Okay. We should be ready to go. So good morning, everyone, and welcome to MediCins Q4 presentation. And before we start, I'd like to share just a few Legalities. You will all be kept on mute during the entire webinar and we will address questions at the end of the presentation and encourage you to Type in your questions as we go along.
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So again, welcome, everyone. My name is Kari Krogstad and I'm also joined by our CFO, Thomas Jacobsen, here today. And we're going to go through highlights from the Q4 and also summarize preliminary results from 2020 total year. We will go through, of course, the financials, Talk a little bit about the updates from the business segments and how we're implementing our strategy. And then towards the end, also some comments on the situation regarding the pandemic.
Okay, so the Q4 sales ended close to last year. As you can see, NOK94.2 million in revenues, so a slight decline in Norwegian currency versus the same quarter last year. And it's still effects of the COVID-nineteen pandemic that we are seeing postponing elective surgeries, then also sales revenues. We can see that we still have some favorable currency working for us. So taking that into account, The currency neutral sales is declining this quarter by 7.2%.
Still, this is an improvement from the Q2 and the Q3, which showed 19.3% and 9.7% currency neutral decline respectively. So we do feel that we are at least stabilizing in this situation and probably seeing slight recovery from the pandemic and we'll talk more about that later in the presentation. Of course, the U. S. Represents almost 1 third of the global market opportunity for Medisins, and also makes up about 45% of the sales from our own products today.
So, what happens in the USA impacts our business in total to a large extent. And the USA has decreased, as you can see, 23.2% in Norwegian currency and almost 28% in dollar. In the Q4, we see effects of the very challenging period that this country has been through due to the pandemic. And As you will recall, we saw growth of 6.5% currency neutral in the 3rd quarter after the first hit of 36 decline in the 2nd quarter currency neutral. So I think all of us have followed really and the U.
S. Pandemic situation in the Q4, so this result should not come as a surprise. When it comes to the other regions, sales in Europe actually increased by 19% this quarter, both driven by good development in our own products, especially helped by some interesting developments in the Nordic area where we have a very strong position. And we'll talk a little bit more about that later on. And also very strong contribution from our 3rd party sales this quarter, up 33%.
Asia and rest of the world were down for the quarter 18% 16%, respectively. When it comes to the segment sales, vascular is a strategic area for us that we want to build a position, and We're following that very closely and face vascular was down for the quarter by 26%. Sales of our imaging portfolio was down by 13 So everything is really reflecting the lower activity level that we're seeing as a consequence of the pandemic. The good news this quarter is that the EBIT margin is up from 21.6 to 23.5. And as you can see, It's a very solid result, 22,100,000, growing by 12% over the same quarter last year.
So we're continuing to deliver good profits. Another good and important milestone for the company was that we were able to sign distribution agreement for India with Livanova. And this is a market where we struggled for a long time to find really the optimal partner and by this agreement. We feel that we really have found an excellent partner. And lastly, as a highlight for the Q4, the board will suggest to the general meeting to pay a dividend of NOK 3 per share for the year 2020.
Then also, let's take a look at the full year and how it all ended up. For the full year, the sales ended on par with 2019, so SEK 363,100,000. And after 3 consecutive quarters with COVID-nineteen pandemic effects, that neutralizes the sales growth that we saw from the record start we had in Q1. Then we had we reached about €100,000,000 in sales for the first time and growing by 16%. So of course, the COVID effect has led to the result that we are ending up on the same level as last year.
Again, we're seeing some favorable currency effects. So taking that into account, the currency neutral sales is down by 6.1%. And making up the status here for the US, there's a decrease then with 7%, rest of the world with 24%, And you can see the currency neutral decline, 13% 30% respectively. We actually are seeing for the year sales growth in Europe for own products and for Asia up 10% or sorry, 12%, Europe was up 10%. If we then again take currency into consideration, the growth is More Neutral.
When it comes to the annual result for the sales of the vascular portfolio, we're ending up with a slight growth of 4%. And you might recall that the growth from last year for the vascular portfolio was 18% and we started off in the Q1 with 36% of growth. So, it is again, definitely corona kicking in during the 3 last quarters in 2020 and then ends up with an annual growth of 4%. And just a comment on the cardiac portfolio, this was pretty flat for the year. When it comes to the imaging portfolio, this is down 6% for the full year.
