Good morning, everyone, and welcome to the Second Quarter and First Half 2025 Financial Results Presentations from Medistim . My name is Kari Krogstad, and as usual, I'm joined by my good colleague, CFO Thomas Jakobsen, and together we will take you through the results. Just before we dive into the highlights, we'd like to start by reminding everyone of our track record. This is a great reminder of our goal and ambition, which has been and still is to deliver profitable growth consistently over time. We can see quarterly variations, but our track record shows that we have succeeded to deliver on this promise over the years. Now let's look at the second quarter and the second quarter highlights. I'm very happy and proud to be able to present the second best quarter, both for sales and EBIT, and it's actually only beaten by the first quarter this year.
We're seeing a revenue performance at NOK 169.1 million, which is 16.7% growth over the same quarter last year. As this slide shows, there is only a slight currency effect here. If we look at the currency neutral sales development, the total sales is up 15.7%. As always, we are extremely satisfied to see that it's our own products that are providing and really delivering this great growth. Own product sales, currency neutral, is up 18.2%. Looking closer at the regions, Americas, as we can see, very, very strong performance this quarter, 32.9% currency neutral growth. Americas are actually accounting for more than 80% of the total nominal revenue increase for this quarter. That speaks to the importance of this region. Asia Pacific is also providing great growth this quarter, up 22.9%. Here is definitely China, which is back on track and really driving this growth.
Interestingly, we're also seeing some good developments in India, which is a very interesting long-term market for us. We'll revert to that. EMEA this quarter is down by 3.6%, although the direct markets in these regions are performing very good. Third party is up 3.3% after a very, very strong first quarter. When we look closer into the cost side of things, we will see that we have a 20% increase in salary and social expenses for the quarter. This is related to the investments that we're making in the commercial organization, both in terms of headcount and also, of course, increased commission payouts in relation to the high revenue. Still, we are delivering an operating profit of NOK 54.1 million, growing 31% over the same quarter last year, and also then helping us achieve a very strong EBIT margin at 32% this quarter.
This is, of course, also very much driven by the product mix. A lot of growth from our own products is securing this high margin. In the second quarter, we also made the dividend payout of NOK per share, a total of NOK 109.6 million. Great quarter. That makes the first half of 2025 the best first half we have ever delivered. In the first half, we are seeing NOK 350.6 million in revenue. That is 25.8% growth. We see again a very slim currency effect here. Adjusting for this currency, the total sales is up 24.7%. Own products are performing great, 25.4% in total. We see that Americas again is really the strongest growth driver here, up 33.7%, but also Asia Pacific, driven by China. Finally, we're getting out of this transition period with the filled inventories in the local distributors in China.
Getting out of that, we're seeing that the growth is returning. EMEA, as I mentioned, a little bit down for the quarter, but for the first half, we're up by 7.1%. Also, when it comes to the third party, we saw a very modest growth of 3% for the second quarter, but we had a tremendous 41% growth in the first quarter. That means that halfway through the year is at 21.4% growth for the third-party products. Operating profit is NOK 113.3 million, up 55% over last year, also creating this very strong EBIT margin of 32.3% in the first half. I think the biggest piece of news that we have really communicated through this year is the strengthening of our commercial operations. I will refer to this towards the end of the presentation. With that introduction, we will go through the numbers in more detail by Thomas.
Thank you, Kari. I will take us through the financials, as usual. We'll come back to revenue split per region and per product. I will not comment that further here, but I need to mention, and Kari touched upon it, that the reason for the improved gross margin is not related to cost saving of material, but the product mix. We sell more of our own products where we have the increase, and especially in a high margin market like the USA, and we have less increase in third-party products. Therefore, we experience an improved gross margin from 80% to 81.9%. Salary and social expenses, yes, we have strengthened our commercial team, but we also have a very solid performance in Americas and especially in the U.S.A., which then drives the commission expense for our sales team, obviously.
