Welcome to Nexstim's webinar for investors, analysts, and media. In this webinar, Nexstim CEO Mikko Karvinen and CFO Joonas Juoksuvaara 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 the 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 e-mail 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, Essi. Welcome also on behalf of myself. My name is Mikko Karvinen. I'm the CEO of Nexstim. I'm very happy to present our full-year 2022 results, positive results for the year. I'm joined also today in the webinar with our CFO, Joonas Juoksuvaara. I'll now switch to the presentation slides. To begin with, I will share a bit about Nexstim story in general. I will go through some of the mega trends that support our growth, and also our both like a general highlight to our business and also regulatory approvals, both diagnostic and therapy. We will dig into the summary of year 2022 business and financials. To begin with our story. We are a Finnish globally operating, growth-oriented medical technology company.
We have a very important mission in the company, which is that we enable personalized and effective therapies and diagnostics for challenging brain diseases and disorders. These challenging brain diseases and disorders include, for example, brain mapping for patients who suffer from brain tumors, mapping motor and speech areas prior to surgery, and also helping patients who suffer from major depressive disorder and chronic neuropathic pain as examples, therapies in those areas. Our innovations create a possibility for a better life. We envision the world with our technological know-how and superior services and more and more towards the services part also in the future, 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.
If we look at our values, we are solidly based in science and clinical evidence, which our system has been built upon, and the evidence has also supported our regulatory approvals and sales and marketing efforts. We strive for constant financial success. The first signs, very positive signs of this success is, for example, that year 2022 we got the first operating profitable and profitable year for the accounting period. I can see the passion and commitment in our Nexstim team members wherever we are, whether it's in here in Finland, where we are headquartered, or in Germany or in the U.S. We are very committed to delivering our mission and vision. Finally, but importantly, we take ethics and responsibility very seriously. We have redesigned the systems in Finland.
We manufacture them also in Finland, so we have visibility and transparency into the whole process. As an example, the consumable one-time use head trackers that we use in our system to help the navigation, we are already manufacturing them in a carbon neutral factory. I would like next to focus a bit of our time to the mega trends that support our growth. Before doing that, there's a picture of the integrated system, the Nexstim system on the right. This is a unique proprietary neuronavigated TMS technology for both diagnostic and therapy applications. We use the same technological platform for both our diagnostic and therapy businesses. TMS is short for transcranial magnetic stimulation, which we use for mapping the brain or also delivering the therapy for the patients.
An important supporting mega trend is the aging population. It is well known that the population is aging and a significant decline in the working age enabled population in the Western countries and brain diseases increase with the aging in general. The technological development in healthcare is also a supporting mega trend. There is a development active research that enable wider and new applications in the treatment of challenging brain diseases and disorders. Our technology has been implemented and constantly is implemented in world-renowned hospitals, university hospitals, clinics, leading clinics around the world. Within these deployments, there's also new research and the lower barriers for using this type of technology, whether it's in diagnostics, in mapping the brain, or for treatment in therapy.
Finally, healthcare cost pressures are there, whether it is in the public or the private healthcare sector. There is a need for more effective and faster rehabilitation. As an example for a patient who suffers from chronic neuropathic pain, it is very disabling and even a patient can be young of age, they are not able to maybe work or study. With an effective and faster rehabilitation, they can become part of the society and the working force as soon as possible and continue on with their more healthy life. Before going into the 2022 results, I would finally still want to take a look at our business and products. As mentioned earlier, we have two businesses.
In Nexstim, we have the diagnostics business, and we have a therapy business. The system itself, technologically, is the same platform, but we call the system, NBS, Navigated Brain Stimulation System, as our sales and marketing name when we use it for diagnostics purposes, and an NBT, Navigated Brain Therapy system when used in the therapy applications. The commercial status for the diagnostic is further in numbers because we have sold over 210 systems during the years, and this is the business we started the first commercial part of Nexstim. The application is pre-surgical mapping of the brain. We can map the motor and speech functions of the brain very accurately prior to a surgery, such as a tumor surgery or an epilepsy surgery.