Again, looking back, we went out of 2019 with 33% annual growth, and we started this year with 40% growth in the Q1. So again, we're seeing the pandemic coming into play and really introduces an abruption to the expected continuation of Growth. 3rd party product ends up then at the same level as the last year. So Yeah, all in all, I would say that we are pretty happy with the sales developments all considered. And it's really great to see that We are continuing to deliver profitable results here and delivering the best EBIT results we've ever made.
So, ending up at €95,500,000 up 6.4% from last year. So by that introduction, I will leave it to Thomas to go through the details here and I will report with further comments.
Thank you, Cori, and good morning, everyone. As usual, I will go straight to the numbers. And since Karri will comment more on sales later on when it comes to geographic split and sales per product. I will not spend much time on that here now. What I need to mention though To explain the increased cost of goods sold is that we had a very strong Q4 when it comes to sale of third party products.
And compared to last year, we had €5,000,000 more of sales related to third party products compared to last year. And that explains the increased cost of goods sold since we obviously have Higher expense when it comes to 3rd party products compared to our own products. Salary and social expenses are down compared to last year. That is the same for other operating expenses. And the reasons for that is as it was for the 2nd quarter and the 3rd quarter related to the COVID-nineteen and the pandemic situation.
With lower sales, commissions for sales reps are down and also bonuses. And when it comes to other operating expenses, Medistin normally has extensive travel activity and exhibition and commerce activity, which has been at a very low level also in the Q4 due to the pandemic. So therefore, these expenses are reduced compared to the same period last year. This leaves us with an EBITDA of €28,400,000 up from €24,500,000 from last year and an EBITDA of over 30% compared to last year's 25.7%. So the margin is strong.
Depreciation I think also increased, and that is due to our new and improved production facilities that we moved into in 2020. And also the fact that we have increased office space in our main office here in Oslo has also contributed to increased depreciation. However, our EBIT ends at €22,100,000 at 23.5 percent margin, which is up from last year's €19,700,000 20.6 percent margin. So it's a solid EBIT despite a little bit weaker sales. Financial income net is negative, and that is related to foreign exchange.
The Norwegian krone has been very volatile during 2020 and by and in the second and the third quarter, weak compared to U. S. Dollars and euros. But by the end of the year, the Norwegian was strengthened towards these currencies, and therefore, we suffered a loss, both realized and unrealized losses related to foreign currency. And therefore, our pretax profits ends at €19,900,000 about the same as last year, which was €20,200,000 and the result of the tax ends at 13.6 You should then go to our preliminary profit and loss for 2020.
Sales again ends at the same level as last year. However, our cost of sales are actually down, and this is related to product mix again. In total and in Norwegian krones, the sales of our own products are at the same level as last year, and that is also the case for third party products. However, we do get help from foreign currency and the underlying growth in terms of number of units and expenses related to our own products are therefore reduced, and that explains the reduction in cost of goods sold. When it comes to salary and social expenses, other operating expenses and also depreciation, the explanations are the same as for the quarter, only different numbers, so I don't need to go into that detail again.
But the operating result, as Kari mentioned, ends at 95 point 5000000. And despite the COVID pandemic and all the effects negative effects that has had on our sales, We are actually delivering the best operating results in Medistim's history. And EBIT margin is strong, up from last year's 24.6% to 26.3%. Again, we see the negative effect related to foreign currency. And that is, again, correlating with the volatile situation the Norwegian CHROME has had against U.
S. Dollars and euro throughout 2020 and the strengthening of the KROME, Norwegian KROME by the end of the year. So our pretax profit ends just above last year, ends at €91,600,000 last year was €91,000,000 and profit after tax ends at SEK69,400,000 versus last year's SEK17,300,000, so approximately close to last year's profit. Then move on to the balance sheet. Intangible and fixed assets are going down.
Intangible Are being reduced, fixed assets at the same level as last year, which means that we've been depreciating more of our activated development expenses that we have been activating in the balance sheet. When it comes to inventory, the inventory level is high and that Has been explained also in previous quarters and is related to end of life stock components and critical components that we need to cure for our products. But we also see effects of the COVID-nineteen, where sales levels or at a lower level than we anticipated when we were actually confirming orders to our suppliers. During the quarter, the Board decided to pay out a dividend of NOK 15,000,000 And also mentioned here by Kari, the Board will also suggest for the general meeting to pay a dividend of NOK3 NOK 3 per share based upon the profit from 2020. The €50,000,000 paid in the Q4 was, of course, related to profit for 2019.
And the board received an authorization to pay that and kind of a wait and see attitude toward to see how COVID-nineteen epidemic was affecting Medistin. When it comes to equity and liability, total equity is solid, euros 256,800,000 74 percent Equity. When it comes to long term debt, the main portion of that is related to lease obligations, 21,600,000 is related to those. And then we have 7,500,000 related to loan from DNB, but also a loan in the U. S.
