ("MeVis Distant Services") and interactive online trainings to improve the diagnostic capabilities of the clinicians ("Online Academy").

REPORTING SEGMENTS

For reporting purposes and internal governance, MeVis has two operating segments ("Digital Mammography" and "Other Diagnostics").

The Digital Mammography segment develops and markets software products which support breast diagnostic imaging and intervention. Aside from the original products for digital mammography, new software applications for other imaging modalities such as ultrasound, magnetic resonance imaging and tomosynthesis were added. These products are distributed to the industrial customer Hologic.

In addition to the breast diagnostics business based on magnetic resonance imaging conducted with Invivo Corporation, the Other Diagnostics segment also includes digital radiology products (e.g. magnetic resonance imaging (MRI), computed tomography (CT), etc.) for other types of diseases such as lung, breast and prostate as well as general image-based analysis and diagnostics of radiology images. Furthermore, the business with Vital Images for lung diagnostics and general analysis of MR-image data is included in this segment. Other main activities in this segment include the services of "MeVis Distant Services" for technical visualizations, which are used in training, for publications, presentations and for research purposes. In addition, this segment includes interactive online training ("MeVis Online Academy") to improve the diagnostic capabilities of clinical end customers.

ECONOMIC REPORT

EARNINGS POSITION

Sales in the third quarter of fiscal year 2017 came to € 4,440 k, up 17 % on the previous year (€ 3,795 k). Licensing business declined by 10 % in the third quarter to € 1,383 k (prev. year: € 1,545 k), and maintenance business fell by 8 % to € 1,799 k (prev. year: € 1,950 k). The service business, primarily attributed to development services for Hologic, rose sharply from € 299 k in the previous-year period to € 1,256 k.

Revenues stood at € 14,196 k in the first three quarters of the year (prev. year: € 11,752 k), of which € 8,984 k was attributable to the Digital Mammography segment (prev. year: € 9,226 k) and € 5,212 k to Other Diagnostics (prev. year: € 2,526 k). At 63 % (prev. year: 79 %), the Digital Mammography segment continues to be the main source of revenues at the Company.

The 18 % increase in personnel expenses to € 6,727 k (prev. year: € 5,717 k) was primarily due to the stock options issued in 2013 and exercised in the second and third quarters. MMS AG had 105 employees on average in the first three quarters of 2017. This corresponds to 93 full-time equivalents (prev. year: 100 employees or 88 full-time equivalents).

Other operating expenses were down significantly year on year and totalled € 1,471 k (prev. year: € 1,798 k) and were largely attributable to the provision for lawsuit costs of € 300 k formed in 2015 which no longer appear in the current financial accounts. These expenses mainly comprised rental/leasing expenses of € 433 k (prev. year: € 415 k), maintenance/repair costs of € 177 k (prev. year: € 122 k), travel expenses of € 169 k (prev. year: € 149 k) and legal and consulting costs of € 122 k (prev. year: € 136 k).

EBITDA (earnings before interest, taxes, depreciation and amortization) totaled € 6,286 k in the period under review (prev. year: € 4,491 k). Accordingly, the EBITDA margin increased by a considerable margin to 44 % (prev. year: 38 %).

As expected, depreciation, amortization and impairments of intangible assets and property, plant and equipment fell by 29 % to € 959 k (prev. year: € 1,348 k), while amortization of development services declined by € 381 k to € 563 k (prev. year: € 944 k).

Earnings before interest and taxes (EBIT) amounted to € 5,327 k in the reporting period (prev. year: € 3,143 k). The EBIT margin increased significantly to 38 % compared to a previous year value of 27 %. The financial result improved in the period under review to € -211 k (prev. year: € -487 k). In comparison to the previous year, there were significant changes in the balance of income and expenses from exchange rate differences of € -502 k (prev. year: € -207 k), as well as in the earnings of the 51 % share in MeVis BreastCare GmbH & Co. KG of € 173 k (prev. year: € -246 k), which is recognized at equity.