We also have other adjustments this year compared to last year and also some salary adjustments, which is a yearly thing. Other operating expenses increase, and this is due to increased travel activity related to our commercial team. They're out visiting customers, supporting them, closing sales, so forth. We're much more having much more customer time out there, and that drives expenses. All in all, this is a positive effect. We see an increased EBITDA from NOK 47.7 million -NOK 60.5 million, and an EBITDA percent increase of almost 3%, ending at 35.8%. Depreciation is the same level as last year, and our operating profit ends at NOK 54.1 million, up over 50%, as Kari mentioned, from last year, and an improved margin from 28.5% - 32%. Very strong EBIT margin above 30%. Net finance is positive.
This is mainly related to currency, either realized gains or losses or unrealized gains and losses. In total, a net positive effect of NOK 2.2 million. This leaves us with a profit before tax at NOK 56.3 million and profit after tax at NOK 42.9 million, up considerably compared to last year. For the first half, again, the same explanations to many of the items. Although third-party products actually increased more than 20% in the first half, we have even stronger growth in sales of our own products. That again drives the gross margin to a higher level, and it's increasing from 80.6% to 82.5%. Salary and social expenses, again, same explanation as for the quarter, but I would also like to add that we made additional accruals for annual bonuses since we now have excellent performance in the first half.
We also looked at goals for the year in total and then also made accruals for those bonuses that are related to annual goals. Since it is looking good that we're going to achieve this for the first half, we made a portion of that as an accrual in the accounts by the end of the first half. Other operating expenses, travel is the driver, but we also have expenses related to our important project, the Patent project this year, which we did not have last year. Those are the two main reasons for the cost increase there. Operating profit before depreciation and amortization ends at NOK 125.2 million, up from NOK 86.1 million last year, and a solid improvement in the percentage EBITDA from 30.9% to 35.7%. Depreciation is a little bit lower than last year. That means some of the projects have already been depreciated.
Operating profit ends at NOK 113.3 million, which is up more than 50%. The top line increases 25%. Operating profit increases more than 50%, and that's what we like to see. EBIT percentage is 32.3%, up from 26.3% last year. Net finance for the first half is actually negative, slightly negative, NOK 250,000. Profit before tax ends at NOK 130.1 million, and profit after tax ends at NOK 86.4 million versus NOK 59.1 million last year. A solid growth on the bottom line. To the balance sheet, fixed assets and intangible assets in total, same level as we entered the year in, but we do have an increase in intangible assets, which means that we are working on developing our own products, which are placed in the balance sheet. Fixed assets are being reduced, which means that we have less investments in fixed assets that we now are depreciating.
Inventory levels are again a little bit up, but now we have really honored all those purchase orders that we had to place during the period of supply chain issues. Most of those are delivered, so we would expect to sell from inventory going forward. Therefore, we would expect also entering into 2026 that inventory levels will decrease since we now don't need to place purchase orders on the major components to our products. Customer receivables increase due to higher sales, which is natural. We have a solid cash position, almost at the same level as last year, but keep in mind that we actually paid a dividend that was almost NOK 30 million higher this year compared to last year. We are recovering quite fast when it comes to the cash position.
Equity, total equity is more than 70%, even after the NOK 110 million or NOK 9 million dividend payment in May. We have no interest-bearing debt. That means bank debt towards banks that we pay interest on. We do have long-term debts related to lease obligations and deferred income divided in long-term and short-term. Obviously, the short-term is within one year, and the long-term is longer than one year. That's why we have a long-term liability in the balance sheet. Key figures, earnings per share, solid improvement as we would expect when we have a solid development or strong development in operating profits and profits after tax. Cash flow, even though we have a profit of more than NOK 100 million, the cash from operation ends at NOK 56.5 million. The main reason for that is prepayment of tax of NOK 28 million.
