For a company such as Sectra, which competes with some of the largest companies in the world, it is extremely important to have satisfied, long-standing customers. Our success in this area is confirmed by the recognition of Sectra’s medical IT system (PACS) for having the highest customer satisfaction in the US for the fifth consecutive year, and globally for the fourth year straight. This is mainly the result of our corporate culture, where the needs and problems of our customers always come first. I am proud of the positive feedback we continue to receive from users across the globe and of our employees, who truly care about and assume responsibility for our customers.
The increase in order bookings is attributable to several comprehensive, long-term customer contracts in both Secure Communications and Imaging IT Solutions. A significant portion of our expenditures arise in the early stages of the multiyear projects, while revenue and profit recognition are distributed over the entire duration of the customer contract. Accordingly, several of the new orders will tie up considerable capital during the installation phase, which will place a greater burden on cash flow.
With all of our financial goals achieved, we aim to continue growing in the long term. Our focus will be on growth initiatives that can contribute to a long-term and stable earnings trend, including cybersecurity for critical infrastructure and solutions for integrated cancer diagnostics. We are also investing in new geographic markets—including Canada and France, where we opened offices over the past year—and in increasing our market shares in countries where we are already established but are not yet the market leader.
By digitizing pathology, we will enable a closer collaboration between pathologists as well as with other departments, thereby increasing efficiency in cancer care. For example, it will make the preparation of multidisciplinary team meetings easier as well as the actual meetings. In addition, Sectra’s vendor-neutral solution lets us use different scanners from various vendors depending on which is most suitable for a certain type of pathology image. This will be very important for us moving forward.
More and more providers have shown interest in placing their PACS and VNA in the cloud. We have forged this relationship to offer our US customers, who choose this option, a reliable and trusted solution. Microsoft Azure gives us that flexibility and rapid delivery that progressive providers are looking for in their new ventures and partnerships.
Awareness of cyber-related threats is increasing, and Sectra is helping to prevent the consequences that a disruption to service in critical infrastructure can entail.
To be acknowledged for our top ratings in customer satisfaction, five years in a row, is to me the ultimate proof that Sectra’s staff—around the globe—creates customer success within radiology and beyond.
Sectra’s innovative 3D solutions will enable us to make full use of the acquired images, resulting in cutting edge delivery of care to our orthopaedic patients.
We have seen an increased need for more diagnostic tools and smoother access to medical images across our facilities. To meet those needs, we have to have a unified and scalable solution from a vendor with whom we can grow and develop in the long term.
With Sectra’s solution we are able to read all types of radiology images, such as mammograms, MRI, and tomosynthesis, all from a single workstation
Sectra continues to experience major variations between quarters, particularly in terms of order bookings. During the second quarter, we reported increased order bookings in both Imaging IT Solutions and Secure Communications. We signed agreements with several new US customers, and won a prestigious order in the Netherlands for a nationwide breast screening solution. Our greatest growth opportunities currently lie in the US market, where we have a high level of customer satisfaction but a relatively small market share to date.
Several of our new orders will initially be charged to earnings. A significant portion of our costs arise in the early stages of the multiyear projects, while revenue and profit recognition are distributed over the entire duration of the customer contract. We are also investing in the countries where we have established new offices, Canada and France, which entails higher initial costs but ultimately will contribute to our continued growth and earnings.
Healthcare and cybersecurity are growing and rapidly changing markets, where numerous opportunities are being created for companies such as Sectra. We are well positioned in these areas, with stable solutions, a long-term future focus and high customer satisfaction. I am therefore optimistic when it comes to our ability to continue this positive trend going forward. Our financial goals remain firm: an equity/assets ratio of 30%, an operating margin of 15%, and 50% growth in operating earnings per share over a five-year period. However, I would like to point out that growth comes at a price. Our aim is to continue growing in the long term, but we will not be able to simultaneously increase our margins beyond our goal.
Having a single system for all medical images improves efficiency in multiple ways. Physicians can more easily access images and are able to smoothly share information across departments. As a result, we see increased efficiency, which of course ultimately benefits our patients.
The use of contrast agents such as gadolinium is a very common way to enhance details of different organs during an MRI exam. However, for the sake of patient safety, it is crucial that radiology can easily track each gadolinium injection. By entering this information in Sectra DoseTrack, healthcare providers can ensure relevant information is available throughout the organization either from the EMR, from the dose monitoring solution or in Sectra PACS
To us, it was important to find a future-proof vendor recognized for efficient solutions. Sectra’s solution has a proven track record of high system availability and support for efficient radiology workflows, which aligns well with our strategy. Its future-proof technology and the possibility to smoothly extend the solution to other departments are important aspects of meeting the future needs of Médipôle Lyon-Villeurbanne.
Sectra is distinguished by being highly innovative as a company. Also, it’s beneficial to be able to secure a consolidated patient pathway at Médipôle Lyon-Villeurbanne. In addition, the imaging element of the solution will enable us to provide greater value to our patients on a daily basis.