Earnings before taxes (EBT) came to € 5,116 k in the reporting period (prev. year: € 2,656 k). Accordingly, the EBT margin increased significantly to 36 % compared to the previous year's value of 23 %.

The tax result came to € -1,149 k (prev. year: € 3,036 k through the reversal of deferred taxes). The fiscal unity is interrupted due to the change in majority shareholder in the current fiscal year. Provisions for corporation income tax and trade tax for the current fiscal year were therefore set aside in the period under review.

Net profit after taxes therefore stood at € 3,967 k (prev. year: € 5,692 k).

Undiluted earnings per share fell to € 2.18 (prev. year: € 3.13).

FINANCIAL POSITION

Cash flow from current operating activities came to € 4,903 k (prev. year: € 5,215 k) in the period under review. This comprises earnings before interest and taxes (EBIT) of € 5,327 k (prev. year: € 3,143 k), adjusted for depreciation in the amount of € 959 k (prev. year: € 1,348 k), the total of all non-cash expenses and income in the amount of € 6 k (prev. year: € -194 k), the total of interest paid and received in the amount of € 186 k (prev. year: € 69 k), the total of taxes paid and received in the amount of € -231 k (prev. year: € -456 k), changes in trade receivables and other assets in the amount of € -1,107 k (prev. year: € 1,244 k), and changes in trade payables and other liabilities in the amount of € -238 k (prev. year: € 430 k).

Net cash inflow from investing activities stood at € -97 k in the period under review (prev. year: € 8,087 k) and predominantly comprised payments for investments. In the previous year, net cash inflow from investing activities included payments for the acquisition of securities of € 497 and proceeds from the sale of securities in the amount of € 8,692 k.

The liquidity-relevant change in cash and cash equivalents came to € 4,806 k in the period under review (prev. year: € 8,560 k).

NET ASSET POSITION

Liquid funds amounted to € 28,404 k (September 30, 2016: € 24,356 k) as of the balance sheet date. They consist solely of cash and cash equivalents.

Total assets climbed by € 4,654 k to € 47,657 k as of the end of the third quarter (September 30, 2016: € 43,003 k), which was primarily due to the rise in receivables and liquidity. The equity ratio rose slightly to 77 % (September 30, 2016: 76 %). Equity covered 239 % of fixed assets (September 30, 2016: 204 %), and fixed assets amounted to 48 % of current assets (September 30, 2016: 60 %). Fixed assets fell to 32 % of total assets (September 30, 2016: 37 %).

The increase in assets is largely due to liquidity and receivables. Equity was up 12 % to € 36,862 k (September 30, 2016: € 32,889 k) on the back of net profit for the period. Income tax liabilities likewise increased to € 972 k (September 30, 2016: € 468 k). There were no other significant changes in liabilities.

MATERIAL EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

There have been no transactions of material significance for the Company after the reporting date.

OPPORTUNITIES AND RISK REPORT

No material changes have occurred with regard to the risk situation of the Company since the beginning of the fiscal year. Therefore, the statements, made in the opportunities and risk report of the annual financial statements for the short fiscal year as of September 30, 2016, remain valid.

OUTLOOK

We forecast a significant increase in sales to between € 17.0 million and € 17.5 million for fiscal year 2017 (October 1, 2016 to September 30, 2017). The Digital Mammography business segment will remain the main source of sales. This segment will again exclusively comprise business with our industrial customer, Hologic, in 2017. The expected strong increase in sales will most likely result from a decline in the operating activities in new licenses and maintenance contracts, a sharp increase in development support for Hologic for the development of its own software and a one-off effect from the sale of extensive usage rights for MeVisLab. Earnings before interest and taxes (EBIT) are expected to increase to between € 5.0 and € 5.5 million compared to 2016.

As in the previous reporting period, the Executive Board will regularly review its expectations during fiscal year 2017 based on current business developments.