This is very helpful for the surgeons to, first of all, resect more in a tumor surgery, resect more of the tumor, and also do this in the safest possible manner without losing these functionalities. We have a CE mark CE marked in Europe for sales in European Union, and then FDA approval in the United States. We are the only TMS manufacturer in the world who has both FDA approval and CE marking for pre-surgical mapping of the brain's motor and speech areas. This is very unique application for our system. On the therapy business, we have over 60 systems that include the therapy software. The applications in therapy are depression and chronic pain, which are both CE marked in Europe.
We can sell and market the NBT system for usage in major depression and chronic pain in Europe. We also have an FDA approval for treating major depressive disorder and for sale in the sales and market in the US markets. The US market also has a very broad existing reimbursement for TMS therapy of depression. This helps also for the commercial efforts in the United States. When we look at the treatment effects we have in depression, we have a patient registry of over 400 patients currently, and the data has been gathered from clinics around the US using a Nexstim system for treating major depressive disorder. Of the completed patients, about 50% have reached a remission, and 76% have a clinical response.
These are very high rates of remission and response in comparison to any of the competition in this area of treating depression with the TMS. We're very happy about those results and helping as many patients as possible. These patients are typically patients who suffer from depression in a treatment-resistant way. They haven't had help from either drugs or other approaches like psychotherapy. On the chronic pain side, we have a CE marking in Europe, but still additional clinical trials are evaluated for possible future US market access. Already we have very promising results from European clinics, such as Helsinki University Hospital, that uses a Nexstim system for chronic neuropathic pain treatment.
We can see that about 50% of the patients get a clinical meaningful pain relief when after using the system for this TMS therapy. These are the current business and products. Of course, in addition to these, we sell services such as support and maintenance services. Also we have a possibility to not buy the system, but lease it, for example. We have a licensing business on top of this. The majority of the sales of the Nexstim products happens, of course, within these diagnostic and therapy business areas and these indications that are shown right here.
We can move on into the, of course, maybe the most interesting part for today's webinar, which is the topic, and this is the business and financial summary. There's actually a typo there, but this is for the full- year 2022 and not the H1. If we look at the first full- year of 2022, it was the 1st and historical best year measured by net sales, operating profit, and results for the period, and meaning the 1st one was the 1st profitable year in the history of the company. Of course, we've strived for this profitability a long time. We have already had some half years where the company has been profitable.
The first profitable full-year was achieved in this year 2022, and this is an important milestone, both internally for the company, but, of course, also as an interesting point for investor point of view. Business has continued the profitable growth despite the tense global political situation caused by the war in Ukraine. Of course, we condemn the activity by Russia, the war in Ukraine, but we also, at the same time, have been fortunate as a company that we haven't suffered so much business-wise at least yet, because first of all, we didn't have so much business in these particular countries that are now in war together.
The other thing is that the component problems and the inflation, we have had manners to deal with them in the short-term. Of course, there is still risks related to both electronic components situation in the world, and we share that risk with a lot of companies. There's also pressure with the prices due to energy pricing and inflation rates being high. We see that this risk has been tackled to date in a good manner, but of course, we keep very much alert to this while we do business this year and in the future. The system sales in our business accounted for EUR 3.1 million during 2022. There was a decrease of 17.4%.
I want to remark here that due to some prototype systems that we sold in year 2021, there was a EUR 0.9 million extra revenue as one-off revenue during 2021. The decrease in this case for 2022 seems large. The comparable net system sales did not decrease if we take that one-off prototype system sales into account from 2021. The recurring net sales accounted for EUR 2.9 million, and there was an increase of 9%, and licensing business accounted for EUR 3.5 million. The licensing business is a new business area for Nexstim, we did some transactions in 2022 with the first time, and I will focus a bit more to the licensing revenue later on on this slide. Net sales amounted to EUR 9.5 million.
There was an increase of 48.9%. Very healthy growth for the full-year. Operating results being EUR 0.9 million plus. This was the first operating profitable year, and also result for the period being positive EUR 1.3 million, which accounts for the first profitable year in the company's history. Important milestone again. I want to thank the Nexstim team and also our business partners, our customers, for us in getting this important milestone in making our business even more sustainable for the future. If we look at the sales between the different businesses, the diagnostics business, therapy business, in particular, the diagnostic business net sales decreased by 7.7% in comparison to 2021. It amounted to EUR 3.4 million.
