Welcome to Nexstim's webinar for investors, analysts, and media. In this webinar, Nexstim CEO Mikko Karvinen and CFO Joonas Juokslahti will be giving a presentation that will take about half an hour, followed by a Q&A session. The webinar will be recorded, and we will inform you later on where you can find the recording. For the Q&A session after the presentations, we ask you to send any questions through the webinar's Q&A chat. Questions can be sent at any time during the webinar, but they will be replied to only during the Q&A session. When you write a question, please state your name and possible organization you are representing. As you send us a question, it will first be visible for us organizers only. We have reserved an hour for the webinar.
In case we do not have time to answer all questions, we will email you later, given that you have given us your full name within any questions. Now, let's move on to the webinar. First presenting is Nexstim CEO Mikko Karvinen. Go ahead, Mikko.
Thank you. Thank you, Essy, and welcome everyone. As mentioned, my name is Mikko Karvinen. I'm the CEO of Nexstim PLC. I'm very happy to present today the first half of 2022, our financial results and our progress that we've made. We reached the first operating profitable half in the company's history. Yes, this is certainly a very big milestone for us. I'll begin with sharing some presentation slides, and I'll be joined also in the presentation by our CFO, Joonas Juokslahti, who will be going through some details of our financials. I'll move into the presentation slides now. There we go. Nexstim is a company that focuses on personalized brain diagnostics and therapy. This webinar will be about our progress during first half of 2022.
I'll begin today with a bit about the Nexstim story. We're a Finnish, globally operating, growth-oriented medical technology company. We've worked on some updates of our mission, vision, and values, and I'll go through a bit of each to remind us about these important targets that we have. Mission, first of all, we have a very important mission in this world. We enable personalized and effective therapies and diagnostics for challenging brain diseases and disorders. And our innovations in Nexstim create a possibility for a better life. We have visioned that the vision of our future is that with our technological knowhow and superior services, we ensure the best treatments for our patients, we deliver the greatest value for our customer hospitals, clinics, and business partners, and long-term growth in shareholder value for our investors.
Everything we do in Nexstim is based on our values, and the first one is that science and clinical evidence is of higher priority here in our company. We of course based our system on revolutionary science. We have clinical trials and literature to prove the clinical evidence of our diagnostics and therapy applications. We of course envision that also in the future, everything that we produce is reviewed both scientifically and with clinical evidence. We strive constantly for financial success, and I'm very happy that we've achieved these type of results already. First half of 2022, we received an operating profitable result, but also for the future, we target financial success in the long run for the company.
To my knowledge, we are currently the only public TMS company that has posted a profitable result, and that in itself tells how we value financial success within our story. We can see passion and commitment within the Nexstim team. I thank the team, the broad Nexstim team, our personnel, our management, our board members for the passion and commitment we've seen. With the hard work together, we've achieved these type of results, and it's a privilege now to be talking about them today. Last but not least, the ethics and responsibility are taken very seriously in Nexstim. Our systems are designed and manufactured in Finland.
As one example, the consumable head trackers that we use, the consumable item we have for helping the accuracy of the navigation of the system, that consumable head tracker is already produced in a fully carbon-neutral factory. Those are the small examples, but very important things about the ethics and responsibility and how we take it seriously. I'm going to talk a bit about the megatrends that support our growth, but before going into that, on the right side, you will see our system, our integrated TMS system. We have a unique proprietary neuronavigated TMS technology that can be used for both diagnostic and therapy applications.
TMS is short for transcranial magnetic stimulation, and what we do uniquely in Nexstim is that we build a 3D model, an accurate 3D model of the brain based on an MRI of the patient, and with the coil that you can see in the hands of the physician in this picture. With the coil, we are able to, by combining the information in our model, the 3D model of the brain and the physical reality such as the coil, we can navigate the brain in a manner that we can stimulate any place in the cortex very accurately and repeatability.
