A very good morning from sunny Oslo, and welcome to Medistim's presentation of our first quarter 2026 financial results. My name is Kari Krogstad, and together with CFO Thomas Jakobsen, we will together take you through the results. Before getting into the highlights, we like to start these presentations just reminding ourselves on Medistim's track record and also just highlighting that our growth over the past 10 years in sales has been close to 11%, and on our EBIT, we have been growing close to 15% over the past 10 years in a CAGR way. That's a reminder of our promise to continue to deliver profitable growth. Let's now dive into the first quarter. I'm very happy to being able to present another record sales quarter from Medistim.
For the first time, we are exceeding NOK 200 million in revenues. That means 11.1% growth in NOK. We can see that we have some negative currency effects here. If we adjust for this, we will see that the currency neutral sales development is actually up at 18.5%. Further, looking at sales of our own products, which is of course the strategic product portfolio and the most important part of our business, we see that this is up a solid 28.8%. All regions are contributing to this result. Americas is up 30.9% currency neutral this quarter. EMEA up 11.5%, and Asia Pacific have a tremendous 57.5% growth.
We're also noting that our third-party products is down by 30.2%. We will remember that the beginning of last year was very, very strong due to sales to new hospitals in Norway. We couldn't expect that to be repeated in this quarter. When we look at the EBIT at NOK 57.1 million, that is also a very, very strong operating result. It's actually the second-best operating result ever, just beaten by the same quarter last year. If we are adjusting for currency effects here, we would actually see a close to 4% improvement in the EBIT for this quarter. We know that the U.S. tariffs is making an impact this quarter, so impacting our gross margin and that's also the EBIT margin. The margin remains strong at 28.3%.
Little bit lower than the same quarter last year, but still at the high level that we would like to see. Of course, very much driven by the strong sales of our own products. We will note, and have some explanation to some higher operating expenses this quarter. Of course, some of that is connected to the establishment of the direct operation in Japan. We are also seeing increasing higher activity levels throughout our sales organization, which is a very deliberate effect that we want to see. We're also taking some expenses on an IT infrastructure upgrade. The General Assembly yesterday decided that we will pay out a dividend of NOK 8 per share, so that will be a total of NOK 146.2 million.
With that, introduction, I will leave the word to Thomas.
Thank you very much, Kari. Good morning, everyone. I will take us through the first quarter profit and loss balance sheet and cash flow. Going directly to the profit and loss, Kari will take us through total revenue, splits per region and per product. I will not go into that detail. However, we do have a weaker gross margin in percent this quarter, and this is explained by our sales channels. We have communicated before that, you know, our margin is very much dependent upon the sales channel we are selling through, either through distributor network or if we are direct in a market, and there's also variances between different regions.
For this first quarter, relatively speaking, we have strong sales to our distributor network, but we also have very strong sales to our APAC region, which affects gross margin and gives us a little bit weaker gross margin as such. Not much, but it is a little bit lower than our margins in the U.S. market. Also what Kari mentioned is the tariff. The U.S. tariff was not implemented in the first quarter 2025. We have full effect of that in 2026, and it amounts to NOK 5.1 million. That was an expense obviously we did not have last year. Salary and social expenses are at the same level, more or less, as last year, but we do have additional operating expenses this quarter, and that's related to a lot of activities which Kari has touched upon.
We do have this IT infrastructure project, which we also spoke about in the fourth quarter. In this quarter, we've expensed NOK 1.5 million related to that project. We also have the establishment of our direct operation in Japan, and that has added another NOK 1.5 million expenses to our P&L. We also had recruitment expenses. We recruit and grow the business continually, and the recruitment expenses for this quarter was NOK 1 million higher compared to last year. Last but not least, we do have a high level of commercial activities, which was NOK 3 million higher this quarter compared to last year, and it's very much travel and face time with customers we're then talking about. Last but not least, we also have an agent commission for this quarter.
This is not very normal in Medistim because we either sell through distributor or our direct sales network. Some hospitals require that they have a contract directly with Medistim, and that's happened this quarter. These contracts are then controlled through letters of credit, which controls the cash flow from the hospital to the manufacturer and also controls that the hospital are actually getting the delivery and secure the delivery that they're being promised. This happened in the first quarter, we have an agent commission then of NOK 2.1 million, which are then the return commission to our distributor for the services that they provide.