Bremen, August 22, 2017

Marcus Kirchhoff Dr. Robert Hannemann Chairman & CEO Member of the Executive Board

INCOME STATEMENT Q1 - Q3 2017

for the period October 1, 2016 through June 30, 2017

FIGURES IN € k	Notes	Oct. 1, 2016 - Jun. 30, 2017	Oct. 1, 2015 - Jun. 30, 2016
Revenues	1	14,196	11,752
Other operating income		726	745
Cost of material		-438	-491
Staff costs	2	-6,727	-5,717
Other operating expenses	3	-1,471	-1,798
Earnings before interest, taxes, depreciation and amortization (EBITDA)		6,286	4,491
Depreciation, amortization and impairment of intangible and tangible assets	4	-959	-1,348
Earnings before interest and tax (EBIT)		5,327	3,143
Share of profit of equity-method investments		173	-246
Interest income		132	53
Interest expenses		0	-18
Other net financial result		-516	-276
Net financial result	5	-211	-487
Earnings before tax (EBT)		5,116	2,656
Income tax	6	-1,149	-34
Deferred tax		0	3,070
Net profit for the period		3,967	5,692
Earnings per share in €	13
Basic		2.18	3.13
Diluted		2.18	3.09

STATEMENT OF COMPREHENSIVE INCOME

for the period October 1, 2016 through June 30, 2017

FIGURES IN € k	Notes	Oct. 1, 2016 - Jun. 30, 2017	Oct. 1, 2015 - Jun. 30, 2016
Net profit for the period		3,967	5,692
Items that are never recognized as profit or loss
Actuarial losses from pensions		0	8
Deferred taxes (prev. year impacts of the fiscal unity on deferred tax)		0	-38
		0	-30
Items that have been or could be recognized as profit or loss
Changes in fair value of available-for-sale financial in struments		0	210
Deferred taxes on the change in fair value		0	-67
		0	143
Other comprehensive income		0	113
Total comprehensive income		3,967	5,805

INCOME STATEMENT Q3 2017

for the period April 1 through June 30, 2017

		Apr. 1 -	Apr. 1 -
FIGURES IN € k	Notes	Jun. 30, 2017	Jun. 30, 2016
Revenues	1	4,440	3,795
Other operating income		286	223
Cost of material		-82	-115
Staff costs	2	-2,197	-1,868
Other operating expenses	3	-448	-474
Earnings before interest, taxes, depreciation and amortization (EBITDA)		1,999	1,561
Depreciation, amortization and impairment of intangible and tangible assets	4	-282	-451
Earnings before interest and tax (EBIT)		1,717	1,110
Share of profit of equity-method investments		308	-14
Interest income		72	15
Interest expenses		0	0
Other net financial result		-1,686	491
Net financial result	5	-1,306	492
Earnings before tax (EBT)		411	1,602
Income tax	6	1	-5
Deferred tax		0	0
Net loss/profit for the period		412	1,597
Earnings per share in €	13
Basic		0.23	0.88
Diluted		0.23	0.87

STATEMENT OF COMPREHENSIVE INCOME

for the period April 1 through June 30, 2017

FIGURES IN € k	Notes	Apr. 1 - Jun. 30, 2017	Apr. 1 - Jun. 30, 2016
Net loss/profit for the period		412	1.597
Items that are never recognized as profit or loss
Actuarial losses from pensions		0	0
Deferred taxes (prev. year impacts of the fiscal unity on deferred tax)		0	0
		0	0
Items that have been or could be recognized as profit or loss
Changes in fair value of available-for-sale financial in struments		0	0
Deferred taxes on the change in fair value		0	0
		0	0
Other comprehensive income		0	0
Total comprehensive income		412	1.597

