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A very good morning, everybody. Thank you very much for joining us for Medistim's third quarter presentation this year. My name is Kari Krogstad, and as usual, together with my CFO, Thomas Jakobsen, we are going to take you through our quarterly results. And we are going to follow our agenda, starting with the highlights, and then Thomas will continue with an in-depth go through on the financial statements, and I will return with some comments to the business segments and implementing our strategy.
So this third quarter, again, I'm very happy to be able to say that this is another very strong quarter from Medistim, and we can see a 14% growth on our revenues. And this means that I think it's fair to say that we have established a quarterly sales above NOK 100 million for a quarter.
As I believe most of you are aware, we are a business focusing on transit time flow measurements in intraoperative surgery. And the majority of our business today is really concentrated around this flow measurement technology. It is also our strategy to convert this market into a combination of using transit time flow measurement and ultrasound imaging. So it's very important for us to continue to see good uptake and sales growth in our imaging product portfolio, meaning the MiraQ with imaging and also the L15 ultrasound probe.
And this quarter, we can continue to report good progress here with 44% growth in our imaging sales portfolio. At the same time, we're also seeing that the flow portfolio is continuing to develop very nicely with 6.8% growth.
In addition, we have traditionally focused the most on the cardiac surgical segment. And really, the majority, about 85% of our revenues are coming from the cardiac space today. We also have a very good position in vascular surgery in certain geographies. And we made it a strategic priority to develop this Vascular segment for the future. So it's also very important for us to continue to see good development in our Vascular product portfolio.
So this quarter, it is up 26.7%. At the same time, we're also seeing good development on the Cardiac sales. And this is also important because we have still very large growth potential in that segment.
We are continuing to see that the sales growth is driven by USA. And this quarter, we see currency neutral sales there of 18.7%. And the United States have been a prioritized market for Medistim. It represents almost 1/3 of the world market for us. And we've been direct there for quite a long time, and we are really monitoring very well how we are able to develop and grow this market. So it's very important and encouraging that we're continuing to see this result.
Also in Asia, we're seeing a very good development this quarter. We remember that in the first quarter, we had a slowdown in Asia due to waiting for a regulatory approval of our next generation or the upgrade of the MiraQ with new components in that market in China. And we're still waiting for that regulatory approval, but we have found an interim solution that allows us to sell, and we saw an uptick then in both the second quarter and now in the third quarter. Rest of the World is up 27%. It's a smaller region.
This quarter, the European sales is at the same level as last year, mostly because we don't see much sales to Russia. Currency neutral, which is also a very important parameter for the company. Currency neutral sales of our own products shows a healthy 14.7% growth.
If we look at the currency neutral total growth, including our third-party products, then we are looking at a 10.5% growth. And this quarter, the third-party product portfolio is down by 10%. And this is due to a couple of agencies that are showing a lower development this quarter compared to the same quarter last year.
We're also continuing to see a good EBIT operating result at NOK 34 million this quarter, growing at 35.6%, so very good and a good margin at 29.2%.
And then we have some good news this quarter. We see that there has been launch of new guidelines from the European Society of Vascular Surgery that are recommending intraoperative ultrasound after carotid endarterectomy, and I will add some more comments to that later in this presentation.
So how does this look then year-to-date September? Looking at our revenue growth, it is at 11.3%. It is the best year-to-date September ever for revenue. If we're looking at the sales revenue in isolation, meaning that we are excluding the PPP grant revenues that we saw last year, our sales growth is 13.2% in Norwegian currency. And again, we're seeing continued good development in our imaging sales portfolio, growing 47.9% year-to-date. Also flow is growing 3.9%. Vascular sales up 36%; and Cardiac up 12.6%. So good developments in all the areas.
Currency neutral total revenue growth is at 9.8%. And if we're looking at the currency neutral growth of our own products, particularly, that is up 11.8%. And here, we see that all of the regions are contributing USA, by far the most important, at 24%; Europe, up 1%; Asia, up 1.4%; and Rest of the World, up 15.3%.
Third-party year-to-date is at the same level as last year. And this means that we are also able to deliver a very good operating profit. So best year-to-date September ever for our operating results. And high margin at 29.9%.
So with that introduction, I will leave the floor to Thomas.
Thank you, Kari. I will then go through our financial statements as usual. We will come back to you when it comes to revenue splits per product and region. Kari will go through that in more detail. So I go straight to the expenses and costs.