Given all this, our EBITDA ends at NOK 63.3 million, a little bit weaker than 1st quarter last year that ended at NOK 64.7 million. Depreciation increases. We do have additional lease obligations, which is the reason for the increased depreciation. Our operating profit ends at NOK 57.1 million and an EBIT margin of 28.3%. That's weaker than the 1st quarter last year, I think, you know, look at the big picture, the fiscal year 2025, our EBIT margin was 28%. We are well in line with what we communicated earlier that our EBIT margin should be in the high 20 area. Net finance is negative. We have experienced strengthening of the Norwegian krone, especially towards U.S. dollars, but also towards Euro.
The net effect of finance is negative by NOK 5.5 million. Profit before tax ends at NOK 51.5 million, and profit after tax ends at NOK 40.3 million. Looking at our balance sheet, our intangible assets increases. We have 2 major development projects ongoing, which are recognized as an asset in our balance sheet. We also have this IT infrastructure project, which I mentioned in the P&L. Basically, what we're doing with the IT infrastructure project is that mainstream code and setup are expensed and Medistim unique code and setup is recognized as asset. It's a combination of those two. Inventory level, same level as the end of the year. The increase in our working capital is related to accounts receivables.
That increases from NOK 86 million to NOK 104 million. Cash position is solid, ends at just under NOK 210 million, a little bit below the cash position by the end of the year. I will comment that a little bit further later on in the cash flow statement. Equity is strong, ends at over 74%. We have no interest-bearing bank debt. Haven't had that for many years. Our long-term liabilities are related to two things. We have lease obligations of a total of NOK 46.2 million, where NOK 11.6 million is short-term. The deferred revenue is extended warranty contracts, two to three year contracts, which then revenue are then recognized over that time period.
All in all, we do have now decided that we are going to pay out a dividend, and that will be paid, I think, estimated 18th of May. That will obviously affect our equity, when we are then closing the second quarter, NOK 146 million. We'll then reduce our total equity and equity percent, but it's still a solid equity as such. Earnings per share, still solid, more than NOK 2 per share this quarter. We do have also a strong equity position, as you can see, 70.9% by the end of the year, increased now to 74.3%.
Cash flow, we do experience that our cash flow from operation is relatively weak this quarter, and there are reasons for that. First of all, we have prepayments of income tax of NOK 14.1 million. We do have the increase in working capital related to increase in our accounts receivables. We also have what is called here other, which are accrued expenses in 2025 that we now have paid out in the first quarter. A lot of this is related to commissions and also yearly bonuses that has been achieved based upon the results that Medistim delivered in 2025. Net cash from operation is NOK 7.2 million. In addition to that, we have investments related to our development project and the IT infrastructure project.
We have paid lease obligations of NOK 2.9 million. Net negative cash flow is then NOK 2.3 million, which then leaves us with a cash position pretty much the same as we enter the year into with, NOK 210 million. I leave the word to Kari. Thank you.
Yes. Let's then dive into our business segments update, starting with the flow and imaging systems sold in units. This is obviously our most important part of the product portfolio since it's our absolute unique product offering. We are the only company out there providing combined flow measurements and high-frequency ultrasound technology in the same system, which is providing really high value both to cardiac surgeons and to vascular surgeons. As you know, we are selling this product as about double the price of a flow-only system. This is very important for us to see a continued uptake and adoption of this technology. For the quarter, we see it's a good quarter for us. We sold 28 systems this quarter.
EMEA and Asia Pacific sold more than the same quarter last year. Americas is down by four units this quarter. These typically vary from quarter to quarter. All in all, a strong quarter for flow and imaging unit sales. When we are selling these systems, the imaging probe sales tend to follow, and we're also seeing therefore strong imaging probe unit sales this quarter. Here Americas is up by two units, EMEA up by seven, and Asia Pacific down by 1 unit. When we look at the flow-only systems, it's also very reassuring to see that this is also growing. Strong flow system unit sales this quarter up eight units quarter-over-quarter. Americas is up. EMEA is a bit down here.
We recognize that they had the higher flow in imaging sales, so this tend to sort of level out a little bit. We're seeing that Asia Pacific grows by 10 units this quarter, and this is very much driven by growth in our sales to China. When it comes to flow probes in units, we see that it's a very strong continuation of growth here, so up 27% this quarter. A really strong contribution from all the territories. As we know that the strong capital system sales are driving the probe sales across all of these regions. Looking a little bit more into the regions, starting with Americas. Americas this quarter delivered sales revenues of NOK 84.8 million .
