Year-end report January – December 2018

Fourth quarter in brief

• Sales growth of 17% in the fourth quarter compared to the previous year.
• Net sales amounted to SEK 15,3 million (13,1)
• Operating profit was unchanged compared to last year and amounted to SEK 5,4 million (5,4)
• Adjusted operating profit after one-off effects due to the CEO change amounted to SEK 6.4 million.
• Profit for the period amounted to SEK 4,4 million (3,9)
• Earnings per share amounted to SEK 1,10 (0,98)

Full year in brief

• Net sales amounted to SEK 48,3 million (35,6), which means sales growth of 36%
• Operating profit increased to SEK 18,7 million (11,1)
• Adjusted operating profit after one-off effects due to the CEO change amounted to SEK 19,7 million.
• Profit for the period amounted to SEK 14,7 million (8,4)
• Earnings per share amounted to SEK 3,63 (2,07)
• Cash assets amounted to SEK 32,1 million (17,0) at the end of the period. 
• The Board of directors has decided to propose to the Annual general meeting a dividend of SEK 1.50 (0) per share.

Significant events during the fourth quarter
Market and sales
SyntheticMR software SyMRI NEURO and Philips Ingenia Elition 3.0T MR scanner with the SyntAc synthetic sequence are now jointly marketed in the United States

Other events
SyntheticMR's CEO Stefan Tell has resigned. He remains as CEO until June 30, 2019 at the latest. Stefan has been CEO of the company since 2011.

Significant events during the first 9 months of 2018.
SyntheticMR received two clearances from the FDA regarding the company´s software SyMRI NEURO. The clearances mean that SyMRI is now cleared for sale in the US together with MR-systems from GE Healthcare and Philips. SyMRI NEURO is the first product on the market that includes volume calculation and segmentation of myelin. It is especially important to measure myelin within pediatrics and in patients with neurodegenerative diseases.

MAGiC was cleared for clinical use and sales in China, through the clearance of the CFDA (China Food and Drug Administration). During the second quarter, the first licenses were sold to GE Healthcare in China.

Other events
During the year, SyntheticMR has been granted a number of patents. One of them in the United States refers to myelin detection in the brain, and the patent has previously been registered in China and Japan.

Furthermore, another patent has been approved both in the US and Japan. This patent relates to a 3D variant of SyntheticMR's quantification. The trend in the market is 3D visualization, which means that this patent is an important part of SyntheticMR's future earnings.

SyntheticMR is part of a project together with Elekta, Inovia AI and Linköping University, which aims to improve diagnosis, planning and workflow in cancer treatment. SyntheticMR has been granted SEK 1.8 million in grants from Vinova for this project.

Significant events after the fourth quarter
Market and sales
SyntheticMR has sold the first licenses of MAGiC AW to GE Healthcare. These licenses mean that the clinics now can get the same functionality in the "reading room" that they have previously had at the MR scanner.

CEO comments

Continued growth in the fourth quarter and for 2018
Sales during the last quarter of the year was SEK 15.3M (13.1), a growth of 17 percent compared with the same period last year. Adjusted operating profit after one-off costs amounted to SEK 6.4M (5.4), which gave a margin of 42 percent (41). The company reported a positive cash flow for the fourth quarter of SEK 1.2M and cash at 31 December totaled SEK 32.1M.

For the full year 2018, sales amounted to SEK 48.4M (35.6), which is an increase of 36 percent compared with 2017. Adjusted operating profit after one-off effects for 2018 was SEK 19.7 million (11.1), corresponding to a margin of 41 percent (31). It is satisfying that our scalable business model gives us good margins together with sales growth. Cash flow for the full year 2018 amounted to SEK 15.1M. We are very pleased with the continued strong cash conversion rate. The good financial position creates both flexibility for new opportunities and legitimacy for SyntheticMR.

Our partnerships
We have during 2018 developed our partnership with GE Healthcare, MAGiC is now also available in reading room. This is an enhanced customer value that GE Healthcare now offers the market. Radiologists are given the opportunity to work with MAGiC during diagnosis in the reading room. GE Healthcare introduced this solution to the market at the end of 2018 and during the first quarter of 2019 we received the first orders. A MAGiC license for the reading room require that the customer simultaneously orders, or already has, a MAGiC license for the MR system. I see this as an important step in expanding our offering together with GE Healthcare. There are further opportunities to broaden the collaboration with GE Healthcare regarding product offerings, SyMRI NEURO is one example.

Our sales via Philips increased in 2018, although from low levels. The potential of this collaboration is very high. The interest of Philips regional sales organizations is significant. We continue to work for SyMRI to become available in the Philips product catalog, which is an important step for continued sales growth.

Siemens continues to upgrade hospitals to make Syngo.via open apps available. This is the platform where SyMRI is integrated as an option. The pace of this project is not in line with our expectations. Siemens did not receive FDA clearance until the beginning of 2019 for the sequence on the MR system which is a prerequisite for SyMRI. This means that we can now initiate the application process to get FDA clearance of SyMRI in combination with Siemens MRI systems. This is another important step in increasing the potential availability of SyMRI in the largest geographic market for MRI.

Own booth on RSNA
At the end of the year, SyntheticMR participated for the first time with its own booth at RSNA, the world's largest radiology congress. We received high attention and can conclude that there is a great interest in our products. It is strategically important for SyntheticMR to be present at selected congresses with its own booth. This is to capture trends and feedback from the market, while also contributing to increased sales and greater research collaborations.

Stefan Tell 
CEO SyntheticMR AB

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