Optomed Plc: Interim Report, January – March 2023

Optomed Plc Stock Exchange Release 5 May 2023 at 9.00, Helsinki

January – March 2023

• Revenue increased by 8.2 percent to EUR 3.5 (3.2) million.
• Software segment revenue increased by 20.5 percent to EUR 2.6 (2.2) million driven by strong healthcare solution sales.
• Devices segment revenue decreased by 16.5 percent to EUR 0.9 (1.1) million due to a slow quarter of the OEM and Chinese sales channels.
• EBITDA amounted to EUR -0.5 (-0.9) million corresponding to -14.8 (-29.2) percent of revenue.
• Outlook unchanged: Optomed expects its full year 2023 revenue to grow compared to 2022.
• Aurora-AEYE FDA clearance process: data collection continues.

Key figures

*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.

CEO Review

Strong growth of Software segment continued

The revenue of Optomed increased as the sales of our Software segment continued to increase strongly. The growth was driven by new healthcare solution deliveries. We are very pleased with this continuing development. Existing and growing recurring revenue customer base of our software segment, combined with these new solution delivery projects, provides our company with the financial foundation we need to invest in opening the US market and launching our new products. Also, the profitability of the Software segment developed very well during the review period.

The Devices segment, which is undergoing a transition, had a slow quarter. Sales of devices sold under our own brand name in the US and through our international distribution channels continued to grow but we did not make significant OEM deliveries during the quarter. As a result, sales for the Devices segment decreased. Sales in China also remained relatively low, approximately on the same level as last year. Our fastest growing sales channel was once again our US subsidiary, which sells primarily in the direct sales model.

The quarter’s most significant activities were related to advancing the FDA clearance process for AI fundus camera Aurora AEYE. Together with our partner, we initiated the collection of additional data requested by the FDA. Once we have collected this requested data, our partner will submit it along with an updated submission to the FDA. In the early stages, the collection of additional data started a little slower than expected, causing a slight delay, but is now proceeding according to plan. We believe we have a good understanding of FDA’s expectations, and we expect that we can meet them with the current measures underway. The process is tightly regulated, and it requires the necessary time, which we as a company cannot significantly influence.

Overall, I’m pleased with the first quarter. With Software segment continuing its good development, the US device sales increasing and the FDA clearance process progressing as we have expected, we believe that 2023 will be a good year for Optomed. Upside opportunities include a possible recovery in China at some point during the year in addition to several significant potential solution deliveries (including both devices and software) to new customers outside of Europe that are currently in the negotiation and/or pilot phase. We will continue systematic work to bring these projects to a successful conclusion.

Seppo Kopsala

CEO

Outlook 2023

Optomed expects its full year 2023 revenue to grow compared to 2022.

Telephone conference

A telephone conference for analysts, investors and media will be arranged on 5 May 2023 at 11.00 EET, (10.00 CET). The event will be held in English. The presentation material will be available at www.optomed.com/investors 10.00 EET at the latest.

The participants are requested to register for the call-in advance by email to sakari.knuutti@optomed.com.

Please see the call-in numbers below:

FI +358 9 856 263 00

SE +46 8 505 218 52

UK +44 20 3321 5273

US +1 646 838 1719

FR +33 1 70 99 53 92

The conference id is 342 090 480 399 #.

Please note that by dialing into the conference call, the participant agrees that personal information such as name and company name will be collected.

Group performance

January – March 2023

In January-March 2023, Group revenue increased by 8.2 percent to EUR 3,478 (3,214) thousand, driven by the Software segment the revenue of which increased by 20.5 percent. Within the software segment, the healthcare solution business continued its very good performance from Q4/2022 improving its revenue significantly. Devices segment revenue decreased by 16.5 percent to EUR 888 (1,065) thousand due to lack of major orders from the OEM customers.

In January-March 2023, the gross margin increased to 71.2 from 68.1 percent of last year as both segments improved their margins. EBITDA was EUR -513 (-937) thousand. The EBITDA improvement was driven especially by increased healthcare solution business profitability.

In January-March 2023, net financial items amounted to EUR -134 (71) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB and USD to EUR.

Cash flow and financial position

January – March 2023

In January-March 2023, the cash flow from operating activities amounted to EUR -440 (-688) thousand. Net cash used in investing activities was EUR -545 (-859) thousand and relates to capitalized development expenses. Net cash from financing activities amounted to EUR -349 (-622) thousand.

Consolidated cash and cash equivalents at the end of the period amounted to EUR 7,179 (4,630) thousand. Interest-bearing net debt totalled EUR -2,136 (1,821) thousand at the end of the period.

Net working capital was EUR 3,658 (4,115) thousand at the end of the period. The net working capital includes trade receivables of EUR 3,446 (3,307) thousand. The Chinese customer that Optomed has a large due trade receivable from has been paying as scheduled during the quarter.

Devices segment

Optomed has two synergistic business segments: Devices and Software.

The Devices segment develops, commercializes, and manufactures easy-to-use, and affordable handheld fundus cameras, that are suitable for any clinic for screening of various eye diseases, such as diabetic retinopathy, glaucoma and AMD (Age Related Macular Degeneration).

*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.

 

January-March 2023

In January-March 2023, the Devices segment revenue decreased by 16.5 percent to EUR 888 (1,065) thousand. In spite of solid performance by the US and distribution channels, the revenue declined due to a slow quarter of the OEM and Chinese sales channels.

The gross margin was 62.9 (60.2) percent. The increase was due to a higher proportion of relatively high margin distribution sales as compared to the comparison period of 2022. EBITDA was EUR -426 (-499) thousand or -47.9 (-46.9) percent of revenue.