The one prototype system sale we had in 2021 was accounted for diagnostic business, so EUR 0.9 million. The comparable net sales in the diagnostic business grew also in 2022. The therapy business net sales grew by a huge percent of 126.8% in 2022 amounting into EUR 6.1 million. As a separate note for this therapy business growth element, the rapid growth was mainly due to the sale of a technology license related to the NBT, so the therapy system to Magnus Medical and the agreement signing fee of around EUR 3.5 million. This was recognized already in the first half of 2022.
It was an important licensing deal we did with Magnus, and of course, this accounted for a large portion of our growth in 2022, but we also look forward to receiving some royalties in the future from Magnus Medical, and these are estimated to begin in during 2023. We have also have some estimates of royalties for this 2023 year. We continue to, of course, have discussions and monitor Magnus Medical's progress in when they launch their commercial product later on this year. The royalty period starts when Magnus starts commercializing their product and selling their products, including Nexstim technology. It is a five-year royalty period beginning from that first system or service sold. A little bit about the long-term progress.
Now that we achieved the first profitable year in 2022, I wanted to take a look at a bit more a broad perspective of how the financial situation has progressed on a PNL and cash flow during the five-year period between 2018 to 2022. Five operational years. We have, first of all, grown, compounded average growth rate being 37% during this time period, which is a very healthy growth rate.
If we look at the net sales, of course, growing by that 37% on an annual level, on average, and then the operating result has also gone up from quite, let's say, severely loss-making years of 2018, 2019 to going up to the positive EUR 0.8 million in 2022. Also, if you look at it from the cash flow, operating cash flow point of view, this has gone also hand in hand, almost with the operating result up, and we had a positive EUR 1 million positive operating cash flow in year 2022.
This is just to highlight the progress that has been done during the years of 2018 to 2022 to be in this situation, which has been very solid financial progress. I think with these words, it's good to let Joonas explain a bit more detail about the full- year 2022 key financials. Please, Joonas.
Thank you, Mikko. Good afternoon, everyone. As the title of the report already says, 2022 was the first profitable year for the company. With the total net sales of EUR 9.5 million, we generated some 14% or EUR 1.3 million of profit for the year. The total net sales grew by 49% to EUR 9.5 million, and the most significant growth driver here was the licensing deal in the first half, where we recognized EUR 3.5 million of licensing revenue.
If we adjust the net sales for that and the comparative year for the R&D project, where we developed and delivered two prototype systems the day the year before, the adjusted comparable net sales grew by 9.2% to EUR 6 million. The growth margin for the year was EUR 8.3 million, with the record high growth margin ratio of 87%. When we look down the PNL to the expense side, our operating expenses grew by roughly 11% to EUR 8.2 million. Personal expenses were EUR 4.8 million with 11% of growth, and that is mainly due to changes in the group organization and some compensation levels.
Now, the other operating expenses grew by 10% to EUR 3.4 million. This is mainly due to the fact that 2021 was still sort of a COVID year. From there on going to 2022, we were able to normalize our sales and marketing activities and increase the level of those, and that incurs some additional expenses. The first ever positive operating result was EUR 0.8 million for the year, and the result for the period was EUR 1.3 million, and both comparative metrics were negative last year. Also, the operating cash flow turned positive for the first time for the full-year in 2022, and that was EUR 1 million for the 12 months.
We had a good cash position at the year-end, that being EUR 4.4 million. Also, the group equity, that was EUR 4.1 million with an equity ratio of 45%, and the total group equity increased naturally with the positive result for the year. Nexstim is not planning any new funding rounds at the moment with the cash position we have. Now, on the previous slide, we had a more detailed view to the financial development through the five-year period. Here I have a smaller graph with the development pace over the past four years. We can see that the orange columns which represent the total net sales or revenue, we can see that it's been growing at an accelerating speed.
At the same time, our operating result in the navy blue is getting better. For the past years, we can say that we've been able to cut our operating losses in half each year before turning profitable this year, or 2022, I mean. This kind of profitable financial development is really important for the company now and in the future and that takes us to the future outlook for 2023, where we say that based on business forecast, the company expects that its comparable net sales will grow in 2023, and its EBITDA for the financial year will be positive.