With this uniqueness, this navigated TMS that we have, we have shown superior results both in the usage for diagnostics and therapy applications, and I'll talk more about that when going into both businesses soon. The first megatrend that I want to highlight that supports our growth is aging population. Population is aging, and a significant decline in the working age enabled population is happening in the Western countries, and brain diseases increase with aging. In general, brain diseases are likely to increase in the future, and operations such as brain surgeries or tumor surgeries are likely to accumulate in numbers. We can help with our systems in the diagnostics or the therapy applications. It is supporting help for this aging population.
There's also space for technological development in healthcare, and as Nexstim, as an example, we sell the systems for leading university hospitals that also do research. Our technological developments and then the active research that these hospitals do and clinics that are our customers enable wider and new applications in the treatment of challenging brain diseases and disorders. There's over 100 papers in the literature written with the NBS system, our diagnostic system used for pre-surgical mapping of the brain, motor and speech areas. We also have white papers in the area of treating major depressive disorder and some chronic pain studies. This is an important area. Our company is there for supporting technological development and active research in healthcare.
And then finally, but importantly, healthcare cost pressures. There is a need for more effective and faster rehabilitation, both in the private and public hospital and clinic sector. Whether it's the U.S., mainly private customers we have, private sector or the European public hospitals that are our customers, there is a need for effective and faster rehabilitation. In major depressive disorder, there are young patients that still can get back to the society to work, to study, and also in chronic neuropathic pain patients that we can help, that they can get fully back into their role in whether it be working or studying or relieving pain for them to be full members of the society.
So very important, both for the cost pressure side and of course then for the patients themselves to have more effective and faster rehabilitation. Finally, before going into our H1 business summary, I'd like to touch on our business and products quickly. We have, first of all, two business areas at the moment, diagnostics business and therapy business. They're both supported by the same technology platform. The technology platform is same for both, but we use a marketing name of NBS, Navigated Brain Stimulation, when we have the applications used in diagnostics business area, and then NBT, Navigated Brain Therapy, when it's part of our therapy business and in working in applications such as depression and chronic pain. Diagnostics business was the first business area for us, and we have over 210 systems sold. The main application is pre-surgical mapping of the brain.
Motor, we can map the motor and speech functions of the brain very accurately prior to complex brain surgery such as a tumor surgery, epilepsy surgery, or radiotherapy. We are FDA approved in the United States and CE marked for European Union, EU, and we're the only TMS system used for pre-surgical mapping of the brain that has both FDA approval and CE marking for pre-surgical mapping of the brain, motor and speech areas. We see that when an NBS system is used for pre-surgical mapping, the physician, the surgeons can make better decisions and also the patient benefits from better outcomes. This is a very helpful usage in the diagnostics area. When we move on to the therapy business, we have over 50 systems that include the therapy software, the NBT software.
And the application areas are such that depression, major depressive disorder to be exact, is FDA approved. The NBT system can be used for the treatment of major depressive disorder. In the U.S. markets, we also have a wide existing reimbursement coverage from the insurance groups. There's also a financial benefit for benefiting the patients in a sense that the insurance can cover their treatments usually in the private clinics for major depressive treatment. In Europe, we're also CE marked for this depression indication, and we can sell and market it in the European Union for this purpose. We have based on our patient registry that includes 311 patients that have received in the United States treatments with a Nexstim NBT device for major depressive disorder.
We can see over 50% remission rates and 77% clinical response rate. Very high remission and response rates in comparison to any of the competing TMS providers for major depressive disorder. We're very proud of those results. On the chronic pain side, the application chronic pain for the NBT, we are CE marked, so this can be marketed and sold in Europe for chronic pain treatment. In the United States, we still need likely additional clinical trials that are evaluated in Nexstim in order to possibly pursue for a possible FDA approval in the future. We already have highly appreciated customers such as the Helsinki University Hospital that treats chronic pain, chronic neuropathic pain patients with our NBT device.
They can see about 50% of those patients getting clinically meaningful pain relief when they use it in clinical use. So there are early signs of high numbers of patients receiving response and benefits from the treatment, but there are still some additional clinical trials that we likely need to do in order to further pursue this, for example, for the U.S. markets. So then we can move to one of the most important topics, of course, for today, which is the business and financial summary for the first half of 2022. As mentioned already in the beginning, very important first half. It was historically the best half year measured by net sales and operating profit for the company.