Related to the PPP program, Payroll Protection Program, which consists which is on the total debt in the balance sheet by the end of the year of just under €30,000,000 And with that, I leave the word to Kari to talk more about business update for the Q4. Thank you.
So we will start with looking at how we're doing for the imaging systems and probes. And as you can see here, we are seeing COVID-nineteen pandemic effects. It's been difficult for us both to reach customers. The main reason for the decline we're seeing is obviously lower activities, lower numbers of surgeries being performed around the globe. So number of imaging systems was down by 12% in this quarter, for the year it's down 25%.
But we were very happy to see in this Q4 we actually had 5 system sales in the Nordic region and that's pretty rare because This is a fully saturated market and it's replacement sales, then they get new system sales here for the cardiac side. So we actually sold 3 systems to Heiklum in Bergen, and we had one to Santulla in Trondheim and one to Copenhagen as well. So that's sort of nice to finish off the year with strong sales in our home market. When it comes to imaging probes, that was also down 14% and 12% for the year. While we've seen a higher decline in the imaging systems compared to Glow Systems.
We believe that several of the sales projects that we have been working on during the year has transition from an initial imaging type of opportunity and ended up as a flow sales because of more cautious spending in the Tools for the moment. And then we should really remember that any sale of a flow system based on the Miracu is field upgradeable to an imaging system at any point in time. So we hope to see transitions to imaging on these platforms going forward. When it comes to the flow probes and the systems, again, it's the same underlying explanation for the decline. ProProbes was down 6.8% for the quarter and 13.5% for the full year.
I think that is a good parameter to look at when we are trying to explain and understand the real decline in activity level out there. Number of flow systems was down 20% for the quarter, but It's growing by 19% for the full year. So that is, of course, very encouraging. And then we're then adding the total number of systems sold, both flow only and flow and imaging combined. We're seeing that we are growing in 2020 from 195 units to 197.
And that's at least encouraging during the current circumstances. And of course, growing our installed base is a prerequisite for sales of probes as well and that is all good. Taking a look at our revenue distribution on the different geographies, We can see that, well, in Europe, there is really 2 things going on. We had sales of our own products and we had sales of third party products. And this quarter.
As I mentioned in the introduction, we've had good contributions from good growth from our own products and third party as well. In the USA, we can see that there's a discrepancy between the development in NOKs and in dollars. Asia. We had a slow quarter, the Q4, but as you see for the year, it's been a very good year, and We had a very good start of the year with a lot of Mirafus system sales to Japan as a consequence of the regulatory approval that we achieved last year. And rest of the world, Middle East, Canada, South Africa and Australia, smaller regions in total and have been declining both for the quarter the year.
Yes, this is again looking at the revenue and then divided on the various product groups. And in general, the apparent Screpancy. You may see in the development of number of units sold compared to the sales development in NOC is due to a combination of sales channel. Of course, it differs if a product is sold through the direct Sage channels or own subsidiaries. That gives higher revenues and profit compared to Sage through the distributor channel.
The second thing is the business model. So in the USA, of course, the unit sold as a capital sales that gives also immediate sales and profit impact compared to a unisold asset PPP or a lease model. And then last but not least, there are currency effects coming into play, Ola. So that is the reason why we or at this slide trying to explain the differences that we're seeing if you're comparing the development in NUC versus the development in the number of units. So I'm not going to go through the details here, that's for everyone who's interested to study in detail.
Okay, so a couple of comments on implementing our strategy. And just a reminder here, The strategic initiatives that we have is 1st and foremost to continue to convert the flow market to a flow and imaging market. This is important for all the geographies where we have a very strong position. So, Nordics, Japan, Germany, same Central Europe at Large. We are also working to develop stronger positions in some of these markets where we do not have as strong position today, USA, UK, France are good examples.
And here it's really to work to fight ignorance, indifference and ease of use. So it's a lot about marketing initiatives, educational programs, and also of course working on the product to make things as attractive to using as possible. In the USA, we've also over time worked very consciously to develop the sales force, not only the size of the sales force, but also sort of the work processes that they are adhering to. We also have a strategy to offer an entry level solution to reach emerging price sensitive high growth markets and we will come back to that. And we have a dedicated strategy to build a similar position in vascular as we have today in cardiac.