If we adjust to the same currency as we had last year, we look at an underlying growth of 30.9 for the quarter. As we know, the U.S. is the majority of Americas, and looking at U.S. in isolation, the currency neutral growth was 33%. We have increased our prices significantly in the U.S. and the growth this quarter, we see that about 50% of the 33% is coming from price increases. It's then very reassuring to see that we have good system volume sales as capital, although not as high as the same record quarter last year, and also very strong flow probe volume growth at 46%.
Canada has a little bit weaker quarter in the beginning of this year, while the Latin American distributors delivered a strong quarter but, of course, from a much lower base. Diving a little bit further into the U.S. We can see here in the table the system sales and also the outplacements on PPP or lease contracts. The total number of units that we have then sold or outplaced this quarters is 14 versus 18 last quarter last year. We're seeing this fewer number of systems sold, but we also see strong sales of consumables to the capital customers. If we look in the second table, the number of procedures from flow probes to capital customers, we see that that is growing by the high 35%.
We're also seeing very high growth of imaging probes to capital customers of 15%. New customers are increasingly coming in as capital accounts, and we also see that some of the current PPP or lease customers tend to convert to capital. This is a trend that is continuing. To the right in this slide, we have split out the flow procedures, splitting out the cardiac part of these procedures and the vascular part. Now we can follow the development of flow procedures to cardiac, here highlighted in orange, either by year or by quarter. This means that it's very easy to calculate the penetration or the adoption of our technology in the U.S. in CABG. The cardiac number for 2025 is about 80,000 procedures.
Considering a market of around 200,000 procedures, that leads us to a share of 40% covered by Medistim in the U.S . CABG market. Hopefully this would be useful to follow going forward. Moving on to Asia Pacific. Here we delivering NOK 42.7 million in sales. Making this currency neutral, the increase is actually 57.5%. We see that the sales to China is making up the majority of this and growing as high as 74.6% for the quarter.
We have continued to explain that we have to expect quarterly variations in our sales to China. Because we do have, of course, sales office with our own staff, but we still rely on local distributors and agents, and that will inevitably result in some quarterly variability. Japan, it is a new era for us in Japan, and Q1 was the final quarter where we're selling through a distributor there. It was on the low side at NOK 2.7 million, much lower than the same quarter last year. This also means that there will be no inventory build-up in the distribution channel as we saw in China when we went direct there.
We know that when we are starting to sell from the second quarter onwards, that will be through our own team, and there should be no unexpected inventory issues going forward. We also see this quarter quite strong contribution from the other Asia-Pacific distributors, up 105% and contributing then in total with NOK 14.7 million. In Europe and Middle East, the region delivers NOK 52.1 million in sales in the first quarter. Currency neutral, this corresponds to an increase of 11.5%. We note that our direct markets delivered sales in line with the prior year, so no big change there. While the distributor sales is actually providing the growth contribution this quarter going up 26% currency neutral.
Just thinking back at the EMEA performance also through 2025, varying quite a lot, direct markets from time to time contributing very strongly and in other quarters a bit weaker. I expect to see a bit variation going forward here as well, but really good news that we in the first quarter are already growing by 11.5% currency neutral. That's very encouraging. The third-party products, as mentioned in the introduction here, the revenue is down 30%. We are reminded that the first quarter last year represented an exceptionally strong comparable because we sold a lot of ophthalmology products to two new hospitals in Norway. We could not plan for or expect to repeat that sales in this quarter.
Other than that, we have a highly diversified product portfolio, and it's Mentor and A.M.I., which are the biggest contributors in the whole portfolio. This table is just summarizing the growth in the NOK from the direct markets and also from the distributor parts and regions. I will not go through the details here. Of course, we are following closely the development of the vascular sales since this is the new market that we are establishing a position in. In this specific market, we see that growth is missing in the vascular segment. It's just 1% up from the same quarter last year.
We see that the cardiac sales growth was 34.5%, really at the high side and is responsible for being the driver of the total growth this quarter. Vascular sales is accounting for 17% of our own product sales, it's not a bad proportion. It was a little bit higher than when we looked at the 2025 numbers. Here we are just expecting the vascular growth to continue and going forward will be in line with what we've seen in previous years. We also follow the split of flow portfolio versus the imaging product portfolio closely.
We can see this quarter that both the flow products and the imaging products are contributing nicely to the total growth, 23% from the flow products and 12.6% from the imaging products. That is a solid performance as well. Closing up here now, taking a look at the recurring versus capital revenues, we can see that this quarter we are seeing 20% growth in our recurring revenues, which is quite in line with also how the capital revenues are growing. The last 12 months takes us to a 70% share of recurring revenues of the total, which is quite in line with the historical levels. A few comments on our strategy. Yeah.