H1 2022 was also the first positive operating result in the history of the company. This is an extremely big milestone for the company, and there's a lot of hard work that has been put into this time and work from the broad Nexstim team. Once again, thank the team and I'm very proud of the achievement. And of course, we pursue the profitability for upcoming half years and years to come. This is an important first milestone that we can report today. Our business has continued to grow rapidly despite the tense global political situation caused by the war in Ukraine. So we had just started to get past the COVID-19 business-wise, and we adapted well to that.
The war in Ukraine, of course, meant that there is a new tense global political environment or situation, and we need to, of course, live in this area. We hope that the war and the situation gets a peaceful ending. In that sense, of course, looking forward to that most positive scenario. But at the same time, we are ready to look at things like scenarios where energy prices and inflation are boosting prices. There's a risk that of course, for the second half of this year, we need to confront a world that is more expensive.
But that it hasn't had a big impact yet to our business in the first half, but we remain aware of that situation for the second half of 2022. Our system sales was EUR 1.8 million during the first half, and we saw an increase of over 11%. Recurring revenue accounted for EUR 1.5 million, and there was also an increase of 9%. The main growth element for our first half came from the licensing business that accounted for EUR 3.5 million, and this was a new business area for us. I'll explain it a bit more at the end of this presentation. First of all, first half 2022 was the company's best reported half-year to date.
We saw the net sales reach EUR 6.8 million, and that's a huge increase of 129.6% in comparison to EUR 3 million in the first half of 2021. The operating result, the first operating profitable result we saw was EUR 2.3 million+ , and that's in comparison to - EUR 0.9 million from last year's first half 2021. The result for the period, our second profitable half year in a row, we saw EUR 3.2 million as the result and in comparison to again - EUR 0.9 million in the first half of 2021. So excellent results in all of these financial measures. If we split the view into diagnostics business and therapy business, we saw a 19.3% growth in the diagnostics business to EUR 2.1 million.
And in the area of the therapy business, the net sales grew by 290.4%. So huge growth amounting to EUR 4.7 million. This rapid growth was mainly due to the sale of a technology license related to the NBT system to Magnus Medical and the agreement signing fee of around EUR 3.5 million. So we recognized this EUR 3.5 million of revenue during first half of 2022. This is the first piece of the licensing agreement between Nexstim and Magnus Medical, Inc., where we license the NBT system technology for Magnus Medical to be used together with their Saint technology or Saint protocol in the future. We're looking forward, of course, to receiving some royalty fees in the future from Magnus Medical sales as we value the full agreement around EUR 17 million.
For the first half of 2022, we could recognize EUR 3.5 million due to the fact that we have already transferred during the first half the technology IP and the technology transfer to Magnus Medical. We're done with that part of this licensing agreement. Revenue and expenses were recognized during first half of 2022 in relationship to this first piece in the technology licensing fee. And then finally, Nexstim established a private equity company in the U.S., and the purpose of this new company is to further expand Nexstim's network of partner clinics in the U.S. So the company, Nexstim Investments, LLC, was founded, and we have one partner clinic already, which is Piedmont Neuroscience Center Management Services Organization, is the investment that we've done from Nexstim into that PNC MSO.
And in the future, when we hopefully have a possibility to expand the clinics further, we will be doing those investments from the Nexstim Investments, LLC private equity company. The aim is here now that we have one clinic partner, which is Dr. Kuluva in Piedmont in California. That's the first clinic that PNC MSO is giving services to. But in the future, we of course are working very hard during the second half of 2022 to further expand this network. This is a very interesting new business venture for Nexstim. With that, I would want to give Joonas Juokslahti, our CFO, a chance to go through in details some of the H1 2022 key financials. Please go ahead, Joonas.
Thank you, Mikko, and good afternoon, everyone. So as Mikko already proudly mentioned, Nexstim achieved its first profitable operating result for the period during the first half of 2022. And at the same time, the company more than doubled its net sales for the period. Now, our net sales consist of diagnostic and therapy revenue, and the total net sales for the period were EUR 6.8 million, showing 130% year-on-year growth. Now, if we break that down by business, the diagnostic revenue grew by 19% to EUR 2.1 million, and that represents roughly 30% of the total group net sales.
