ContextVision AB: Year-end report 2023 – Underlying growth and scaling up the business

Q4 Highlights

• New advanced X-ray product Altumira™ Plus with scatter correction released
• Participation in world’s largest medical imaging conference, Radiological Society of North America (RSNA)
• Increasing interest from customers and OEMs in our products
• Strategic investments in Point of Care Ultrasound (POCUS), R&D and Quality Management

Q4 Financial Data

• Record Q4 Net Sales of 33.2 MSEK (32.6)
• Operating result of 3.2 MSEK (9.1)
• EBITDA of 5.2 MSEK (11.0)
• Dividend payout of 11.6 MSEK
• Earnings per share of 0.04 SEK (0.10)

Full Year Financial Data

• Net Sales continued operations of 132.2 MSEK (117.8)
• Operating result continued operations of 40.0 MSEK (41.1)
• EBITDA continued operations of 48.9 MSEK (49.1)
• Dividend payout of 23.3 MSEK
• Earnings per share continued operations of 0.42 SEK (0.43)

Comments by the CEO: Underlying growth and scaling up the business

2023 has been a dynamic year, concluding a highly active final quarter. This year we achieved record Q2 and Q3 net sales, and now we round up with record Q4 net sales as well. In the last quarter, we released a new innovative X-ray product, participated in the RSNA conference in Chicago, and increased our focus and investments within Point-of-care Ultrasound (POCUS), recognizing its significant growth potential.

In the fourth quarter, our net sales slightly increased to 33.2 MSEK (32.6), marking a sales growth of 2.0%. For the full year, net sales increased to 132.2 MSEK (117.8), marking a robust growth of 12.2%, of which approximately 5.4% (zero in Q4) can be attributed to currency translation effects, influenced by a weaker Swedish Krona. Adjusting for a 4.7 MSEK one-off effect, where 40% affected the fourth quarter, related to an extraordinary non-recurring sale for services and licenses for a product we decided not to market, the net sales would have been lower. However, we still see that the underlying growth is strong and on a yearly basis is outpacing the global growth of 4 % in the medical imaging sector. The growth is supported by our ongoing expansion in our service offer as well as lifted travel restrictions in key Asian markets, enabling us to increase the share of wallet and strengthen existing partnerships. This aligns with our strategic focus to grow our core business with existing main customers.

Looking at our profitability, EBITDA for the fourth quarter came in at 5.2 MSEK (11.0), marking an EBITDA-margin of 15.7 % (33.8). For the full year we reached an EBITDA of 48.9 MSEK (49.1), giving an EBITDA-margin of 37,0 % (41.7). The EBITDA in the fourth quarter is lower than previous quarters, due to several reasons: increased personnel costs, where the majority is non-recurring, FX expenses of -1.6 MSEK, and a change in capitalization policy of -1.0 MSEK affecting the fourth quarter’s EBITDA. Additionally, we are starting to focus and invest more in future growth areas, particularly in POCUS, where we see a great opportunity. We are anticipating this technology to be very important in the future, and we will continue to invest in this area as we see it has the potential to be a key driver in our future growth prospects.

Big interest in new product

Two major highlights in the fourth quarter were the upgrades of our X-ray products and thier launch the RSNA conference in Chicago. Our latest product addition to the Altumira family is powered by AI and features an impressive scatter correction functionality that enables significanftly lower radiation dose while keeping the same image quality, compared to images acquired with a grid. This launch represents an important milestone for ContextVision.

Our presence at the RSNA conference in November generated substantial interest in our offerings, as we showcased our product portfolio. The traction from customers and OEM’s is back to pre-pandemic levels, with a high curiosity in both our product portfolio in general as well as the new Altumira product. I am confident in the success of this product, as it improves image quality in a new way, benefiting both our customers and patients. As we move forward, I am eager to see this growing interest in our products to further solidify our position in the core segments of our business.

Investments for higher growth

Throughout the fourth quarter, we have dedicated considerable resources to advancing ContextVision’s future growth prospects. We have restructured our R&D organization and recruited new talents, positioning us to be more agile and effective as we scale for growth. Additionally, we have prioritized upgrading our quality management system, our Enterprise Resources Planning (ERP) system, and worked on strengthening our future investor communications. Improving our quality management system includes a recertification of ISO 13485 regarding medical devices, which strategically positions us to better meet the intricate needs of larger customers with more detailed requirements.

One of our most important investments, however, is our strategic commitment to expanding our business into the POCUS market. This move is not only a response to the rapidly growing demand and potential within the POCUS sector, but also marks our dedication to improving healthcare through innovative technology. In our efforts to tap into this new market, we are actively developing software solutions that leverage AI and advanced imaging technology to significantly enhance real-time image interpretation and acquisition intelligence in POCUS devices. Our focus extends beyond image enhancement to improving the acquisition phase, where we aim to reduce variability and the potential for human error. This approach is particularly important for managing the complexities of chronic conditions, where regular patient monitoring is essential. We are not only streamlining image acquisition and diagnostic processes, but also pioneering in diagnostic procedures. This is part of our broader strategy to transform imaging into a more efficient procedure, akin to a lab-test, demonstrating our dedication to innovation and excellence in medical imaging technology.

Looking ahead

I am confident that the steady positive feedback we receive from customers about our products will continue to drive growth in our core business. The investments we have made in system upgrades, new strategic hires, and marketing, are set to further catalyze this growth. Most importantly, however, our investments of almost 4 % of our net sales into the POCUS sector this quarter, will not only strengthen our market leadership, but also have the potential to yield significant returns in the future as we are now ramping up these investments.

Dr. Dr. Gerald Pötzsch
Chief Executive Officer ContextVision AB

For more details, please contact ContextVision's CFO, Richard Hallström at richard.hallstrom@contextvision.com or visit our official website at www.contextvision.com.

--- About ContextVision ContextVision is a medical technology software company specialized in image analysis and artificial intelligence. As the global market leader within image enhancement, we are a trusted partner to leading manufacturers of ultrasound, X- ray and MRI equipment around the world. Our expertise is to develop powerful software products, based on proprietary technology and artificial intelligence for image-based applications. Our cutting-edge technology helps clinicians accurately interpret medical images, a crucial foundation for better diagnosis and treatment. The company, established in 1983, is based in Sweden with local representation in the U.S., Japan, China and Korea. ContextVision is listed on the Oslo Stock Exchange under the ticker CONTX. This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act. This information is inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act. The information was submitted for publication, through the agency of the contact person set out above, at 08.00 a.m. CET on 15 February 2024.