We also have a change in working capital. Even though we have an increase in inventory, the main driver for the change in working capital is actually customer receivables, which increases with NOK 28 million. Investments end at NOK 12.5 million. Mainly, the majority of that is related to the development of our own products. Cash from financing, obviously, dividend is the largest payout. We also purchased our own shares in this period to honor a share program for management and key personnel in Medistim. We also have the lease obligations, which also are reported under cash from financing, giving us a net negative cash from financing at NOK 126.8 million. Net change in cash of NOK 82 million, and we end the first half at NOK 96.3 million in cash. With that, I give the word further on to Kari. Thank you.
Yes, so let's make a round trip looking at the various products. As usual, starting with the high value, higher price flow and imaging systems, and looking at the unit sales development, we are seeing a very strong quarter from Americas, which are selling eight units more compared to the same period last year. EMEA and Asia Pacific are slightly down, and that means that the net effect this quarter is one more flow and imaging system compared to the same period. I think it's valuable to highlight also that for the first half, we are actually selling 12 more units of this flow and imaging system compared to the first half 2024. Imaging probes, we are selling seven more than Q2 last year, up 23%. Americas and EMEA are up. Asia Pacific is slightly down on the imaging side.
Year to date, we are selling 20 more units this year compared to the first half last year. Flow-only systems in units, we see that we are up by six units. Americas is up two units. Asia Pacific is up by seven units. We're seeing a little bit of softness from EMEA this quarter, and it's due to less sales through our distributor sales network. Year to date or the first half, we are selling 13 more flow units this year compared to last year. When it comes to the number of flow probes sold in units, we see that this sales is up by 15.6%, and it's up in all regions, although slightly for the quarter in EMEA. Year to date, we are seeing a 17% increase in the number of flow probes.
This is very solid evidence that there are new customers coming in, buying the first probe packages, but also that we have good utilization on the install base. Looking a bit further into the regions and Americas, as highlighted, $78.9 million in sales in the second quarter. Currency neutral, very strong growth of almost 33%. We can see that it's the total number of systems sold as capital that is really driving this. We also see that the majority of these systems are flow and imaging systems. That, of course, drives revenue. It's a direct market, it's highly priced, and it's a majority of flow and imaging systems. That all contributes to the great results. It's also great to see that our new direct market, Canada, is continuing to contribute to Americas' good performance, growing 13.7% this quarter.
Latin America is a very small portion of Americas' sales, and this quarter, it's a little softer than normal. Looking a little bit further into some details here, we can see in the table on the top here, the number of capital units sold in the U.S.A. We can clearly see that we have sold more flow systems and also more flow and imaging systems, both for the quarter and for the first half. We can see that the majority of systems sold is really on the flow and imaging side. This is driving the revenue, as mentioned. It's also interesting to see that the growth in flow probes to capital customers, which we see in the second table here, is at almost 50% growth. This is, of course, driving the total number of procedures that we are counting as well. This is a great development.
I just wanted to remind us that this is also driven by these initial probe packages that go out to new customers. It's not equal to utilization, but we are looking at these numbers as an estimate for utilization. We can see that this is going in the right direction, definitely. Also, very nice to see, and credit to the U.S. team, that we are seeing seven new customers for the quarter and actually 19 new customers achieved so far this year. When it comes to the Asia Pacific region, as already mentioned, it is China who is really coming back. When we entered this year, we see that China is normalizing after this transition period. We've talked a lot about that. We went direct, and the local distributor network in China was sort of filled up with products.
It was hard for Medistim to start selling in the first phase here. 2023 and 2024 were challenging years. Now in 2025, we see that we are recovering from this period, and the sales are back to normal. Very strong growth in the second quarter from China, up 75%. When it comes to Japan, we see for the quarter, it was at the same level as last year, but we do see some growth in the first half from Japan. A little bit better than we have seen in the last year and the previous quarters. It's also interesting to see that our sales to India are picking up. This quarter, we sold for $1.9 million and $4 million in the first half. Of course, these are very modest numbers, but it's a very important strategic market for Medistim, as we've talked about many times.