And we can see for this quarter that the gross margin has improved. It's over 80% compared to last year, which was 76%, 77%. And the main reason for this is our good development in our direct operations, especially USA growth, and we obviously have very good and strong margin when we sell directly and especially in the United States. And that is the reason why we have this good margin -- gross margin this quarter compared to last year's quarter.
Salary and social expenses increases with NOK 3.5 million. We have invested in our organization. We have strengthened our R&D department mainly, but we also have strengthened our organization within management, within service, sales and also production. So that's why the expense obviously increases.
Other operating expenses is also up, and this is driven by increased activity related to traveling and exhibition participation. Keep in mind that 2021 was still very much affected by the COVID restrictions, especially related to traveling. So -- also then exhibition participation was limited and mostly digitally.
EBITDA ends at just under NOK 40 million. Depreciation is more or less at the same level as last year, and this gives us an EBIT of NOK 34 million. This is up 35% compared to last year's NOK 25.1 million. And also, you can see a very much improved EBIT margin going from 24.6% to 29.2%.
Financial -- net finance is negative this quarter, and this is driven by currency. So pretax profit ends at NOK 30.5 million versus NOK 23.9 million last year, and profit or result after tax ends at NOK 24.6 million versus NOK 18.8 million last year. So a good growth also in profit after tax.
Year-to-date number, as Kari mentioned, best top line and bottom line ever as of September for Medistim and Medistim's history. When it comes to cost of goods sold, we end at 78% -- or over 78%, which is actually better than year-to-date numbers last year, even including the U.S. COVID grant of NOK 5.3 million. And the main driver for this is also year-to-date that we are doing very well in our direct operation and especially in the United States.
When it comes to salary, social expenses and other operating expenses, the increase is related to the same things as I explained for you related to the quarter, only larger numbers. So I don't go through that in detail again. But what I think is worthwhile mentioning is the currency effect also on the expenses. And of course, we have a positive effect on the top line related to currency, but we also have a negative effect on the expenses. And the total effect when it comes to salary and social expenses and other operating expenses as of September is NOK 4.5 million in increased expenses just due to currency.
EBITDA ends at NOK 22.1 million (sic) [ NOK 122.1 million ], up from NOK 114.2 million. Depreciation, same level as last year. And our operating result, EBIT, ends at NOK 104.8 million and an EBIT percent of 29.9%. Last year, we have 30.8%. But if we look at the EBIT from operations, and that means excluding the U.S. grant, the EBIT percentage is 29.6%. So that means that our EBIT percent from operation has actually improved a little bit.
Net finance is negative also year-to-date, but not as much as for the quarter. And our pretax profit ends at NOK 104.1 million versus NOK 94.6 million. Again, this growth is of NOK 5.3 million. If we look away from that, we see that we have a growth in our profit of close to 15%. Profit after tax ends at 81.5% (sic) [ NOK 81.5 million ] versus 74.8% (sic) [ NOK 74.8 million ] last year.
Our balance sheet. Intangible and fixed assets are, in total, more or less the same as when we entered the year. However, we see that intangible assets has increased, which means that we are working on developing improved products, new products in the Medistim portfolio.
Our cash position is strong, NOK 124.5 million by the end of September. We also have a high level of inventory. I mentioned earlier that we are very much depending upon securing critical components and end-of-life components, and that's why we keep high inventory levels.
We also have an increased customer receivables by the end of this quarter, and this is related to the sales profile, meaning that a lot of the sales have actually landed late in the quarter. And that means that the customer receivables increases. It does not mean that the credit time given to the customers has increased. On average, DSOs, days sales outstanding, has immensely been around 60 days. And by the end of September, this was 65. So we are pretty close to what's average for the company. But of course, we will follow this very closely going forward as well.
When we look at equity and liability, the company has no interest-bearing debt. So what we see here as long-term debt is mainly related to our lease obligations. Our balance sheet is very solid. We have an equity ratio of almost 80%. So this is a solid balance sheet, as I mentioned.
And with that, I pass the floor to Kari.
Okay. So let's take a look at the various business segments, starting with the imaging probes and systems in units. As I mentioned, this is a very important strategic area for us to see growth in imaging. And this quarter, we are seeing growth in the sales of imaging systems as capital growing at 29.4%. So that's good. We're also seeing a slight growth in the number of imaging probes sold, growing at 7.9%.
If you look at the flow probes and systems in units as well, starting with the flow systems and then, again, sold as capital equipment. This is up 23.3% this quarter.
And if we look at the combination, so the total sales of systems as capital will flow and the flow and imaging variance. This is increasing by 25.5%. And of course, the larger installed base, we are able to create out there in the marketplace, this really secures the future sales of consumable probes.