Now, for a few additional slides, I will give the mic back to Mikko before we go into the Q&A session, where we would be happy to try and answer any of your questions. Thank you.
Thank you, Joonas. I'll move on to The next in key strategic objectives for the year 2023. Of course, it's nice that we have had our first profitable year in 2022 and the financial progress has been nice during the recent years. Now it is time to focus on the strategic objectives for 2023. We have three objectives which we see that are crucial for the year 2023 and also strategically for our future. The first one is similar to what Jonas mentioned about our future outlook a moment ago. The number 1 objective is that profitable comparable net sales growth continues, and this leads into a positive EBITDA, so operating result before depreciation for the financial period, while minimizing future capital needs.
We are aiming to grow on a comparable level in, in the net sales, have a positive EBITDA, and not do necessarily any fundraising activity, meaning we minimize the future capital needs. That is number one objective also for the year 2023, and if we think about it strategically. A second very important objective for us is that we launch our new NBS 6 product. This enables easy-to-use systems and the use of future additional modules in the same system. I have an additional slide after this, which is the final one in the presentation, where I wanna focus a bit more about this NBS 6 product.
It's a totally new product that we are launching, a new software platform also, and we have, of course, high expectations and hopes for this most advanced TMS system and software that we are launching this year, 2023. It is still undergoing regulatory approval paths for both E.U. and the U.S., so we don't have an exact launch date yet for this year. The paths are already in a nice status, both U.S. and E.U. MDR, that we are able to look this also as a very important objective for this year, 2023. A bit more on the next slide about this. Number three objective is to expand the network of Nexstim exclusive collaboration clinics, primarily in the USA and Europe.
We opened one of these exclusive collaboration partnership clinics in California during last year, 2022, called Piedmont Neuroscience Center , led by Dr. Kaluva, the clinic, and we are partnered in the Piedmont Neuroscience Center Management Services organization. This is something that we want to develop also as a business model further, and we want to add more clinics in the US, and also we have some discussions going on in Europe about the possibility of doing these clinic networks.
This is helpful and when you want to collaborate with a clinic in a more than just by selling the system or leasing the system from Nexstim, but actually us partnering in delivering as many services as possible for the clinics, and the clinics can then take care of what they know best, which is treating the patients with this unique technology and getting the type of results we see in our patient registry. We have also ambitions of getting new clinics in this network during 2023, and of course, those individual discussions and negotiations go in different timelines. We will be adding them to our news flow when we get the agreements done, but no additional information at this point.
Those three objectives are what we focus in 2023 and are also of strategic importance for the company. I want to end this also with the future outlook. Based on a business forecast, the company expects that its comparable net sales will grow in 2023, and its EBITDA operating result before depreciations for the financial year will be positive. As a final part of the presentation today in this webinar, I would want to focus a bit to this NBS 6 future of the Nexstim system. We are currently developing and launching a new product generation, and this is an essential part of Nexstim's work during the 2020, 2024 strategic strategy period, which is coming to an end.
We are launching, first of all, the NBS 6 that is a combined system, and it's built on Nexstim's unique, clinically established technology. What does this combined system mean? It means that we will have in the, in the final version of the NBS 6, we will have also the therapy capabilities and the diagnostics capabilities. We are starting with the therapy applications. When we launch the product this year, we will start with NBS 6 therapy. This, because we have a modular product design. This allows expansion of system capabilities over time. We will start with therapy indications, so, major depressive disorder in the U.S., and then a major depressive disorder and chronic pain for the European markets.
This type of the structure makes it possible that in a later time period in 2024 estimated, we will be adding the diagnostics, new diagnostics applications also to the NBS 6. This type of a modular approach creates long-term value for Nexstim's customers and investors because once you have acquired or leased a Nexstim system with the software you have and the modules you have or the indications you have for use, we can possibly then add new modules, for example, new for usage workflows for different, new indications or things like research modules for the future if this particular customer or hospital or clinic wants to do research with the system that is outside of the current indications for use.
