Good morning, everyone, and welcome to this year's third quarterly financial webinar. My name is Benedikte Meidl, and I'm the Marketing Communications Manager here at Medistim. Before we start, I would like to share with you a few important points. We will address questions at the end of this webinar, and you can add them in the questions section of your bar to the right-hand corner. It's important that you make sure that the panel is expanded by clicking on this little arrow here. The second part is that you go to the questions section here at the bottom, and you enter your question right here. Note that all of these questions will be addressed anonymously, and you can add them whenever you want to during the presentation.
Secondly, I would like to inform you that this webinar will be posted on our web pages under the Investor Relations tab. Thank you for your attention, and I will now hand over the presentation to CEO Kari Krogstad.
Yes. Good morning, everybody. My name is Kari Krogstad, and welcome to our Q3 presentation. As normal, I will start by going through the highlights for the third quarter, and then my colleague, CFO Thomas Jakobsen, will take us through the financial statements. We will get back also into some comments related to the business segments update, comments related to our strategy, and at the end of the presentation, also talk a little bit more in depth about the COVID-19 pandemic situation. In the second quarter, we saw the effects of the COVID-19 pandemic and the effect it had on the surgical activity around the world, not only for Medistim but for all players in this field. We could see that our sales in the second quarter was down by 12% in Norwegian krone, and actually down 19% currency neutral.
The big question for this third quarter is really, is it getting better, or is it getting worse? Now we have the results from that. The third quarter ended with the sales at NOK 83.4 million. This is a 2.5% decrease in Norwegian currency. As you can see on the slide here, we still have some favorable currency effects and some help. If you take that into consideration, we do have a decline this quarter of 9.7%. However, compared to the 19% decline we saw in the second quarter, we have to say that this is a significant improvement from that quarter. When it comes to the various regions, it's very important, and I'm very happy to report that the U.S. region is coming back much stronger this third quarter.
As you will remember, the currency neutral development in the U.S. in the second quarter was actually down 36%. This quarter, we're coming back with a currency neutral growth of 6.5%, that is really driving the decent results for this quarter. When it comes to the other regions, they were down. Europe were down with 3.3% in Norwegian krone, 11.9% currency neutral. Asia was down 23% in Norwegian krone, 30% down currency neutral, the rest of the world was also down 63% in Norwegian krone, 66% currency neutral. A comment to that is that this is for the most part distributor markets, we do have a little bit different dynamics in those markets.
I reflect that in the U.S., we saw really the big effects of the pandemic in the second quarter, and we now are seeing a little bit delayed effects of the same fundamentals in the market in the other regions. When it comes to our vascular portfolio, as you are all aware, of course, the vascular business is strategically important for Medistim going forward. In this quarter, we are delivering sales at the same level as last year. When it comes to imaging, that is also a very important growth lever for the company going forward. This quarter, it is down by 25%. We are still able to contain costs. Of course, there has been almost no traveling at all, and we're also making savings from marketing events and just a different way of operating.
Also this quarter, we are delivering a very good margin of 25% on the EBIT level. I'm also pleased to announce that the board has resolved to pay a dividend of NOK 2.75 per share. This is reflecting, of course, their confidence in the company being able to navigate through this pandemic period. Take a look at where we are year to date September. We're delivering sales of NOK 268.9 million . This is at the same level as last year in Norwegian currency. Still, we do have a little bit of help here. Currency neutral, we're down 7%. I do think this is a pretty strong result, everything considered in the situation. Go back and look a little bit into the different regions.
U.S. meaning a lot to the Medistim results, considering about 50% of the revenues coming from our own products. The year-to-date sales are decreasing with a modest 1.5% in Norwegian krone. It's actually 10% in U.S. dollar, but not that bad. The other region that is also down is the Rest of World region. It's high percentages, but then we should remember that the Rest of the World region constitutes only 5% of the total own sales revenues. It doesn't really impact that much. We see some growth. Year to date, we have Norwegian krone growth from our own products in Europe up 9.5%. Currency neutral, it is flat. Asia showing growth at 22.3% in Norwegian krone and 11.5% currency neutral. That's also very good. Sales of the vascular portfolio so far this year is up 20%, and that is very good.