Software segment

Optomed has two synergistic business segments: Devices and Software.

The Software segment develops and commercializes screening software for diabetic retinopathy and cancer screening for healthcare organizations. The segment also distributes off-the-shelf products from selected partners to supplement its own solutions and expertise and provides software consultation to support the Devices segment screening solution projects.

*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.

 

January – March 2023

In January-March 2023, the Software segment revenue increased by 20.5 percent to EUR 2,590 (2,150) thousand. The increase was driven by very strong performance of the healthcare solution business, that also drove the revenue growth of 23.2% of Q4/2022.

Gross margin increased and was 74.0 (72.0) per cent. EBITDA was EUR 790 (414) thousand or 30.5 (19.3) percent of revenue. The key business driver for the EBITDA improvement was the increased profitability of the healthcare solution business.

Group-wide expenses

Group-wide expenses relate to functions supporting the entire group such as treasury, group accounting, marketing, legal, HR, and IT.

January – March 2023

Group-wide operating expenses amounted to EUR 877 (853) thousand.

Personnel

Number of personnel at the end of the reporting period.

Corporate Governance

Optomed complies with Finnish laws and regulations, Optomed’s Articles of Association, the rules of Nasdaq Helsinki and the Finnish Corporate Governance Code 2020 issued by the Securities Market Association of Finland. The code is publicly available at http://cgfinland.fi/en/. Optomed’s corporate governance statement 2022 is available on the company website www.optomed.com/investors/.

Annual General Meeting

Optomed’s Annual General Meeting will  be held on Wednesday, 10 May 2023 at 10:00 a.m. (EEST) at Hanaholmen, Congress Hall Tetra, Hanasaarenranta 5, FI-02100 Espoo. The reception of persons who have registered for the meeting and the distribution of voting tickets will commence at 9:30 a.m. (EEST).  

The invitation and other material is available at:

https://www.optomed.com/investors/annual-general-meeting-2023/

Shares and shareholders

The Company has one share series with all shares having the same rights. At the end of the review period Optomed Plc's share capital consisted of 16,541,355 shares and the Company held 373,566 shares in the treasury which approximately corresponds to 2.3 percent of the total amount of the shares and votes. Additional information with respect to the shares, shareholding and trading can be found on the Company’s website www.optomed.com/investors/.

Risks and uncertainties

The key risks and uncertainties are described in the company’s Annual Report 2022 which was published on 2 March 2023. The complete report is available at https://www.optomed.com/investors/. The risk position of Optomed has not changed since then.

Audit review

This financial report has not been audited by the company's auditors.

Financial reporting in 2023

• 4 August 2023 Half-Year Financial Report for 1 January – 30 June 2023
• 3 November 2023 Interim Report for 1 January – 30 September 2023

For more information, contact

Sakari Knuutti, CFO

Tel: +358 (0)50 562 4077

E-mail: sakari.knuutti@optomed.com 

Seppo Kopsala, CEO

Tel: +358 (0)40 555 1050

E-mail:  seppo.kopsala@optomed.com

About Optomed

Optomed is a Finnish medical technology company and one of the leading providers of handheld fundus cameras and screening software. Optomed combines handheld screening devices with software and artificial intelligence with the aim to transform the diagnostic process of blinding eye-diseases such as rapidly increasing diabetic retinopathy. In its business Optomed focuses on eye-screening devices and software solutions related R&D in Finland and sales through different channels in over 60 countries.

www.optomed.com

Alternative Performance Measures

Optomed uses certain alternative performance measures (APMs) with the purpose to provide a better understanding of how the business develops. These APMs, as defined, cannot be fully compared with other companies’ APMs.

Consolidated income statement

Consolidated condensed comprehensive income statement

Consolidated balance sheet

Consolidated statement of changes in shareholders’ equity

Equity attributable to owners of the parent company

Consolidated cash flow statement

Selected notes

Corporate information and basis of accounting

Corporate information

Optomed is a Finnish medical technology group (hereafter ‘Optomed’ or ‘Group’) that specialises in handheld fundus cameras and solutions for screening of blinding eye diseases, established in 2004.

The Group’s parent company, Optomed Plc (hereafter the ‘Company’), is a Finnish public limited liability company established under the laws of Finland, and its business ID is 1936446-1. It is domiciled in Oulu, Finland and the Company’s registered address is Yrttipellontie 1, 90230 Oulu, Finland.

Basis of accounting     

Optomed’s consolidated financial statements has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The preparation of this interim report also takes into account the amendments to IFRS standards that have become effective by January 1, 2023.

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with Group`s last annual consolidated financial statements as at and for the year ended 31 December 2022. This Interim financial statements do not include all of the information required by IAS 34: selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group`s financial position and performance since the last annual financial statements.

All presented figures have been rounded so the sum of the individual figures may differ from the presented total figure.

Financial ratios have been calculated using exact figures.

Reportable segments

Q1/2023

Q1/2022

2022

Other operating income

Other operating expenses

Other operating expenses also comprise changes in expected credit losses and realized credit losses.

Financial liabilities

Fair values - financial liabilities measured at amortized cost

Optomed considers that the carrying amounts of the financial liabilities measured at amortized cost substantially equal to their fair values. This estimate corresponds to the fair value hierarchy Level 3.

Exposure to credit risk and loss allowance

Optomed considers it has heightened risk regarding Chinese customer's trade receivables. The credit risk concentration has been formed and is associated with an increased credit loss risk due to overdue trade receivables. Planned schedule was renegotiated in January. Chinese customer has paid its overdue receivables according to planned schedule.

Events after the review period

No material events after the reporting period.