ContextVision AB

OSE:CONTX

Earnings Call Transcript 2020-Q1

[Fredrik Palm, Chief Executive Officer]

Welcome to ContextVision's summary and report for the first quarter in 2020. Let me start with the highlights.Despite the ongoing global crisis, we managed to break yet another sales record in the company's history. We have seen increase in X-ray sales, thanks to Altumira, our AI-based product line for X-ray, and in this quarter, it was exceptional. Earlier announced in February, we have signed contracts with new key customers that brings revenue already in this quarter, but also expands our ground for growth within medical imaging going forward. We continue to make progress towards the product release of our first product within digital pathology. And last but not least, we strengthened our liquid assets.Sales in the first quarter ended at SEK 29.2 million, which is 38% increase compared to the first quarter in 2019. And once again, the best quarterly sales in the company's history.Looking at the regional distribution of the sales, the majority of the revenue increase comes from our business in Asia. We also saw a significant growth in United States, where we almost doubled our revenue compared to the first quarter in 2019. In Europe, we saw a small decrease, which we consider being with a normal variation and it was in line with our expectations.The share of total sales from each product line saw a significant change in this quarter. The sales of X-ray products is unusually large part of our total sales, while 2D ultrasound remain to be the biggest part of our sales. X-ray grew with almost 250%, while 2D ultrasound grew with 18%. The X-ray sales is related to large orders from existing customers, while a large part of the growth within ultrasound is related to the new contracts signed in February. In addition to the regular demand for our products, we saw several special requests for products, which could be related to an elevated need for imaging exams in the current pandemic situation. So to summarize the medical imaging business, Altumira, our AI-based product line for X-ray, continue to drive significant sales. Apart from a good growth within ultrasound, we also made progress with our next-generation ultrasound product called Rivent, which is intended to be released for sale in the second quarter. And given the new contracts and solid business with existing customers, we not only maintain our leading position but expanding our footprint in the market.In digital pathology, we are building a portfolio of decision support tools. We continue to make progress towards the market entrance with our first product for prostate cancer diagnosis. Apart from progress with testing and collecting feedback from beta test sites in the first quarter, we almost completed an integration with several well-renowned strategic partners that delivers packs and LIS systems. Such systems, combined with our decision support tools, offers a comprehensive package for the digitalization of pathology labs. It also opens up for wide distribution of our products.So financials. We already talked about the sales that ended at SEK 29.2 million. We had an extremely strong EBITDA of SEK 13.8 million in the first quarter. The operating result ended at SEK 11.8 million, which corresponds to an operating margin of 40.6%. Strong sales is, of course, the major contributor to the great result we see in the first quarter. We were also supported by favorable currency exchange rate. And lastly, we also have an efficient cost control.Looking at the individual business segments. All revenue up until now comes from the medical imaging business. In the first quarter, we saw the record sales in the company's history, and this with the remarkable margin of 54%. This, while digital pathology are still in the final development phase. Our liquidity, meaning cash plus receivables, was strengthened compared to the year-end 2019.So to summarize, starting with COVID-19. The global challenges brought on by COVID-19 has created an unpredictable business landscape for many companies around the world. We are grateful and humble for being able to deliver not only stable sales but record sales despite the current global crisis. This also confirms that most of our customers are doing fairly well so far. But we do also expect the inevitable business effects during the year, mainly since many new products are put on hold which postpones business expansion. I do like to point out, though, the fundamental need for our existing and upcoming products has not decreased by any mean due to the crisis, rather the opposite. It underlines the need for high-quality imaging and efficient decision support tools to support health care and patients. In this quarter, we grew our leading market position by expanding our market footprint with new customers. This, thanks to our highly skilled team, close collaboration with customers, and continuous focus on product development. We made progress within digital pathology. And we are closing in on the release of our first product for prostate cancer. We closed the quarter with strengthened liquidity.So I'm proud of our achievement so far. I certainly hope that the global situation will stabilize within a reasonable time frame, so global recovery can start. And I'm very excited on what we are about to achieve going forward.Take care now. Thank you.