We can compare that status with our 18% growth from 2019. That's how we ended up 2019. When it comes to the imaging sales, going back to 2019, we actually have had a growth of 33%. Obviously the imaging portfolio, as I said, is very important and we have seen good growth over time there. Far this year it is down and I will get further into the details, explaining a little bit background for that. When it comes to our third-party products, which is now constituting less than 20% of the total sales, this is down 11.2% year to date. Actually, in the third quarter, it was slightly up at 3.8%. Then again, we are able to contain costs and operate efficiently, and we are delivering an EBIT of NOK 73.3 million and a good margin of 27.3% as well.
This is actually our best result ever for a period year to date September. With that introduction, I will hand over to you, Thomas.
Thank you, Kari. We will, as normal, dive into the numbers and again, we will come back to split of sales within regions and products later on. Kari will take you through that. I go directly to the cost of goods sold. As we can see, the cost of goods sold has decreased compared to the revenue for this quarter. There are two main reasons for that. One is that we have had good sales through our direct channels, especially in the U.S. but also in the other direct representations that we have in Germany and Spain. All in all, they performed better this quarter than they did in the same period last year, and that improves margin. The other thing is related to currency. We have a favorable currency situation for Medistim this quarter compared to last year.
Those two factors result in an improved gross margin for Medistim the third quarter. Also, when it comes to salary and social expenses, those are down. Obviously, we do have here also currency effects that increases expenses. All in all, when it comes to commissions for sales reps and also bonuses and bonuses in general since we are affected by the COVID-19 and less sales, we have a reduction in accruals for bonus and commissions with about NOK 2.3 million. About NOK 1 million is related to currency, which actually increases expenses for the quarter. We have similar effects for other operating expenses. Less travel and exhibition expenses, congresses, is about NOK 1.8 million for the quarter. Then again, we have on the negative side foreign exchange effects of about NOK 800,000. The total expense for the quarter is down about NOK 1 million.
With improved gross margin and less expenses, the EBITDA is increasing from NOK 23.6 million to NOK 26.6 million. An EBITDA % increases from 27.6% to almost 32%. When it comes to depreciation, that has increased from NOK 4.4 million to almost NOK 5.8 million. The main reason for that is related to leasehold improvements or prolonged agreements related to production facilities in Horten and also larger premises to make sure that we are well-fitted for growth in the future. That increases then the depreciation compared to the same period last year.
Still, operating result or EBIT is up from NOK 19.2 million to NOK 20.8 million, and the EBIT margin increases from 22.4% to 25%. Net finance is negative by almost NOK 2.2 million this quarter, and the reason for that is related to currency realized and unrealized losses related to currency for the quarter is amounting to this NOK 2.2 million.
Pre-tax profit ends at NOK 18.6 and profit after tax ends at NOK 14.4 compared to NOK 16.7, compared to the same period last year. Go to the numbers year-to-date. Sales end at the same level as last year, but the margins are also much better when it comes to the year-to-date numbers. Again, we do have an increase in sales of our own products and a decrease in sales of third-party products. That obviously improves margin, and we also have help from currency. When it comes to salary and social expenses, we have the same effects as for the third quarter, only larger numbers. The total bonus and commission reduction is about NOK 7 million, but the currency effect is about NOK -3 million. Net NOK 4 million is what we see as a saving actually, compared to what would have been a more normal situation.
When it comes to other operating expenses, we have currency effects of about NOK 2 million, in total, less travel and exhibitions, congresses amounts to about NOK 4.6 million. This gives us an EBITDA of NOK 90.2 million and the percentage of 33.5%, which is an improvement compared to the same period last year. The increase in depreciation is related to premises for production, but also extended premises related to our main office here in Oslo. Our EBIT ends at NOK 73.4 million. That's up NOK 3.3 million compared to the same period last year. As Kari mentioned, that is actually the best operating profit we've been delivering in the company history despite the COVID-19 situation. That is a pretty solid performance.
Net finance, same as for the quarter, only smaller numbers and net profit before tax ends at NOK 71.6 and net profit after tax ends at NOK 55.8, up from NOK 54.8 last year. When we look at the balance sheet, intangible assets are being reduced from NOK 40.8 million to NOK 35.4. That means that we've been depreciating activated development expenses to a higher degree than what we've been activating. When it comes to fixed assets, the additions is related to the lease agreements, which we have prolonged here in the main office, but also the premises related to production in Horten. Inventory increases from NOK 90 million to NOK 112.9 million, which is a relatively high increase. We are still securing end-of-life components and also making sure that critical parts related to our products has a very solid security level of stock.