Last but not least, we also work to expand our direct market coverage over time. So just to follow-up on the main market where we are really concentrating our efforts. As we know, we've had a really good development in terms of growth in revenues, but also number of procedures over the years. And as you can see, in 2020, we are everything this growth curve and hopefully just for this year. So I don't need to repeat The results in Eustol and NOx, number of procedures was down 11% in the 4th quarter and 10% full year.
I think this compares really well to how we're seeing the development of the flow probes in the other parts of the world. That was down about 13% for the year. So that gives a good indication on the reduction of activity level that we're seeing in our business. We've also seen some slower capital sales, but not down to 0. We sold 3 units in the Q4 compared to 8 last year, 26 units in total in 2020 compared to 33 last year.
And I'm very happy to see that we're continuing to add new customers to our customer base. So 7 new customers also achieved in Q4 and 25 in total for the year. So I think this is pretty encouraging and solid results and providing every reason to be optimistic for the 2021. Okay, so let's again just remind ourselves about the strategy to offer an entry level solution to reach emerging price sensitive and high growth markets. And India is definitely an example of such a market.
I just need to remind everyone that this is a longer term growth opportunity for us. It's not a business which is strong today, obviously. We struggle to find really the right way to get a position in a market like this. And the milestone that we have reached now with signing this distribution agreement with EVANOVA. March, I would say a new starting point for trying to repeat this position.
The Indian market is very interesting because it's large. It's about 100,000 cabbages done annually. And this is about half the size of the USA. So of course, this is interesting for us. It's also growing at a faster speed than the Western world, where we're in many cases are also seeing a small decline over the years.
So 7% to 8% annual growth is what we're seeing at the moment. But this is a price sensitive market. About 75% of the market is private hospitals and being very price sensitive. And the cost of CABG is low compared to other markets where we're operating. So typically from $200,000 to $800,000 is the cost of the cabbage.
And this can be compared to cost of maybe 40,000 U. S. Dollars in the USA. So that tells a lot about the presence activity in at least a portion of this market. Today, we have a very low position here, but we have developed this 2 product strategy.
We realized that we will not be able to succeed only with our high end products. They will be too expensive in this press sensitive market. And we therefore went to market with and low end version and it was a 3rd party product, the name is SonoQ. And now we have actually made the decision to transition out, this on the queue and replace it with one of the modules in the Miracu Fab family and launch that as a Miracu basic version. And the rationale for doing this is really the complexity and the cost which is associated with keeping 2 product Families Alive, both from a regulatory perspective, which is just becoming increasingly demanding, and also from Pure Cost Perspective.
Of course, we have higher margins on our own developed products and own produced products. And it's also just handling costs internally, which will be more beneficial. But the strategy is is still the same. And it's the combination of these 2 product types that will enable our partner to Negotiate Bundle Days with the hospital chains, which we think is the way to go forward and build a significant position in this market. And we have, as I have talked about many times, really been looking forward to the strong and right partner.
And Livanova. They are a global medical device manufacturer. They also have a very strong position in cardiac surgery with their heart lung machines, and they have a strong position in India in particular, undergoing after exactly the same customers, meaning they already have the relationships with the customers that we are interested in. So, I don't think we could have found any better partner to work with and to represent us in this challenging but very interesting market. And we also have very good experience from working with Livanova.
They also representing us in Australia. And in Australia, we are actually currently having about 1 third of the market being present at 40 of the 52 cardiac hospitals in Australia. So we have definitely had and good support from Livanmova over the time there. So this agreement was signed in the 4th quarter, And they are representing us now in the market as of January 1, 2021. Again, reminding everyone that this is a longer term Growth Opportunity and things will not change dramatically in 2021, but we feel that we are in a great shape and position to really start seriously working on this.
Okay. So lastly, just a few comments on the situation with the COVID-nineteen pandemic. So As we have all seen, there are continued negative effects on sales revenues in the Q4. That we also do see some tendency of recovery and lower impact on sales. So I mentioned that we started the year with really a record performance and 16% growth.
Then we had COVID coming in the Q2, which really impacted that quarter, going down 12.5% versus last year. And then I think what we've seen in the 3rd Q4 is definitely that the hospitals have been able to adapt to the new situation. In the Q2, everyone was caught by surprise. There was no capacity, there was struggling to find equipment and really to find a way to handle with this new situation. And in the Q3 and in the Q4, we can see that they have found a way to balance the need for allocating resources to COVID-nineteen, and at the same time being able to take care of the cardiac patients, cancer patients and other patient groups as well.