Sectra’s experience of large-scale projects impressed us and will be valuable given the future size of Imapôle Lyon-Villeurbanne. The flexibility of Sectra PACS is unique and enables each radiologist to work efficiently according to their own preferences. The tools offered in oncology will also add value.
When merging, we of course wanted to consolidate our different IT environments. For us, it was important to partner with a vendor with proven high system availability and whose solution would also allow us to increase reading efficiency—in this case, for example, through integrated speech.
Sectra is known for delivering high-quality solutions with excellent customer support. The combination of establishing a regional Sectra support organization and utilizing the strong market knowledge and network of El Seif gives us the right conditions to support healthcare providers in Saudi Arabia in their efforts to improve the quality of care.
I am very excited to be able to offer our customers the ability to improve the efficiency and quality of post-operative follow-up. TMC’s global reach enables us to provide excellent service to our customers today and to expand the service outside Sweden when the time is right.
There are many modern machine learning algorithms that could bring great benefits to diagnostic work, but very few solutions have yet reached clinical routine. A main limitation has been the lack of an effective multi-vendor ecosystem for radiologists to use through a single, unified workplace. The Sectra platform is the missing piece, a solid vendor-neutral foundation.
Healthcare in the Philippines is expanding its ability to share and collaborate around medical images and patient information through consolidation and telemedicine initiatives. This distribution agreement with Medical One will enable us to address these demands by combining their market-specific expertise with our extensive experience in delivering scalable solutions that cover multiple enterprises in large geographic areas—within teleradiology and telepathology specifically.
The Sectra solution will enable us to deliver digital slides and a consistent user experience in difficult image programs, such as cytopathology. This due to its ability to provide a seamless microscope-like experience even on heavily z-stacked virtual slides, mobile devices and lower bandwidth connections.
Implementing a breast screening solution on a national scale is an exceptional IT project. The Dutch breast screening program is among the most effective in the world and the fact that Sectra has been selected to be part of this makes me very proud.
Sectra’s operating areas continued to develop and the trend for the Group’s financial results was positive. Our Imaging IT Solutions business area got off to a much better start than in the comparative quarter, but we cannot draw any definitive conclusions based on the outcome for a single quarter. Sales in Secure Communications also improved, mainly as a result of development assignments and products for secure communications. Although the business area’s new venture in the area of cybersecurity for critical infrastructure has not yet generated any substantial sales, we have signed a number of strategic orders and are growing in the Nordic energy sector.
Order bookings did not quite reach the desired level and we are continuing to focus on growth. In many of the markets where Sectra operates, we command such a large market share that our growth opportunities are limited. However, this is not the case in the US, where, in addition to a high level of customer loyalty, we also have a relatively small market share. We have been commissioned by several prominent healthcare providers in the US over the past year, and I expect that we will continue to benefit from favorable business opportunities in the US market going forward. To achieve long-term growth, we must also enter new markets and channels. Over the past year, we have established ourselves in two new countries, namely France and Canada.
Customer demand for the solutions we provide remains favorable, and we witnessed no changes to the underlying trends in our markets. We have a stable foundation, with a substantial share of long-term customer contracts, and more than half our sales comprise recurring revenue.
TUHS’s focus on advanced medical treatments, cancer care and medical education align very closely with our core values at Sectra. We are looking forward to implementing our enterprise-wide imaging solution at this prestigious healthcare system.
Sectra’s focus on cancer care, including our cutting-edge software for teaching files and multidisciplinary team meetings, aligns closely with UC San Diego Health’s treatment philosophy and academic needs.
To interact with the 3D renderings on the Sectra Table enables our students to learn and explore in a realistic environment. The portal itself is yet another way for enhancing medical training since students can access cases from their own workstations
I am most pleased with the positive feedback we continue to receive from users around the world. After all, operating a business is all about keeping your customers and users happy—and being paid to do so.
Digitizing our pathology department enables us to handle many of the efficiency and collaboration challenges that healthcare is facing. One example is increasing efficiency before and during multi-disciplinary team meetings. Sectra’s solution meets our high requirements in terms of both capacity and performance, as well as in system availability.
As I look back on the 2016/2017 fiscal year, I am most pleased with the positive feedback we continue to receive from users around the world. After all, operating a business is all about keeping your customers and users happy – and being paid to do so. The market’s view of Sectra reflects the high quality of our deliveries, regardless of where in the world our customers are located or the solutions they use. This high customer satisfaction is the result of our targeted efforts to understand our customers’ environments and of our culture, with outstanding employees who truly care about and assume responsibility for our customers.