Also we do see effects that some of these components that we are ordering, we need to order them 9-12 months in advance. At that time, we were not aware of the COVID-19 situation and when sales are then going down compared to what we expected, that also results in increased inventory levels. Our cash position is solid. By the end of the quarter, we have NOK 115 million in the bank account. As I mentioned earlier, the board has decided, based upon the development of the company, decided to pay the dividend of about NOK 50 million . That is about NOK 2.75 per share. On equity and debt, as we can see, the equity is solid, almost NOK 300 million. What I would like to mention is long-term debt, which has actually increased a bit.
We've received a PPP loan in the U.S. that is a Paycheck Protection Program, which is recorded in our balance sheet as a long-term debt for now. This is a program to make sure that employees are being employed in the U.S. There could be some debt forgiveness related to that, but for now, we don't have all the criteria ready, so it is recorded as a long-term debt with interest. The other long-term debt is related to lease obligations, NOK 32.5 million of that is recorded as long-term debt. The remaining is short-term debt. All in all, the balance sheet is very strong, an equity of 75.7%. With that, I leave the work to Kari.
Okay. We will continue looking a little bit more into how the sales are going. As I was alluding to in my introduction, it's really in the imaging portfolio that we're seeing the most dramatic effect of the COVID situation. As these numbers tell us, we are going down in the number of units sold of the imaging system from 27 this quarter last year to 10 units this year. That's a 63% decline. We're seeing a following decline in sales of imaging probes as well, naturally. I don't think it's that strange that we are seeing, actually, that it's the imaging portfolio that takes the largest hit here, to put it that way.
I think when our customers are considering to buy a new system in more challenging financial times and more insecure times, it's probably not that difficult to understand that some of the potential imaging sales projects that we have been working on turns into a flow system sales instead. It's also a fact that when it comes to really having to choose between doing a transit time flow measurement procedure versus an imaging procedure, transit time flow measurement is the most clinically valuable modality. I think that will also create sort of a priority for flow over imaging. When it comes to the sales in our flow portfolio, we do see that the flow probes is also declining. It's a 21% decline from the third quarter last year. When it comes to sales of flow systems, that is actually increasing.
An 11% growth this quarter compared to the same quarter last year. Year to date, we are still seeing actually a 39.5% growth in the total number of flow systems sold this year compared to last year. That in itself, I think is pretty solid and really speaks well to the future as well. If we just take a look at sort of the total number of systems, whether that's flow systems or flow and imaging systems combined, it was down in the third quarter, but year to date, it's up by 4.9%. All in all, not bad. This is then a segmentation of our sales revenues per geographical region.
Looking at sales from our own products in the different regions, I just want to remind that Europe contributes with about 30% of that revenue, U.S.A. up to 50% of the revenues, Asia is about 15%, and the rest of the world is about 5%. Of course, there are big differences in the sizes and contributions of these different regions. When it comes to Europe, we saw flat development in Norwegian krone from our own products or in total. If you divide that into own products and third party, own products decreased with 3.3%. The third party increased with 3.8%, as previously mentioned. The growth in Norwegian krone has been driven by favorable currency. In the U.S.A., as mentioned, we had growth both in local currency and in Norwegian currency this quarter, but are still seeing a decline year-to-date.
Asia, a slow quarter, this third quarter, but very solid year to date. You will remember that we started off this year with very solid sales in Japan due to the introduction of MiraQ and the regulatory approval of that product in the market. The rest of the world, well, it's showing big numbers here in percentage but means very little in the total figures. Again, looking at revenues now split on the various product groups. The reason why we are trying to do this analysis is that we see differences between the units sold and really the revenues in Norwegian krone. We can have typically growth in the units sold of a product group, but not seeing that reflected in the currency, in the Norwegian currency. Of course, that is explained both with currency effects from period to period.
Also, it depends on which sales channels these units are sold through. As you know, we are selling both in our direct markets, U.S.A. being the largest, and also Germany, Spain, U.K., Denmark, Norway also contributing to that direct sales. We have distributors in the remaining markets, making up about 30% of the sales of own products. These are factors that are influencing how the numbers pan out. I'm not going to go through all of the explanations here. It is written down and hopefully making some sense when we go through the details here. Just a comment on the strategy. Well, this continues to be the strategy, of course, being very much committed to growing in the coronary artery bypass grafting market, still very much focusing on the U.S.A., but of course, also the other regions are very important.