We have worked together with LivaNova for a longer period in order to reestablish a pipeline of projects and potential customers. In this first half of the year, we're seeing that this is starting to pay off. It will be very interesting to see whether we are able to continue this good trend in the second half and, of course, further on. When it comes to EMEA, NOK 42.8 million in sales, a slight downward trend for the quarter, but as already mentioned, we are growing in the first half. What is always very positive to note is that the direct markets, which are Spain, Germany, and Scandinavia, are still growing and not completely making up for the downward result for the quarter from our distributors. It really points to the importance of Medistim 's strategy, which is to go direct in more markets over time.
Third-party products, we started in the first quarter with a tremendous 41% growth. It's very unusual for the third-party portfolio, but this was driven by equipping some new hospitals in Norway. We're back to a more modest growth this quarter, but still, for the first half, it's looking really, really nice with 21.4% growth. We are carrying a highly diversified product portfolio in this part of our business. So far, it's Mentor, iCare, and A.M.I., which are the biggest contributors. Ophthalmology, the ophthalmology portfolio, is the one that has contributed the most to the growth in the first half. This is summarizing the various geographical performances, and I don't think I will go through this in any detail.
Taking a look at how we're doing when we're splitting our own product sales into sales to cardiac surgeons and to vascular surgeons, we see that both portfolios are doing nicely, both for the quarter and also for the first half. It's always very important for us to see that the vascular products are actually growing more than the average year and more than cardiac. Of course, it's growing from a much smaller sales, and we are investing a lot of efforts in order to develop this market. It's very important that we are seeing a result from this. 41% growth in vascular in the second quarter and 43% in the first half, that speaks to a very good development in vascular.
Also, when it comes to the split between flow-only products and flow and imaging products, it is important for us to see that the imaging product portfolio is continuing to grow. Today, the flow products are making up the majority of the sales revenues from our own products, around 70%, and around 30% of the revenues are coming from the imaging products. We know that we have a huge potential in converting the install base on flow only to flow and imaging. To monitor progress and success in this portfolio is very, very important. We also remember that we had a challenging period for the imaging sales in 2023 and 2024, very much related to a challenging macroeconomic environment. We saw that towards the end of 2024 and then into this year, the imaging portfolio is coming back strongly, growing 37% in this quarter and 60% in the first half.
This is also very much in line with our own expectations and the feedback we get from the market and from potential new customers that the interest in imaging remains very strong. When we look at the recurring sales versus capital revenues, we are seeing that we had very strong capital sales in the second quarter. The share of recurring revenues is a bit lower for the quarter. We are at 66% compared to 73% in the second quarter last year. For the last 12 months period, we see that recurring revenue is at 70%, which is about the same level as last year. That was a deeper dive into some details on product performance. Just some further comments with regard to our strategy and what we are working hard on there. Our strategy, very briefly, is adapted to the various positions we have in the various markets.
We have strong Medistim markets where we have a high share in the CABG field. Here, of course, the main strategy is to convert the flow only to flow and imaging. In developing markets where we have a lower position, it is really to grow this adoption through clinical marketing, education, and also through the product innovation to make our products as easy to use and adopt as possible. When it comes to some more price-sensitive markets, such as India, we have also made it our strategy to be able to provide entry-level solutions in these markets. Vascular surgery is a very important future growth area for the company, and we are very focused there in our strong CABG markets to make sure that this is going to be the next lever for growth. In the developing markets, we are pushing these products forward.
Finally, and I've mentioned before, it is very important for us to continue to expand our direct market coverage. I stated in January that due to the fact that 2025 started with a launch of the INTUI software platform for the cardiac segment, and also that we started to embark on a journey for a clinical study in peripheral bypass to really support our vascular segment, this would be a perfect time for us to strengthen our commercial efforts. As talked about previously, we did make some changes to our commercial operations from January onwards. We got appointed a new chief commercial officer. We had a new leader for the Americas sales region, and we've also strengthened and expanded the sales teams, especially in the Americas, with a few more heads. This will continue into the next year as well.