STATEMENT OF FINANCIAL POSITION

as of June 30, 2017

FIGURES IN € k	Notes	Jun. 30, 2017	Sep. 30, 2016
Non-current assets Intangible assets		11,890	12,718
Property, plant and equipment		282	316
Equity-method investments	7	1,631	1,611
Trade receivables		1,633	1,454
		15,436	16,099
Current assets
Trade receivables		3,338	2,203
Other financial assets	8	254	202
Other assets		225	143
Cash and cash equivalents		28,404	24,356
		32,221	26,904
ASSETS		47,657	43,003
Equity capital	9
Subscribed capital		1,820	1,820
Capital reserve		8,225	8,219
Revaluation reserve		250	326
Retained earnings		26,567	22,524
		36,862	32,889
Non-current liabilities
Provisions		269	269
		269	269
Current liabilities
Provisions		142	142
Trade payables		171	327
Other financial liabilities	10	6,034	5,743
Deferred income		3,003	3,021
Other liabilities		204	144
Income tax liabilities		972	468
		10,526	9,845
EQUITY AND LIABILITIES		47,657	43,003

STATEMENT OF CASH FLOW

for the period October 1, 2016 through June 30, 2017

	FIGURES IN € k	Notes	Oct. 1, 2016 - Jun. 30, 2017	Oct. 1, 2015 - Jun. 30, 2016
	Earnings before interest and tax (EBIT)		5,327	3,143
+	Depreciation and amortization and impairments	5	959	1,348
+/-	Increase/decrease in provisions		1	-369
+/-	Other non-cash expenses/income		6	-194
+	Interest received		186	74
-	Interest paid		0	-5
-	Tax paid		-231	-456
+/-	Decrease/increase in trade receivables and other assets		-1,107	1,244
-/+	Decrease/increase in trade payables and other li
	abilities		-238	430
=	Cash flow from operating activities		4,903	5,215
-	Purchase of property, plant and equipment		-90	-85
-	Purchase of intangible assets (excl. development cost)		-7	-23
-	Payments for the acquisition for marketable secu rities		0	-497
+	Proceeds from sale of marketable securities		0	8,692
=	Cash flow from investing activities		-97	8,087
-	Payments for profit transfer/dividend		0	-4,742
=	Cash flow from financing activities		0	-4,742
	Change in cash and cash equivalents		4,806	8,560
	Effect of exchange rates on cash and cash
	equivalents		-758	345
+	Cash and cash equivalents at the beginning of the period		24,356	13,974
=	Cash and cash equivalents at the end of the period		28,404	22,879

STATEMENT OF CHANGES IN EQUITY

for the period October 1, 2016 through June 30, 2017

				Cumulative change in
FIGURES IN € k	Subscribed capital	Capital reserve	Re-valua tion re serve	fair value for sale of available assets	Retained earnings	Total
Balance on Oct. 1, 2015	1,820	8,203	429	-143	24,274	34,583
Net profit	0	0	0	0	5,692	5,692
Other comprehensive income	0	0	0	143	-30	113
Total comprehensive
income	0	0	0	143	5,662	5,805
Issue of stock options	0	12	0	0	0	12
Transfer from revaluation re serve to retained earnings
based on amortization	0	0	-77	0	77	0
Payout from profit transfer agreement	0	0	0	0	-4,742	-4,742
Balance on Jun. 30, 2016	1,820	8,215	352	0	25,271	35,658
Balance on Oct. 1, 2016	1,820	8,219	326	0	22,524	32,889
Net profit	0	0	0	0	3,967	3,967
Other comprehensive income	0	0	0	0	0	0
Total comprehensive
income	0	0	0	0	3,967	3,967
Issue of stock options	0	6	0	0	0	6
Transfer from revaluation re serve to retained earnings
based on amortization	0	0	-76	0	76	0
Balance on Jun. 30, 2017	1,820	8,225	250	0	26,567	36,862

NOTES TO THE FINANCIAL STATEMENTS AS OF JUNE 30, 2017

BASIC INFORMATION

GENERAL DISCLOSURES

MeVis Medical Solutions AG ("MMS AG", "MeVis" or "Company" for short) was incorporated at the end of 1997 and commenced business in 1998. It has its registered office in Bremen/Germany. Its address is Caroline-Herschel-Str. 1, 28359 Bremen. MMS AG is registered in the Commercial Register of the Bremen Local Court (HRB 23791 HB).