Just to go through this really quickly, we have a strong position in the coronary bypass segment, so the cardiac segment. We have some markets with really high market share with our Medistim technology. Japan, China, the Nordic countries, the German-speaking countries, and other European countries as well, with really high share, up to 80%-90% of the procedures covered. Here it is important for us to continue to convert the dominant flow only install base to a flow in imaging install base. This is gradually increasing and ongoing. We are also working to grow our adoption in what we regard as under-penetrated markets, including the U.S. at 40%. Of course, it's growing, but still regarded as under-penetrated in our view.
Clinical marketing, the studies that we are doing really critically important in order to get that traction. Flexible pricing and business models are important in some particular areas. We have mentioned India before. There are other areas also where we are finding different business models and ways of making our products available and affordable to the customers. That's a part of our strategy. As I mentioned, building a position in vascular has been a focus for quite some time already, and we are getting traction there. Last but not least, to expand our direct market coverage and getting closer to our customers, that leads us into the change that we announced the 2nd of February this year, that we're opening our direct sales office in Japan. As of 16th of March, we are direct.
We have now a very solid team in place. We have 10 employees there and a very experienced leader with background from the vascular area, which is really very important and provides optimism in terms of breaking into a vascular market also in Japan. We know that Japan is the strongest market for us in terms of the market penetration. 90% of the CABG surgery procedures are already supported with our technology. The question is how to continue this growth. By getting closer to the end users, we want to get higher traction of the conversion from flow-only systems to flow with imaging systems. Of course, we get the, let's say, the one-off effect of capturing the distributor margin, that's also important.
We will then seek to untap this potential from vascular procedures as well. Last year we had sales through our Japan, Japanese distributor of about NOK 21 million, and that gives some idea about what we could expect for this year, taking into account that the distributor margin would be now going to Medistim. As also mentioned in the previous quarterly presentation, related to the first quarter, I want just to remind that we are now sponsoring a new randomized clinical trial in CABG surgery, the so-called SMARTFLOW trial.
Being a large randomized clinical trial comparing the use of flow technology versus no use of flow technology, this could be a breakthrough into providing the evidence to make our technology being eligible for guideline inclusions in the U.S., which is the country where we are lacking that kind of support. The lead investigator of the trial, Professor Mario Gaudino, well-known, really one of the, I would say the stars on the CABG heaven at this time. He was also the first author of the circulation paper that we have been referring to many, many times, which is a absolutely critical consensus paper stating that this group of highly renowned surgeons are saying that TTFM should be used in every CABG case.
This paper is also concluding that there is a lack of randomized clinical data, and this is now the project that they want to go through. We know that the first patients have been enrolled in this trial. It is going to be 1,242 patients enrolled, and there will only be Medistim's MiraQ flow measurement system that will be used. That will be mandatory, and then we will of course also encourage the surgeons to use the imaging component while this is not mandatory. It will be a relatively big trial with 20 centers in U.S., Canada, Europe, and Asia, so good coverage there.
The goals of the study to begin with is to determine whether TTFM reduces the rate of graft failure. This will be checked within 1-3 months of the surgery, and it's going to be documented by coronary CT angiography. The idea is that this provides a platform to continue the study and evaluate the impact of TTFM on the longer-term clinical outcomes. We're talking about myocardial infarction, repeated revascularization, survival, and quality of life. These are the outcomes that are relevant for guidelines consideration. We really believe and hope that the whole platform study will be prolonged into this long-term clinical outcomes study. Exciting days.
Our involvement here, of course, it's a scientifically independent trial, but we are making a limited financial contribution of $500,000, which will be, well, supporting the study over the course of the trial. At the side of course, the main objective, which is to provide this evidence, is also providing us with an opportunity to facilitate upgrade of the imaging at the sites that are currently not imaging users. That's a, let's say, a very interesting business opportunity. We will also encourage and help the centers to get hold of the newest INTUI software. This is also a great opportunity. Yes. I think we can open up for questions.
We have some questions today too. Congratulations on surpassing NOK 200 million in first quarter revenue. APAC delivered strong growth in this quarter, accounting for around 24% of sales of own products. What is your ambition for this region, which markets do you see offering the greatest growth potential from today's levels?