The Therapy business grew by 290% to EUR 4.7 million. This includes the EUR 3.5 million license fee, which was recognized as revenue during H1. And the total Therapy revenue represents roughly 70% of the group net sales. The gross margin was EUR 6.1 million, with a record high gross margin ratio of above 90%. Now, the license fee has a positive impact on the gross margin too, and we have calculated an adjusted comparable gross margin for the half-yearly report. This also is showing a healthy 80% level of gross margin ratio for the period. Now, looking at the expenses side, our personnel expenses increased by 23% to EUR 2.5 million.
Now, this was mainly due to increase in personnel and changes in our compensation levels as well as our personnel expense related accruals. Our other operating expenses increased by 15% to EUR 1.8 million for the period, and this was mainly due to increase in our sales and marketing activities, but also due to licensing business related technology transfer project expenses incurring in the first half. The first ever positive operating result showed operating profit of EUR 2.3 million. Now, our subsidiary loans related exchange rate gains had a positive impact on the result for the period, and this was due to the stronger USD . And the result for the review period was EUR 3.2 million.
Also, the cash flows from operating activities were positive for the first time in the company's history, and those were EUR 2.4 million for the period, and there's a significant improvement if we compare to almost EUR 2 million- last year. At the end of the review period, we had EUR 6.6 million in the bank, and that is roughly the same amount as what we had 12 months earlier. The positive result increased our group total equity to EUR 5.6 million, with an equity ratio of 54%. Now, as already mentioned in the annual report this year, Nexstim is not planning new funding rounds at the moment.
If we look at below the key financials table, we have one graph here on this slide which shows the net sales and operating result development through four consecutive first half periods. The orange columns represent our net sales and the growth pace, and the navy blue shows our operating result. And we can see that the sales have grown at an accelerating pace to almost EUR 7 million, and as a result, our operating result has turned profitable this year. Now, directly linked to this is our future outlook, which remains unchanged, and it goes as follows. The company expects its revenue to continue to grow during the year of 2022, and the operating result for the year to be positive.
Now, towards the end of this webinar, we have the Q&A session where I'd be glad to try and answer any of your finance-related questions, but before that, I will give the mic back to Mikko for a bit.
Thank you, Joonas. I'm happy to hear also the positive detail for the first half financials. As a final thing and as a final focus element for this presentation part of this webinar, I would like to take a bit of focus to the next and key strategic objectives for this year. There are only two, so we're very focused in what we do for the remaining part of this year 2022. The first one is that we continue profitable net sales growth, which leads into our first operating profit making full financial year, and we do this by also minimizing future capital needs.
Well, we saw already in the first half of 2022 that we reached operating profit, and we will continue to lead the business in a way for the second half that we maximize the operating profit for the full year. We also minimizing future capital needs means that, as Joonas mentioned, we don't have any plans at the moment for fundraising. The funds we have as cash and also the business cash flow is taking care of our needs for the moment being. The second strategic objective we have is the expansion of Nexstim network of exclusive neuroscience center partner clinics, especially in the U.S. As I mentioned, we have founded a new investment vehicle called the Nexstim Investments, LLC in the United States.
We also have a MSO called Piedmont Neuroscience Center MSO, which we are a minority interest holder in. And we are searching now and have discussions with multiple opportunities for future neuroscience center partner clinics. Of course, we will do whatever there is to pursue these during the second half of 2022 and come out with hopefully news flow in this area and progress. Because we believe that, of course, we still continue to sell our device and our system and services in relationship to both diagnostics and therapy systems.
But we see that strategically we want to be part of these neuroscience centers also through these management services organizations, because we want to provide the best technology, the TMS technology for these clinics and other services around it to help these physicians and these psychiatrists can give the best care for their patients and focus on the treatments. And as we show the treatments results from our patient registry, we are sure that the navigated TMS system we provide them, the fully navigated system or fully integrated system and the services, then we also get superior results from those clinics. And we see that from multiple clinics that are our customers in the United States.