So far, MMS AG has been included, via VMS Deutschland Holdings GmbH, Darmstadt, Germany, in the consolidated financial statements of the Varian Group, under the leadership of Varian Medical Systems, Inc., Palo Alto, California. However, with the spin-off agreement dated December 28, 2016, the transfer of MMS AG shares from VMS Deutschland Holdings GmbH to Varex Imaging Deutschland AG was resolved with economic effect as of December 30, 2016. The spin-off becomes legally effective upon entry into the commercial register. Varex Imaging Deutschland AG is managed by Varex Imaging Corporation, Salt Lake City Utah, USA. Varex Imaging Corporation prepares the consolidated financial statements for the largest and smallest group of entities and MMS AG is included in these. The consolidated financial statements are filed with the U.S. Securities and Exchange Commission (SEC) and can be obtained from the head office of the group parent company.

The interim financial statements of MeVis Medical Solutions AG, Bremen as at June 30, 2017 were prepared in accordance with Section 315a (1) of the German Commercial Code (HGB) in line with the rules and regulations in force on the balance sheet date and approved by the European Union of the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). Accordingly, this interim report as at June 30, 2017 was prepared in conformity with IAS 34 "Interim Reporting". The notes to the interim financial statements are presented in abridged form in line with the option provided by IAS 34. The interim financial statements and interim management report have neither been audited nor subjected to accounting review.

RECOGNITION AND MEASUREMENT METHODS

The interim financial statements from October 1, 2016 to June 30, 2017 use the same recognition and measurement policies as the individual financial statement according to IFRS for the short fiscal year 2016. The interim financial statements as of June 30, 2017 must therefore be read in conjunction with the individual financial statements according to IFRS for the short fiscal year as of September 30, 2016.

EFFECTS OF NEW ACCOUNTING STANDARDS

MMS AG's interim financial statements as of June 30, 2017 including the previous year's figures have been prepared in accordance with IFRS as endorsed by the European Union as of September 30, 2016. The same accounting and valuation principles were applied that were used in preparing the individual financial statements according to IFRS for the short fiscal year as at September 30, 2016 and in addition, IAS 34 "Interim reporting" was applied. New announcements of the IASB applicable as at June 30, 2017 had no material impacts on the MeVis financial statements.

SELECTED NOTES ON THE BALANCE SHEET AND INCOME STATEMENT

1. REVENUES

Revenues break down by type as follows:

	Oct. 1, 2016 -	Oct. 1, 2015 -
FIGURES IN € k	Jun. 30, 2017	Jun. 30, 2016
Software and licenses	4,231	4,996
Maintenance (software service contracts)	5,429	5,760
Services	4,528	989
Hardware	8	7
	14,196	11,752

2. STAFF COSTS

The average headcount was 105 (prev. year: 100). This is equivalent to an average of 93 full-time positions (prev. year: 88). The average figures include 7 testers (as a rule, students employed on a negligible part-time basis) (prev. year: 6).

3. OTHER OPERATING EXPENSES

FIGURES IN € k	Oct. 1, 2016 - Jun. 30, 2017	Oct. 1, 2015 - Jun. 30, 2016
Rental/leasing expenses	433	415
Maintenance/repairs	177	122
Travel expenses	169	149
Legal and consulting costs	122	136
Cost of preparing and auditing financial statements	60	89
Training costs	56	24
Energy costs	54	53
Vehicle costs	53	44
Internet expenses	46	36
Cleaning expenses	34	27
Cost of Annual General Meeting	29	100
Hospitality costs	27	34
External work	25	71
Office supplies	24	18
Events/congresses	23	13
Membership fees	23	7
Insurances	21	51
Patent lawsuit expenses	0	300
Others	95	109
	1,471	1,798