Our profit increased, despite earnings being charged with several long-term investments in future growth. As the markets mature, our hope is that a number of these activities will contribute significantly to our growth. In the short term, however, Sectra’s growth will mainly be dependent on our sales in our largest business area, Imaging IT Solutions, where our order bookings over the past year did not quite meet our expectations. This was partly due to the trend in the UK, where we faced a falling GBP rate and a shrinking market in local currency, as well as the fact that in certain countries we now have such a large market share in our main area of medical IT systems (PACS) for radiology that it is difficult to continue growing at the same rate as we have in the past. However, in the US, for example, where Sectra so far has a relatively small market share and thus significant potential, order bookings are growing sharply. To create the scope for further growth in Imaging IT Solutions, we are also focusing on establishing a presence in two new countries: France and Canada. However, we do not expect to see the results of this work until a few years from now, since we operate in a slow industry.
In light of recent global cyberattacks, our corporate culture, where the needs of the customer are always our top priority, and our combination of niche areas are clear strengths. Healthcare and cybersecurity are growing and rapidly changing markets, where numerous opportunities are being created for companies such as Sectra. We are well positioned in these markets and we operate in segments where a strong brand, such as the Sectra brand, is an important and decisive factor. I therefore have high hopes when it comes to our ability to continue this positive trend over the years ahead.
To expand in the Canadian market is part of our long-term growth plan. Canada has some unique healthcare challenges that we are prepared to address with our flexible and intuitive software. Sectra has highly-satisfied customers in Canada, but we still have a relatively small market share. This is something we believe we can improve through increased local presence.
I am proud to say that the close partnership we have with all our customers in combination with clear crisis management processes has made this an efficient, although tough journey. We have worked around the clock, also over the weekend, to get systems back up at record times. As a medical IT company with its roots in cybersecurity, we have a big advantage in situations like these.
With Sectra as our vendor, we will be able to smoothly expand the solution as we grow, to include additional hospitals and medical disciplines. That advantage, as well as the possibility to geographically work from anywhere, were especially important to us in our choice of vendor. From our earlier experience with Sectra, we know that the solution has very high system availability and that Sectra’s support team will be there for us when we need assistance.
Our focus on cancer care through integrated diagnostics allows for great synergies with City of Hope. We are honored to be working with such a prominent cancer research organization.
We are elated to partner with a highly-esteemed institution like UPHS. We look forward to joining forces to accomplish our mutual goals of enhanced patient care and improved diagnostic outcomes.
Sectra’s proven track record of high availability and stable integrations with other systems were important aspects in our choice of vendor. Another key factor is that the solution is delivered through the cloud, which increases efficiency and reliability.
The US is one of the markets where our largest business area, Imaging IT Solutions, is growing and capturing market shares with its medical IT systems. Over the past three years, the US operations have reported average sales growth in excess of 20% per year. I recently returned from the US, where we once again received the prestigious award of “Best in KLAS” for our top ranking in customer satisfaction. This is the fourth consecutive year that Sectra’s system for managing medical images has received this award in the US, and the third year globally. In my opinion, the fact that we have won this award for so many years in a row is directly attributable to our close cooperation with customers, our strong corporate culture and our outstanding employees.
Our basic view is that it is better to be big in a few countries than to be small in many. Our goal is to be the largest or second largest supplier in the countries where we have subsidiaries. Just as we began operating in France last year, we plan to open offices in one or two additional countries during the coming year.
Within the Secure Communications business area, we have turned a loss into a profit. With new security approvals from NATO and the Netherlands, the business area has begun delivering the latest generation of Sectra’s Tiger products – products that protect phone calls and data communications from eavesdropping. While the business area’s focus on the growth of the new critical infrastructure product area will hamper its earnings trend in the short term, it will ultimately contribute to continued expansion.
With this joint solution from Sectra, information will follow the patient instead of the other way around. Sectra’s proven track record of extremely high system availability was another important aspect for us in the choice of vendor and is also key in delivering efficient healthcare.
Sectra is a pioneer in mobile voice encryption, with over 20 years’ experience of mastering mobile secure communication systems. With this partnership, now with the formal approval from NATO, we are making smartphone technology available to a large group of users who were not previously able to use it due to security concerns.
We are seeing a growing trend of increased patient engagement. Patients are becoming more keen to have access to their own medical records, for example to be able to have a deeper dialog with their physician or to bring along their medical images for treatment at another hospital. The extended capabilities of our solution will make it easier for healthcare providers to meet that demand, and thus help healthcare to become more inclusive and patient-centered.
A major factor for choosing Sectra was their high system uptime rates and strong physician satisfaction rankings in KLAS. Our radiologists enjoyed the enterprise wide system to distribute images quickly and efficiently across a very large geographic area. This will result in increased efficiencies for our business and referring physicians while providing swifter results for our patients.
To receive these accolades from users all over the globe, demonstrates the quality of our people and our software, regardless of where in the world or where in the hospital these customers work. It also shows our dedication to making our customers successful in every discipline we choose to enter—in radiology as well as in the broader field of enterprise imaging or cybersecurity