We are working to convert from flow to flow and imaging. We're also working to establish ourselves in a more meaningful way in markets where we have modest market share today, and we're working also to build a position in emerging markets. Vascular continues to be a very important target for us. When it comes to the development in the U.S.A., I've already mentioned that we are coming back very nicely in this third quarter compared to the second quarter. We're seeing that the total number of procedures was up 2.3% in this third quarter. It's down 9.9% year-to-date, of course, reflecting the lower surgical activity level. Also here we see that flow procedures were up 5.8% in Q3, while imaging procedures are down 15.4% in the same quarter.
Again, reflecting my previous comments about how the imaging seems to be taking a little bit of a hit right now. Capital sales is still good, nine units for the quarter compared to four last year, that's fine. Maybe most important, we're still continuing to see growth in our new customers. 10 new customers acquired this third quarter compared to six last year. Year to date, the number is 18 versus 22 last year. The final part of this presentation will be the continued reflections and the comments with regard to the COVID-19 pandemic situation. Some of these comments are very similar or the same as we talked about last quarter, and that's just because it's very much a similar situation still.
We are, as I said, we see continuously negative effects on the sales revenues, but not to the same extent as we saw in the second quarter. The situation with lockdowns and travel restrictions and all of this is, of course, continuing to challenge our sales reps in being able to see their customers and establish new sales projects, et cetera. It's not a normal situation. We're also seeing that how the healthcare systems are being pressured. It still continues to be a situation where elective surgeries are being postponed to some extent. From the internal Medistim operations, we are still working well. We have had no health effects on our employees. We have an intact supply chain. The production is running as normal. As I said, we have been able to contain costs. Operating profit year to date is very good.
The cash from operations is very solid, and in that respect, it's going really well. We continue to be optimistic about the situation. We continue to see the light at the end of the tunnel. We know that serious medical conditions, such as the ones that we are addressing, they cannot be left untreated indefinitely. That's the background. As mentioned last quarter as well, we have seen data really demonstrating that the lack of treatment capacity and reluctance amongst most patients to seek care have had serious consequences, meaning that more people have been both dying and suffered from cardiac arrests outside of the hospitals, and at the same time seeing a lower percentage of patients seeking care.
This is, of course, very serious, and we know that the change is ongoing to make sure that the hospitals are both ensuring that they have the capacity to treat, but also that they are able to convince the patients that it's safe to seek treatment. I still want to be clear that the situation has lots of uncertainties. We don't know for how long the pandemic will last. We don't know for sure how our business will continue to be affected. We do what we can in order to be monitoring, of course, controlling whatever we can control here. We have contingency plans in place. That's the situation.
I think in summary, we can see that the sales revenues development that we've seen now from the second quarter to the third quarter, it may indicate that we're seeing a decrease in impact from COVID on the Medistim business. We do believe that continued positive development will take surgical activity back to the normal capacity. This is due to hospitals getting more used to and trained in handling the normal patient population side by side with COVID patients. Of course, there are increasing pressures now to treat patients on waiting lists. We also believe that there are increasing confidence from patients to seek medical care. These are factors that are working towards a more normal situation. Still, we do not assume that the COVID goes away.
We have seen recent information from the vaccine programs telling us that it's not really likely to have vaccines in large quantities until 2022. That will still take some time. We know that it's demanding for the hospitals to treat patients while the COVID is present. Of course, it requires more time to plan and to just keep space, well, keep distance. There is increased cleaning and disinfection procedures and more requirements for personal protective equipment. This is not, of course, speeding up the efficiency in the hospitals. I think my final comment today would be that Medistim have proven to be running a robust business that can withstand a challenging situation. We're still delivering solid profit and cash flow. That will be the final remarks today. With that, we are going to open up for questions.
I assume that we've been very clear in our presentation today. We don't have any questions for us at this moment.
No hands.
No hands.
Raised. Okay.
So.
Okay, it doesn't look like we have questions. I will just want to thank everybody for listening in this morning. Of course, if you have questions after the presentation, you are very welcome to make contact with us. As also noted, the presentation and all the other information will be available from our website. Thank you very much for listening in this morning.