4. DEPRECIATION AND AMORTIZATION

FIGURES IN € k	Oct. 1, 2016 - Jun. 30, 2017	Oct. 1, 2015 - Jun. 30, 2016
Amortization of industrial property rights and
similar rights and customer bases	272	289
Amortization of capitalized development expenses	563	944
Depreciation of property, plant and equipment	124	115
	959	1,348

5. NET FINANCIAL RESULT

The net financial result as of June 30, 2017 amounted to € -211 k (prev. year: € -487 k). It mainly consisted of the balance of income and expenses from exchange rate differences of € -502 k (prev. year: € -207 k), the result derived from equity-method investments amounting to € 173 k (prev. year: € -246 k) and interests received in the amount of € 132 k (prev. year: € 53 k).

6. INCOME TAXES

Income tax expenses mainly resulted from corporate income tax, commercial tax, withholding tax on capital and in 2015 from the result of deferred tax assets and liabilities resulting from the differences between amounts included in the IFRS financial statements and those included in the tax assessment.

7. EQUITY-METHOD INVESTMENTS

Financial assets concern the equity interest of 51 %, valued in accordance with the equity method, in the MeVis BreastCare GmbH & Co. KG, Bremen, as well as the MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen.

8. CURRENT OTHER FINANCIAL ASSETS

FIGURES IN € k	Jun. 30, 2017	Sep. 30, 2016
Loans granted and receivables	252	116
Eligible expenses	0	66
Other	2	20
	254	202

Loans and receivables amounted to € 252 k (September 30, 2016: € 116 k) against MeVis BreastCare GmbH & Co. KG, Bremen.

9. SHAREHOLDERS´ EQUITY

Revaluation reserve

In connection with the acquisition of the 49 % interest in MeVis BreastCare Solutions GmbH & Co. KG (hereafter: "MBS KG") from Siemens AG and the subsequent full consolidation of MBS KG in 2008, the assets and liabilities of MBS KG, which were accrued to MMS AG with the official registration of the merger of MeVis BreastCare Solutions Verwaltungs-GmbH on August 1, 2013, were completely revaluated. Where this increase was attributable to the 51 % interest in MBS KG already held by the Company, the difference was recognized within the revaluation reserve. The amount of € 1,688 k comprises intangible assets of € 2,411 k net of deferred taxes of € 723 k. Amounts equaling the depreciation and amortization recognized on these assets are reclassified as retained earnings on a proportionate basis.

FIGURES IN € k	Oct. 1, 2016 - Jun. 30, 2017	Oct. 1, 2015 - Jun. 30, 2016
Status as at October 1	326	429
-Transfer of the amount corresponding to write-downs and the associated deferred taxes to retained earnings, without an im
pact on profit and loss	-76	-77
Status as at June 30	250	352

10. OTHER FINANCIAL LIABILITIES

Current other financial liabilities

FIGURES IN € k	Jun. 30, 2017	Sep. 30, 2016
Liabilities to affiliated companies	4,157	4,157
Staff liabilities	1,877	1,586
	6,034	5,743

The liabilities to affiliated companies as of June 30, 2017 comprise the transfer of German GAAP (HGB) profit for the short fiscal year 2016.

Staff liabilities primarily comprise the costs for accrued vacation entitlements, bonuses and the 13th salary.

11. TRANSACTIONS WITH RELATED PARTIES

In the first quarter of 2017, the sale of extensive usage rights for our tool for the development of software prototypes MeVisLab in the amount of € 1,800 k was finalized with the Varian Group.

12. CONTINGENT RECEIVABLES AND CONTINGENT LIABILITIES

In comparison with the contingent receivables and contingent liabilities presented the individual financial statement according to IFRS for the short fiscal year 2016, no changes occurred in the first three quarters of the current fiscal year.

13. EARNINGS PER SHARE

Earnings per share equal the profit on continuing activities or profit (after tax) divided by the weighted average number of shares outstanding during the financial year. Earnings per share (fully diluted) are calculated on the assumption that all securities, stock options and stock awards with a potentially dilutionary effect are converted or exercised.