This quarter, we have a pretty flat development in the number of flow probes. Year-to-date, it's actually down by 3.7%. And I think we need to see that as a consequence of the uptake we saw in 2021, where the activity level in the operating rooms was picking up again after the COVID stress. So this is not unexpected.
If you break down the revenues now per region, starting with -- looking at Europe. As we can see, in total, a slight decrease both for the quarter and year-to-date in Norwegian currency. And reminding everyone that Europe is a region where we are looking at both sales of our own products, but also the third-party products in Norway and a little bit in Denmark as well.
So in the third quarter, we see that the sales of our own products decreased by 2.8% in NOK currency neutral. It was at the same level as last year. If we look at the year-to-date sales on products, that's at the same level as last year, while the currency neutral, sales was actually increasing by 1%, so relatively flat.
And I mentioned that the lack of sales to Russia is the most significant contributor to this weak development. If we look at the third-party portion of the European sales, this was decreasing, as I said, by 10% for the quarter. And at this year-to-date September, we are looking at a flat development.
For the quarterly development of third party, it is really 2 agencies that are a little bit down. We have very good sales from breast implants coming from Mentor, Jason & Johnson. And we see that some of that sales is going down to the private clinics for cosmetic use, and that's probably related to the strained economic situation in the world right now.
We're also seeing a bit of stress in the development of products from Vascutek, which is delivering stent grafts to Medistim. And this is a situation that the producer is working on, and we're expecting that to be resolved in not too far future.
If we look at the USA, this is looking good in every aspect, both in NOK and dollars and in a number of procedures. I will touch more closely into that later on. And in Asia, we're seeing a very good quarter, taking us to a more flat development for the year. So we're recovering from the difficult start of the year. Again, connected to this regulatory approval that we're waiting for in China for the upgraded version of the MiraQ.
And Rest of the World, nice percentage-wise growth here, but as everyone can see, these are very small regions for us so far. And just to remind everyone what is Rest of the World really for Medistim, it's Middle East, Africa, it's Canada, South America and Australia.
If we break down the revenues by product category, that's also an interesting thing to look at. And starting by looking at the procedure sales in the USA, as I said, here, all parameters are following in the same direction. It's good growth both in the number of procedures, giving us good growth in both NOK and, of course, with the currency help from the dollar, strong dollars these days, that will also be affected there.
Flow probes, as I mentioned, pretty flat and a bit of a decline year-to-date due to a very strong comparable from last year. Flow systems, number of units, strong quarter with 23.3% growth and 8.7% year-to-date. And the discrepancy that we see between the growth in NOK and the growth in numbers here is really that we're seeing that this quarter sales went through our distributor sales channel, and then we are obviously getting less revenue for the same number of units sold.
It's the opposite situation for the imaging sales. Here, we have seen very strong sales through our direct U.S. sales channel. And also, we have some positive currency effects. So here, we see even stronger development in Norwegian currency compared to the unit growth. Third party, I already commented on.
Yes. Just to continue our story and the monitoring of sort of getting out of the COVID situation. As we said, we really faced some negative impact on our sales from the second quarter of 2020, which was then gradually decreasing, and we saw a very strong recovery in 2021, and I feel that it's safe to say that now we're back to a more normal growth rate.
And we are still facing some issues related to COVID. There are still some lockdowns and some restrictions, and we see that -- well, some new outbreaks as well as the winter approaches. So it's not completely back to normal, but we can see in our sales that it's not impacted -- impacting our sales very much at the moment. So we are very happy to see that.
Then we are continuing to follow the consequences of both the Russian-Ukrainian war and the world economy and the effects on the global supply chain. So of course, that has been a challenge for most companies and Medistim included, and Thomas was alluding to the high inventory that we're seeing. So it's very important for us to keep security stocks of the key components and really avoid any disruption and we're able to deliver to the market. And we feel that we are in good control of this situation at the moment, but it definitely requires actively -- active monitoring and continued management of the situation.
So implementing the strategy. We've said that USA is a prioritized market, and we want to continue to, well, increase our sales force capacity and really drive excellent performance through our own sales forces. And the U.S. continues to deliver. So currency neutral sales revenues growing by 18.7% for the quarter and 24% year-to-date. We see that the number of procedures is also developing very nicely, 18% up for the quarter, 23% so far this year. And we're seeing that both flow procedures and the imaging procedures are growing. So this is reassuring.