Of course not to 100% capacity, but at least at the higher level. So I think that is what we're seeing. Internally in medicine, I'm still very happy to report that we have not had any Significant Problems. We have had the health employees and the supply chain has been impacted. Our production has been running as normal.
We have been able to contain costs, which is a good thing, and that has enabled us to deliver the best operating profit ever for a year. The cash flow has been solid and even taking into account that we paid the dividend of SEK 50,000,000 for the year. So all in all, there is every reason to be happy with the overall result. But again, we're not quite back to normal. We are still suffering from the lockdowns and the restrictions to get in contact with our customers.
Although I have to say that we have found solutions and developed ways to use of course all the digital platforms to perform not only customer meetings, but clinical evaluations and product trainings, which is really very hopeful, I would say, for the future, and we're planning to do a lot more of those type of things also after the COVID pandemic is behind us. This makes it so much more efficient to perform a lot more of these type of activities. So that's actually a very positive thing. We do believe that the continued positive development will take surgery activity back to the normal capacity. It's just a matter of Time.
And we are very hopeful to see that the vaccination programs are accelerating and that we will move towards herd immunity in more and more countries as we move towards summer. And that is very important for hospitals also being able to allocate more resources back to all the other patient groups and getting back to normal. So, yeah, I think the worst is behind us and we are definitely looking forward to 2021 with a lot of optimism. So with that, I think I will just check with my colleagues whether we have received any questions that they could answer.
Yes, we have a couple of questions here, Karin.
Yeah.
If we can start with India, the market there is a question related to the volume or numbers of procedures. And I think That has actually been answered in the presentation that we are estimating about 100,000 procedures in India per year. So I think you kind of answered that question. It came in quite early.
Okay.
But it's still related to India. And the question is, could you give some more color regarding distribution agreement in India with Livorno.
Well, it's a very standard distribution agreement, Very similar to the agreements that we have with other distributors all over the world. Our distributor agreements are pretty comprehensive And of course, it describes very well how the responsibilities of the 2 parties are in terms of both marketing sales, but also servicing the customers and following up on any potential patient events, etcetera, etcetera. So it's a rigid system. I think,
First of
all, I would say that we've always been very fortunate with the distributor network that we have been able to put in place. For the most part, we have been lucky or good, I don't know, combination probably to really find and develop relationship to very qualified distributors. For the most part in our network, the distributors tend to be rather small, so more focused, very focused on the cardiac side typically. And it's always been important for us to make sure that medicine means something to our distributors that it really constitutes a certain portion of their revenues so that we know that they will be putting in the effort. When it comes to a company like Livanova, of course this is a huge company with a lot of own developed products.
So you might say is that a good idea when it comes to presenting the Medicines products. And for many alternative distributors, I would say no, it would be not a good But for this particular distributor, we have so much synergies with regard to the target customers and All of Uvanova's heart lung machine customers will also be relevant for considering buying flowmeters and imaging Equipment for intraoperative use. So it's just a perfect combination of the 2. And as I mentioned, we already have tried sort of working with this company. And we're very impressed with the team in GIVANOVA and also with the new team that we're starting to collaborate with in India.
So all in all, we're very optimistic, but of course, the job has to be done before we can say it's a success.
Thank you, Kari. And We also have a couple of other questions that has come in. This is more related to general development in CABG. And the question is, How do you expect a gradual improvement in the market and caboz surgeries to recover in 2021? And when do you expect the U.
S. Market to back at 2019 levels.
I think this is a gradual process. I mean U. S, since it makes up such a big portion of our total business, of course what is happening there is impacting the total to a large extent. And what we've seen was that the Q4, everyone has followed the news and they have really been in a horrible state with infection rates reaching the roof and maybe also with leadership that has not taken the situation seriously. These things hopefully are changing and of course with vaccination, which I think is the critical change that we're seeing going forward.
They will get control of this situation and as I said, the hospitals will be able to serve the normal patient population as they used to. So It's just a matter of time, hopefully this will see effects hopefully in the Q1, I would expect certainly in the Q2 and then more so. Whether we will get back to the normal levels and how quickly, nobody can tell. I can't tell you. But I think there's no reason why we shouldn't feel optimistic as long as the effects of vaccination strategy and program is developing according to the plan.
Thank you. And I think that concludes all the questions that have come in. So, I think we have almost everything that's come in here, yes. And there's no other questions, which it isn't. I think we're done with this part of the session.
Okay. Then I will just thank everybody for participating this morning. And if there should be any further questions after this presentation, of course, don't hesitate to contact us here at the company. Thank you very much.