Doing that, of course, with an IRB and an IRB approach to research without needing to buy a system, but rather to expand the licensing of the software to allow also this type of research use. There is a lot to be experienced with this NBS 6 coming out, and most importantly, it has been developed in collaboration with our customers, and this ensures the best possible level of usability.
The usability has been a big focus for this new system because we want, as you can see also from the picture where there is this patient or subject that is looking what the physician is showing on the screen, but things like touch screen approach to the workflow, making the training as easy as possible so that the customer and their staff getting the training of the NBS 6 is possible to start using the system for the patient care already on the same day. Combining the new system, combining the approach of having both diagnostics and therapy in the same system, it responds to the customer demand that you can deliver both the diagnostic and therapeutic applications in the same system.
We see this more and more with our customers. If you have the need to map the brain, for example, in a hospital where they might do pre-surgical mapping of the brain, on certain days, they could do chronic neuropathic pain treatments or depression treatments with the same system, if otherwise workflow-wise arranged, they can do it in the same clinic or hospital, multi-usage of the same system. Finally, I want to end this in that we want to make this change to the NBS 6 also a very seamless process for our customers. In case you buy the earlier version NBS 5+, if you buy that system during this year 2022, we have made an upgrade package available.
Your software can be upgraded to the new version NBS 6. There is minimal hardware changes required. It can be an upgrade package. You don't need to wait for the NBS 6 to be approved in any market. You can purchase the NBS 5+ and then get upgraded with a good way also to the NBS 6 once it is released for your target market. Very much looking forward to this. NBS 6 is going to be the future of the Nexstim system for years onwards. As mentioned, we launched the previous version NBS 5 during 2014, we don't launch software platforms that often.
We look forward to, of course, as many NBS 6s out there during the upcoming years as possible within our hospital and clinics that we serve. That was the final information piece I had in my presentation slides. I already thank you at this point for your interest. Of course, I also welcome your questions, which we will start answering together with Joonas if you wish to send them through the chat services. Thank you already at this point. Let's see in the Q&A if there are. Okay. Thank you. Yeah, there's a question from Fredrik Thor from Redeye. Can you discuss the transition to a global process organization and its meaning? A very good question. Thank you.
We had this process evolved during the early weeks and months of this year. We had an organization that is created now to, first of all, help us grow in the future, and also organize ourselves in global processes in a manner that we have less and less, you know, interference between different, land, I mean, country organizations and sharing the knowledge broadly within Nexstim. We have three process categories that we have designed. First of all is to support growth, and the growth includes sales, marketing, clinical application support, technical support and operations. That's the five processes in the area of growth.
These processes have process owners, which some of them are management team members, and some are new process owners that are included in the broader management team. Those five processes, sales, marketing, clinical application support, technical customer support, and also operations, they are kind of the key processes to grow the company. We have enabling processes. We have enabling processes which include R&D, clinical, and then quality and regulatory. Those are processes that enable the growth. Of course, we need to design new systems. We need to get them clinically proven and clinical evidence. We also need to have the quality and regulatory processes in place and the approvals in the market. We have the administration process.
That's the finance and the support processes, IT, legal, HR, that help the administration and the support. Finally, we have strategic partnerships and business development. Those are the things that we also develop on a corporate level. In a nutshell, this is kind of the evolvement of Nexstim now we are 40 people. We built these global processes, key processes, so that we can grow to the next level. If you look at the growth between 2018 to 2022, for example, compound average growth rate of 37%. Hopefully, when we look five years forward, this type of organization that we've now created supports the kind of growth we need for the future years. That's my answer. Okay, thank you. There's a continued question from Fredrik.
Can you shed some more light on the diagnostic sales for H2? Was it in line with your expectations? Outlook for 2023 compared to the therapy segment? That's a very good question. Yes, we. If you look at the diagnostic sales for the H2, we did have comparable growth. It's important to keep in mind that there was EUR 0.9 million of prototype diagnostic system sales that we did in 2021. We are of course, happy that there was growth in also in the second half of 2022. Could there be more growth? I mean, of course, more is more in growth. I see that of course, even larger numbers would be welcomed.