With that said, we also gain in selling TMS systems and services to these clinics, but we also gain in the future in knowledge about the business, the neuroscience center, clinic business, and also we can utilize the data from that information, the patient treatment data, and also possible future indication expansion with being involved as much as we can in supporting these partnering clinics. It's a strategic choice for us. Both number one and number two objectives are very important for us, but have a bit of a different timeframe when we pursue these. So that was my presentation part of this webinar. And I thank you already at this point.
You can follow us on the social media in Twitter, LinkedIn, and Facebook if you want to. We are also here still for the Q&A part of this webinar, and I look forward to answering some of those questions soon. So thank you at this point. Okay, there are a few questions here. There's a bit of a lag in time, by the way, so if you post a question, it takes a bit of time when I reach it. But there's a few here. First of all, from Redeye, Fredrik Thor, we have a question about, can you give us a bit further guidance regarding the Magnus Medical launch? Hopefully in terms of year of approval. What type of sales growth can we expect in the years following the launch?
What type of peak sales range do you think is possible? Thank you. Thank you, Fredrik, for the question. That is a very, I would say, interesting question. Unfortunately, what we have agreed with Magnus in the agreement is that we can't comment any guidance on their business. We did guide in relatively broad terms when we released this deal in February, and we need to stick to that. Basically, we expect that within the first three years after signing the agreement, we would see the first royalty payments. And the royalty payments for Nexstim are in connection with Magnus selling commercially the system.
They need to first get the FDA approval for their system, the system that uses Nexstim NBT technology, and also likely the SAINT technology and protocol that they have. We have yet to see, because it's a public, they'll publish the FDA approval once they have it. We don't have knowledge of that FDA approval yet, and we need to be guiding everyone now based on the public knowledge. You're welcome to visit Magnus Medical's website, and they have news flow around this area. They are also, they have been active in some of the U.S. public media, and their website also has some links to this media activity, and there's a bit of hints there maybe to their timeframe. But I have to stick to that.
In total, we're still looking at a EUR 17 million value of the total agreement. There's no need to start changing that estimate at the moment, and we receive the first EUR 3.5 million of that total in this first half of 2022. We're still expecting a majority of the deal value to be happening in the future. There's another question about there is slowing growth in the NBT segment when excluding the upfront payment. Any guidance ahead? In the period before the potential launch of Magnus Medical, what will be the key areas of growth? That is true.
I mean, a half a year is of course a very short time in our business, but the fact is that we had quite a bit of focus in the first half, first of all, in the Magnus Medical deal itself. So the technology transfer and the deal negotiations that we did took quite a bit of time, of course, especially management time in the first half. And then some of our, thankfully, some of our personnel they were involved in this technology transfer, which is quite a bit of a process to transfer the knowledge of IP and NBT system documentation and everything. It's a large project.
But the organic NBT therapy business was lower in first half. Again, the Magnus deal of course compensated quite a bit, reaching 290% in growth for the full therapy business. The diagnostic side grew faster in the first half. We see that there was more activity in the first half. We still have, for the full year, we're looking at, of course, I mean, sales pipeline and opportunities for also the therapy business. But at this point, it's very hard to tell just based on one first half. We've had times where the therapy business has been the majority of our growth. This includes this first half. Without the Magnus, this was not the case in the first half.
But then the diagnostics did well. So there's a bit of a balance of these two businesses, and it's also a very good thing that we have both businesses because in the diagnostic and the therapy area, sometimes the timings are a bit different. Don't know if that answered fully your question, but it added a bit of flavor. I have to say that in the long run, when we're looking at the Nexstim business, we're very fortunate that we have the capital sale. Typically, especially in the diagnostic business, there's a large piece of capital sale, but also in the therapy business. Then we have, sometimes we have deals where there's a monthly fee. This monthly fee, the recurring revenue portion of the monthly fee is more popular in the therapy.