We're continuing to see strong development in capital sales. So it seems like customers in the United States continue to seem to favor the capital purchasing option and not to the same extent choosing the paper procedure and the lease models. Of course, we are completely flexible in that regard and trying to work out the best model working for the individual customer. But so far, we see the 13 units sold as capital this quarter compared to the 10 last year. 40 so far this year compared to the 27 last year. So it's definitely a development there.
In the United States, we are at about 27% penetration in terms of number of procedures. There's still a lot of room for growth, and it's very important that we're continuing to win new hospitals, but also new users at hospitals where we're already in. This quarter, we have 8 new customers versus 9 last year. And so far this year, year-to-date, we have 27 compared to 33 last year. So we keep on winning new customers, which is important.
We also have a strategy to develop the Vascular market. And the very good news that we could report this September was really that the European Society of Vascular Surgery has launched a new clinical practice guideline on intraoperative ultrasound after carotid endarterectomy. And this new clinical practice guideline was presented in Rome at the European Society of Vascular Surgery Meeting in September. So this is really recent news.
And in this clinical guidelines, they are adding a recommendation, specifically speaking about intraoperative completion control and the value of doing that in order to prevent perioperative stroke. And here, they are also taking in ultrasound imaging as an option together with the gold standard angiography or also angioscopy. And it's very important, of course, for Medistim to have our technology mentioned specifically in such a guideline.
The recommendation is based on a meta-analysis done by Knappich, and this is showing that both ultrasound imaging and angiography are associated with a reduced risk of death and stroke after carotid endarterectomy.
And then I would also like to point at the CIDAC study, which was a study that was published in 2020. It was a study that was comparing ultrasound imaging to the use of the gold standard angiography, and they were using Medistim's equipment in these comparative studies.
And the result of that study was to show that they were able to detect more -- detect defects with the ultrasound alternative, which is really good news for Medistim. And they could also prove that it was higher reproducibility, meaning that the ones who are rating the data and interpreting the data had more reproducibility when looking at the ultrasound images. So this is also very positive.
In addition, we know that ultrasound is a safer alternative for the patients as no X-rays and no contrast agents are needed for this option. And it's also a more cost-efficient solution. So all of this together and the CIDAC study is also mentioned in these guidelines, really provides a good foundation for us to continue to develop our solution and position our solution as an alternative to the current technologies in this application area.
And just pointing at where we are again, I mentioned it before, but in the third quarter, Vascular sales was growing at 26% and year-to-date, it's growing at 36%. So we're very happy to see these guidelines being published.
And by that, we've gone through the presentation, and we will open up for questions.
Yes. And we actually have a couple of questions this time. And obviously, someone has already read our Q3 report because the question is related to number of flow probes year-to-date in Europe. And the question is why it has declined year-to-date. Any comments on that?
Yes, I think the situation in Europe is similar to what we're seeing worldwide, more or less. So we had a very strong development in the activity levels in the operating rooms in 2021. And that is what we're comparing against, and we're seeing it particularly for the sales in Europe.
I think that is the fundamental explanation for the slight decline that we're seeing in this period this year. That it varies a little bit between the geographic regions that is also related to what extent our distributors are adjusting their stock levels and things like that. But I think the fundamental explanation is really just normalization after the COVID years.
Okay. We also have another question here related to your last slide here, the ESVS guidelines. And the question is, what impact does the company hope to see from this and which markets will have the largest effect from the new guideline?
Yes. I think that guidelines, they work slowly. They are one piece of the equation and there are many pieces in this in order to really see this materialize into increasing sales out there in the market. But it's very, very important for us, I would say, of course, documentation, sales ammunition, supporting our positioning, our products in the market is very, very important for our sales force to know that they have these medical associations behind their technology when they are presenting these to potential new customers.
So I think to sort of motivate and really inspire the internal organization through the sales force and through our distributor networks is really, really important, and it can make a difference from day one.
When it comes to changing the surgeon's practice, I think we have to be more patient. We know that, that is always a process that it's influenced by manufacturers, and it will take some time. But this is definitely extremely positive for us to get these guidelines, and we want to work towards providing more documentation and hopefully strengthen our guidelines in every application area where we have a product to present.
When it comes to the geographical regions and where this can impact the most, of course, this was the European Society publishing the guidelines. But as we tend to see is that, for instance, in the USA, these surgeons have high respect for the surgical work that was performed in Europe as well. So I'm very sure that this will have a positive impact in the United States and, I would say, worldwide. So every type of guidelines is positive in the global market.
Thank you. That was a very good answer and a solid answer to the question. I don't think we received any other questions.
So with that, I think, we are good.
Yes. Okay. Then we will just thank you for participating this morning, and welcome you back for our next presentation. Thank you.