Yes, absolutely. I think the moves we've made in Asia Pacific, first by establishing our own team in China and going through a little bit of a rough patch in the early days there with some distribution channel issues. We now see that we are really getting a return on that initiative and investment. It was really encouraging us to move forward also with going direct in Japan. Asia Pacific is of course, many other interesting countries and opportunities, and we've highlighted India as one of the next big growth opportunities in the territories.
That will also be a region where we will, yeah, be placing, I guess, more resources and give more attention and continue the great collaboration we have with LivaNova in that territory. Yes, Asia Pacific is the runners up for driving growth for Medistim. The Americas and U.S. in particular will continue to be the major and foremost growth driver also in the sort of near term or the next few years.
Thank you. On the cost side, other operating expenses increased significantly. Do you view this as one-offs or should we expect higher operating expenses going forward?
Answer that, Kari.
The cost master.
Well, of the increase of just over NOK 10 million, I would say around NOK 5 million are one-off expenses. That is related to the IT infrastructure project. That will be a project that we will finalize during the year. We also have this agent commission, which are unusual, NOK 2.1 million. In addition to that, I would say that the establishing of the Japanese office around NOK 1 million are one-off expenses. Going forward, we will still have that operations ongoing, but this is kind of like a one-off to establish everything. Those are the one-offs. The recruitment, I mean, Medistim is growing, so we will always recruit. That will be ongoing. Could be timing, related to that when the expenses are coming.
Our commercial activities are something that we are actually driving to make sure that our sales force are getting out there and make sure that they have the face time with the customers. Around NOK 5 million, I would say, are one-off expenses.
Thank you. The next one is on currencies. Currency movements have had a no-noticeable impact on this quarter results. Could you outline your currency strategy and how Medistim manages FX risk?
It's actually very simple. We do not speculate in currency. That means that most of our cash coming in in $ and EUR are then converted to NOK as they, as they come into us. However, we do have some hedging contracts that we enter when we do see that the currency is favorable for Medistim. In that sense, we are a little bit speculative, but in general, it's more like a spot conversion to NOK. This has been the case for Medistim in many, many years. We tried to make hedging contracts in order to reduce the risk.
We do see that, you know, whether you do that or you enter, or convert on spot currencies, all in all, you will, you know, you could lose or gain regardless. If we do have a secured cash flow for a large project, it makes sense to have a hedging contract because you know then you will have an amount of EUR or U.S. dollars coming in. Our cash flow is not like that. It's more a random cash flow stream that comes into Medistim, and therefore it's a little bit more difficult to plan that in that sense.
Thank you. The third-party business show a decline of some 30% compared to 2025. Can you elaborate on the development and the expectation going forward?
I can perhaps say something about that. I mean, as we know, we had a tremendous year last year. The first quarter and maybe a bit into second quarter as well, we provided a very strong result and growth for the third party portfolio last year. Going back, yeah, it has been a lot of variation, but I would say maybe the growth rate has been around 5%, so much more moderate. And I think, in sort of a normal circumstance, you know, it's probably around there that expectations should be. Yeah. There's no real changes that we're seeing. I mean, we have a solid portfolio of products. We are managing those, working closely with the suppliers that we are serving.
We're also seeking new agencies on a regular basis. You know, I'm very happy with the third party team that we have. They are operating a lean organization, providing good margins on their work. Yeah, I'm expecting that to continue sort of in the more historical levels.
The last question is from the public chat. What kind of gross margin level on own products is to be expected going forward?
What we've seen throughout the years is that our own products are increasing more than third-party products. As we do that, the gross margins increases in percent and also the EBIT margin. To answer that, I mean, we do have in our reports the split of the segments, sales of our own products and sales of third-party products. Based upon that split, you could see what margins are to be expected from sales of our own product and EBIT margin as well.
The thing, though, that could affect it is that, you know, if we continue to grow, and that is expected in our direct markets, these margins will actually continue to grow as well as we shift more business from direct operation compared to distributor operation.
Thank you. That was all the questions.
Just a sec. Just came in one. Could you give us an update on your factory automation project?
Yes.
We have mentioned that one of the projects that we're working on has been to redesign our probes and making them possible to automate. That part of the project has come to almost a conclusion, and we are in the phase of sort of looking into various options on how to actually move forward with that automation. I can't give very specific information about that, but this is a very important and critical project for us. We want to make sure that we have really a future-proof production process that not only provides improved cost levels for us, but are securing the high volumes that we will be needing to supply the market with, you know, when we are fulfilling our growth objectives. It's moving forward.
We will give more information when it's becoming more concrete.
We are through. Thank you.
Thank you.
Thank you very much, and we look forward to the next encounter. Thank you.