This is not, of course, only a matter of putting more people in place, but it's also making sure that we are sharing best practices across all regions. We have put more emphasis on training and support to our sales teams, and we are really seeing results from these endeavors already. We entered the year with our slogan, "One team, bold moves, and excellence redefined." We feel that we are making good progress on all of this. With that, I think we are ready to take some questions.
Yeah, we have quite a few coming in. The first one is on Americas. The growth of more than 30% in Americas is impressive. Can you elaborate on this development? Do you attribute the growth to your product offering, market conditions, new management in the region, or is it down to other elements?
It's probably a good mix of the things that you are mentioning. Of course, we should keep in mind that the quarters that we are comparing with are softer, and we were not happy with the first and second quarter in 2024 with our sales. At the same time, we have seen tremendous progress in the first half. We have seen that we are winning more customers. We are able to close more capital deals. We are also able to convince our prospects to actually invest in the flow and imaging systems, which is the higher value. Clearly, we are succeeding with our strategy here. I think it's a combination. We have a great leadership team in place. We have strengthened the team, as I already mentioned.
I think that also, you know, the focus that also Thomas, I think, mentioned, that, you know, more expectations with regard to spending more time face-to-face with our customers, doing more clinical evaluations, those are all very important factors in order to succeed in this space. I guess, yeah, it's a combination of all of that.
Thank you. What is the weighted average age of the installed base? Just trying to get a sense of the cohorts in place and when old systems would need to be upgraded. Of the 3,700 installed base, how many are still in use?
That's a difficult question, but most of them, I would say.
When we estimate this, we are actually looking at what we estimate as those being active. When we say and report, I think in the latest report now, 3,850 systems active, those are our system install base. That's those who are active because we've, over the years, sold more than that number of systems. We see that on average, a system is used around 100 x d uring a year. That's how we kind of calculate how many systems that are active based upon our probe sales. Those we report as 3,850 systems are the active ones that we estimate. The lifetime of that system can vary. We've seen on the shorter term, more like five years, but we've also seen some of these systems lasting up to 10 years.
Thank you. The next one is on the inventory. I appreciate the need for an inventory buffer to ensure deliverability. Looking past that, your balance sheet looks highly conservative. Why not lever the balance sheet a bit to fund M&A and/or do buybacks or similar?
When it comes to our inventory, we do have the regulatory issues that force us to make sure we have all the components that we need because if we miss one component, we can't sell our product, and that would be a catastrophe for Medistim. All those orders, as I mentioned, have been honored. Going forward, we will sell from inventory. That means the most critical components that we have to secure, which are Medistim-based and have to go through another regulatory process if we change them, are secured for a couple of years ahead. We don't have to place orders on those components and products in the near future. Therefore, we expect an inventory decrease. That's the answer to the inventory question.
When it comes to M&A, we have been looking at M&A earlier. We also had a project on that last year, really looking into what could be Medistim's opportunities. What we found was that a lot of opportunities there, but the conclusion for Medistim was that we do have so much opportunity within our own products and on markets that in order for us to focus on the potential that we actually have, we should really focus on the Medistim products and going forward with rather going direct in other markets and do product developments on our own products. Maybe you want to add something to that, Kari.
Yes, and of course, M&A will never be out of the picture. We will always scan the market and be open for opportunities, but it's not a proactive strategy, as you say. We feel that we have a lower risk opportunity with our organic growth strategy and so much to grow from there. We are following the market. I think also with regard to financing an M&A opportunity, you know, we're not seeing that as a problem. I mean, we do have a very solid finance base. It would not be a problem for us to raise the money.
The board also has authority to issue shares if the right opportunity is there. I can also add that what we've seen so far, we're afraid that an M&A would actually distract the opportunity that we have within the markets we are already in.