We focused a lot on profitability during year 2022, and of course, we wanted to secure our first profitable full-year. I don't say that in saying that we need to balance too much on the, on the growth, but there's always a bit of a balancing act of whether we are really aggressive on the growth or do we want to ensure that every single deal is profitable and valuable for Nexstim as it is for our customer. We hope that, of course, we continue and we work hard to continue the comparable growth also in 2023. If there was a deal that we slipped from 2022 H2, I'm sure that it will happen in 2023. In that sense, of course, business continues.
I'm in a, in a general view, I'm very happy with the full-year 2022 and the progress and the fact that we also did make comparable growth even in the second half of the year. There's one more question from Fredrik, thank you, about can you discuss the target for 2023? What will be the main drivers to reach it? Yes, we can certainly discuss that. I think there are some key drivers that are good to go through. One of them is already what I mentioned in my earlier response, which is the diagnostic business.
The diagnostic business is typically capital sale of the system, the NBS system, to the customer with a nice gross margin, with the capital sale, a service contract to follow, and then maybe some consumables also or service elements in the future. Mainly capital sale recognized immediately at point of delivery with the margin. That is something that is really important for both the growth, but also the profitability for any year. That will be part of 2023, is to continue growing the diagnostic business and do that in a good margin and provide as much gross margin as possible for the year. On the therapy side, we focus that we. There's a recurring element that is larger in the therapy business. In the therapy side, we need to continue to focus on selling some systems.
Of course, NBS 6 is coming out with the therapy. NBS 6. The year for 2023 for NBS 6 is around therapy. The new systems we sell, especially towards the end of the year, will be more and more NBS 6 therapy that will give us a boost to the therapy sales, of course, in some manner because we are launching a new product. We have to be also conscious about our expenditure. Whether it's diagnostics or the therapy business, we've done some cost savings recently. We have a change in negotiations as part of going to the global process organization, but we actually did some cost savings.
Being conscious about our cost is a third element for 2023 and getting to the positive EBITDA level is that we have some one-off items like changing holiday pay to extra vacation, being more conscious about our travel, going to the events. The most significant events will be go to the industry events, but not necessarily going to every single one. The most important ones and investing into those. There are some other savings. For example, we have a administrative saving that we are simplifying the share listing of the Nexstim share in a manner that we are departing the Swedish First North Growth Market Sweden because of the low volume and the low ownership in comparison to Finland.
We are going to have the Nexstim share traded in the Nasdaq First North Growth Market in Finland after 14th of April. These are things that, again, on the cost side, they will save the company EUR tens of thousands in the years forward. Some savings also for 2023. In the final part, I want to mention the partnerships. Besides diagnostics business, therapy business, and of course, focusing on the costs, we also want to keep the door open for partnerships. We will see from the Piedmont Neuroscience Center MSO, we are targeting, of course, a positive result for the year 2023.
Also when we go to new partnerships, we focus on the profitability elements, and we also want to see if there would be room for partnering in the area of diagnostics or therapy into maybe such areas where we are not focused yet ourselves so much and receiving extra revenue through those. Those are long-term, these are the type of deals we did in 2021 when we did the prototype sales for diagnostics, EUR 0.9 million. In 2022, we did the EUR 3.5 million technology licensing to Magnus Medical. These sort of deals, we also have some constant discussions with partnering companies. Of course, you cannot necessarily estimate it for any given year.
There's always a possibility that we can do these type of agreements with companies and boost both our revenue and profitability for a year. I hope there's a lot of elements, but I like the portfolio strategy that we have. We have the diagnostic business, we have the therapy business, we have the partnerships, and we constantly focus on the keeping our costs effective. With that combination, I'm sure that we can strive for a sustainable and a profitable business also for the long run. Are there any other questions? Thank you, Fredrik, for the ones already asked. Maybe any additional ones or anything you want to add, Joonas, on these already asked?
No, I think it was an elaborate answer.
Okay. Well, I once again thank you for your interest in Nexstim. I want to point out that we are going to publish the full financial statements and as part of the annual report early next week. I look forward, of course, in updating about our process in events, in investor events, in the future, and then we will be publishing our H1 2023 results in August. Thank you for your attention and have a good winter day and upcoming spring. Thanks. Bye-bye.