As the criteria for exercising the options have been satisfied as of the balance sheet date, it can be assumed that the options will be exercised by the employees. Accordingly, they are included in the calculation of earnings per share.

The weighted average of shares outstanding is determined by taking account of shares redeemed and reissued subject to a chronological weighting.

	Jun. 30, 2017	Jun. 30, 2016
Net result for the period in € k	3,967	5,692
Weighted average of shares outstanding during the reporting period -
basic	1,820,000	1,820,000
Dilution through stock options	562	20,380
Weighted average of shares outstanding during the reporting period -
diluted	1,820,562	1,840,380
Basic earnings per share in €	2.18	3.13
Diluted earnings per share in €	2.18	3.09

14. SEGMENT INFORMATION

As of June 30, 2017 the activities of the Company were still subdivided into the reportable segments of Digital Mammography and Other Diagnostics.

Segment net profit and loss, which corresponds to earnings before interest and tax (EBIT), constitutes the key benchmark for assessing and controlling the earnings position of a particular segment.

The segments break down as follows:

	Mammography	Digital	Diagnostics	Other	Total
	Oct. 1 - Jun. 30		Oct. 1 - Jun. 30		Oct. 1 - Jun. 30
FIGURES IN € k	2016/ 2017	2015/ 2016	2016/ 2017	2015/ 2016	2016/ 2017	2015/ 2016
Revenues	8,984	9,226	5,212	2,526	14,196	11,752
Grants	0	0	0	267	0	267
Total segment revenues	8,984	9,226	5,212	2,793	14,196	12,019
Depreciation and amortization	-830	-1,254	-129	-94	-959	-1,348
Operating expenses	-2,447	-2,919	-4,718	-3,289	-7.165	6,208
Result of operating activities	5,707	5,053	365	-590	-6,072	4,463
Other operating income	252	162	474	316	726	478
Other operating expenses	-533	-860	-938	-938	-1,471	-1,798
Segment net profit/loss	5,426	4,355	-99	-1,212	5,327	3,143

15. POST BALANCE SHEET EVENTS

No material events occurred after the balance sheet date.

Bremen, August 22, 2017

Marcus Kirchhoff Dr. Robert Hannemann Chairman & CEO Member of the Executive Board

DISCLAIMER

FORWARD-LOOKING STATEMENT

This report contains forward-looking statements which are based on management's current estimates of future developments. Such statements are subject to risks and uncertainties, which MeVis Medical Solutions AG is not able to control or estimate with any precision, e.g. future market conditions and the general economic environment, the behavior of other market participants, the successful integration of new acquisitions and government acts. If any of these uncertainties or imponderabilities materialize or if the assumptions on which these statements are based prove to be incorrect, this may cause actual results to deviate materially from those expressly or implicitly contained in these statements. MeVis Medical Solutions AG does not intend and is under no obligation to update the forward-looking statements in the light of any events or developments occurring after the date of this report.

DEVIATIONS FOR TECHNICAL REASONS

Deviations may occur between the accounting data contained in this report and that submitted to the Bundesanzeiger for technical reasons (e.g. conversion of electronic formats). In the case of any doubt, the version submitted to the Bundesanzeiger will prevail.

This report is also available in a German-language version. In case of any doubt, the German-language version takes priority over the English-language one.

The report is available for downloading in both languages in the internet at: http://www.mevis.de/en/investor-relations/financial-reports/

FINANCE CALENDAR 2017

Date	Event

Annual Report 2016 (Short fiscal year)
Interim Report for Q1 2017
Annual General Meeting, Bremen
Interim Report for H1 2017
Small Cap Conference, Frankfurt am Main
Interim Report for Q3 2017

MeVis Medical Solutions AG

Caroline-Herschel-Str. 1 28359 Bremen Germany

Phone +49 421 22495 0 Fax +49 421 22495 999 info@mevis.de

www.mevis.de