And then we have also the so-called one-time pay-per-use lease model, where the revenue is generated by selling head trackers or selling coils and then service contracts. And these elements depend very much on who the end customer was. In some of the when we look at half years or years, it depends on the timing. If there's a lot of system sale or the customer wants to purchase based on capital expense, then there will be a lesser amount of contract revenue and vice versa. So that gives a bit of complexity and I understand that it's not always easy to estimate all this with accuracy.
But in the long run, that recurring revenue element has been growing and it gives us more predictability to our business that the therapy has this recurring revenue element. Also present in diagnostic, but with a lesser portion of the full revenue. Okay. And then finally, have you already now started to shift sales personnel towards the NBS system? Very good question again, Fredrik. Thank you. First of all, the combined system, the NBS 5+ was launched in late 2021. We've been now selling that for less than a year. And we can see that as reported, the seven NBS systems we sold during the first half all had the NBT therapy software. The combination system sales is now the strongest growing area.
It is natural that our sales personnel and our sales staff, sales people and directors and business managers, they focus into selling systems to the customer that purchases the NBS 5+ now. We can sell that in the U.S. also. It's fully FDA approved that you can sell it for both diagnostic and therapy purposes. So most of the sales is already NBS systems, but that NBS system has both diagnostic and therapy applications. So in a sense, yes, our sales staff is more focused now into NBS sales because NBS sale means selling likely a system either to a clinic or a hospital.
Hospital customers have been the vast majority of our deals, but we also have sold some NBS 5+ systems to clinic customers. I think there will be a portion of both of these sales, but the true quick answer is that the NBS sale with inclusion of therapy software is likely gonna be also the volume product in the future, and then these NBT therapy devices has a bit of a smaller customer group, and in that way they take smaller portion of our sales team's time. I think there's a bit of a time still to pose any questions if you have at this point.
There's been good questions, and I've been hopefully giving flavor to those with the answer. In the meanwhile, I can tell that we will be publishing our. Okay, there's one more question that we can get before. Any comment on other income streams, new licensing agreements, prototype systems, et cetera? Yeah, that's a very good question. We are well-networked in the area of discussing with companies and partners that are in the area of challenging brain disease and disorders and treating those. I see that new licensing agreements, whether we would do such things, such as the similar to what we did in Magnus. There's always a possibility. I think we've only done one deal right now with Magnus.
There are also some discussions with some parties about, you know, pushing the technology further into new indication areas, which would actually require new development, such as a prototype. And we were very successful in 2021 in this prototype development and sale to where we had this TMS-EEG system. I think that's a valid point. We look for those, and we have a constant search for those opportunities, and we have some discussions. I see that as an area where it's not necessarily constant that we would get every half year such a deal, but I think it's likely that also in the future we would see deals that involve either new licensing or prototyping.
I actually welcome also partners or research groups to be in contact with Nexstim in these areas. We have some very interesting high-level research universities and hospitals that we discuss with. It's an interesting area. I mean, this is only the beginning, what we have. We have a good beginning in Nexstim, but diagnostics and therapy for challenging brain diseases and disorders. There's a lot still to do, whether it be indication expansion, so other indications than motor and speech area mapping or therapy, major depressive disorder or chronic pain. There is a lot of interesting research that could be done in those areas, but also outside those areas in pushing the science further.
And as one of our key values is science and clinical evidence, we're always happy to date these kind of opportunities. But we do look at those opportunities also in a commercial manner, and we need to make sure for the long term and for the responsibility and the sustainability of the business that we want to stay profitable also in the future. So we have to always involve the commercial element. Science, research, clinical evidence, that's something that is also always very tempting for Nexstim, and we wanna be part of those in as many projects as possible. Okay. Thank you. Thank you for the questions, and thank you for your attention. We will be publishing our full year results and the H2 results in February 2023, 27th of February.
Of course, hopefully a lot of news flow before that, but that's when we will be officially posting our next results and the results webinars. Of course, I hopefully can present and be engaging with investor activity in multiple events before that. Latest then, and I wish everyone a nice summer weekend. It's sunny in Helsinki, it's warm. Let's enjoy that, and looking forward to reporting our progress later. So thank you.