Thank you. Could you comment on your leg simulator? You showed that at a vascular symposium. Is this a new product or does it simplify your sales process or both?
That's interesting that someone has picked up on our new leg that we are actually using for demonstrating how to use our probes in vascular surgery. We should have our marketing team really here to explain this, but it's something that we are using for demonstrations. For now, we are using it at conferences, but it has proven to be a very effective tool to actually have vascular surgeons come and understand better how they can utilize our flow probes. It's a tool that we are planning to use more in the future. It's created some interesting attention out there. It's not a product. It's something we use for demonstrations.
The next one is on pricing. Can you clarify your pricing in the second quarter? You had mentioned raising prices with the software launch, which didn't happen at the start of the quarter. When exactly do you increase prices and by how much? Also, regarding the new tariff, will you be able to pass this cost on fully to the customers?
When it comes to INTUI launch and the increased pricing, we haven't seen that in the first half because that has been launched now after. We will see hopefully effects on that in the second half when we get there. When it comes to tariffs, there are still some uncertainties, but Norway has, this has been communicated, tariffs to Norway of 15%. If we follow our business model and transfer pricing towards our U.S. subsidiary, we would have to absorb 9% to the end customer, which then would make this a zero game. We do have plans. We did have plans even before the tariff to increase pricing and considerably more than 9% in the U.S. When it comes to other markets, it's different. We have to go into each and every region to evaluate how much we can actually raise the prices. For the U.S., we will more than absorb the tariff.
The effect of these price increases has not been shown in our numbers yet. That is sort of an upside for the second half.
Yeah, one more on INTUI. Are you already having a feeling for the demand for upgrading of the current install base with the new software?
It is a fact that actually taking the product all the way through our production into the market has been delayed. We have only sold a few versions of our MiraQ with INTUI inside so far. We can't really speak very much to the feedback from the early users in any meaningful way yet. Still, from what we have shown at conferences and to other customers, there is definitely a great interest in the INTUI. Also, the majority of new systems and MiraQ that we will be selling will be with INTUI inside. That will not be a choice. It's not like you're choosing INTUI or not. It is only for tender business that we have already sort of entered into that we will sell the old legacy software.
Could you talk about your initiatives in R&D, given the R&D spend is significantly up year -over -year?
I would say that it's starting to be at the level we need it to be. I think it's very important to realize that Medistim's percentage of R&D spending, related to sales, has been on the very low side compared to other players in the medical device industry. The big projects that we have invested in over the past few years have been very much on the INTUI side, improving this software that we have launched the first version of. I've also said that there will be new upgrades of this software with new features being added as time moves forward. It's been a revamp of the whole software also in the process. That has also, of course, taken time and resources, and this is visible on the cost side. We're also doing an automation project in our production, which has also been mentioned before.
We are seeing the possibility to automate several steps, as many as possible, in our production of the flow probes, which is today a very manual process. These two projects have been taking the majority of the R&D costs in the past period and I think will continue to be the basis for spending going forward. We also have some new products that we are in the starting phase to actually start developing as well. We will come back with more details on that when the time comes.
Thank you. Are there specific markets you would like to go direct within the coming one to two years?
We always have a shortlist of the next markets where we want to and plan to go direct, and we will also disclose that when the time comes.
Could you talk about the use of AI, perhaps in conjunction with your new software, internal as well as for the surgeon?
Yes, so our dream is, of course, to apply AI on larger data sets in order to develop and offer more sophisticated interpretation guidance to our users, whether that is on the flow side of the technology or on the imaging side. Actually, INTUI is one first step in that direction because that software helps our users to better control where measurements are done. It's better reported. It provides a data basis for further analysis. This is really required in order to get the quality data that we would need in order to develop interpretation guided interpretation, well, based on AI. At the same time, we're also doing some experiments internally to see what we could develop. As I said, we are depending on great data to really get that going.
That was all the questions from the web.
Thank you for participating this morning, and we will meet again for the third quarter. Thank you.
Thank you.