A very good morning from Oslo, and welcome to Medistim's second quarter and first half presentation of our results. My name is Kari Krogstad, and together with the CFO, Thomas Jakobsen, we will be presenting the results. So I suggest we move forward to the highlights of the quarter. So the highlights for the second quarter. First of all, we are reporting our second-best quarter ever for sales, even for EBIT, but we have to say it's greatly helped by currency. As we can see from the numbers, we are delivering revenues in Norwegian currency of NOK 137.4 million, versus NOK 117.5 million last year, so a 16.9% growth.
When we're seeing where this growth is coming from, 18.6%, growth from our own products, and then also 8.2% growth from the third-party products. This quarter, we see that the imaging product portfolio, which has been really showing solid growth quarter-over-quarter for several years, is actually down by 13%. At the same time, we see that the flow product portfolio is growing very nicely at 36.5%. And we can see that the majority of this growth is actually coming from sales of flow probes, and this is shown in the table at the bottom left, where we see that the flow probes in number is growing by 25.5%. And it's also coming from all territories.
So all territories this quarter is showing decent growth in the number of flow probes sold, but particularly from the Asia Pacific, related to the changes we are making in the Chinese market, so a final delivery to our former distributor for China. This high number of flow probes also indicates that the stocks, stocking up that we saw in the fourth quarter last year, due to the announcement of a price increase from first quarter this year, is actually now consumed. So that's a good thing. We're also seeing that our vascular sales is up, our cardiac sales is up.
When we take a look at the currency and neutral sales, as we can see here, currency is contributing very much, 12.2% in total, and if we're looking then at the currency neutral, total growth over all our products is 4.7%. When we're looking at the currency neutral growth from our own product, it's 4%, and we can see that it's a little bit of variation between the regions here. Americas is down. It was also a bit down in the first quarter. EMEA is coming back strongly after a more challenging first quarter, and Asia Pacific is rather flat after a tremendous first quarter. At the EBIT side, we are delivering NOK 42.2 million, so a 13.1% growth here. It's still very decent margin, 30.7%.
We will have a go through from Thomas when it comes to our expenses, but we see a high level of expenses due to a very high activity out in the markets. It's timing of some expenses. It's also a consequence of going direct in new countries. It's also due to inflation and currency. And we have also some news from the second quarter, that Medistim is now participating as a partner in a groundbreaking new trial, and I will comment on that a bit later on. If we then move on to summarizing the first half. So highlights for the first half of 2003. It's still very strong sales first half due to, again, the favorable currency.
So we're delivering for the first half, NOK 266.6 million, 14.1% growth. 16.8% increase comes from our own products, and 1.5% comes from the third party. The decline in imaging products that we saw in the second quarter also takes the first half sales down 2.5%. Still, the flow sales is very good, 37.3% up, and again, it's reflected in the number of units sold, both for flow probes and flow systems, as you can see in the table. We see that both vascular sales and cardiac sales is growing. Currency, as I mentioned, is playing a big part here, so currency neutral, the total growth was 2.3%.
Only looking at our own product, it was 2.5%, so actually a little bit better than in the first quarter, but of course, at a much lower level than we have been used to seeing. Half year, Americas is now down 5.5% currency neutral, EMEA is up 4%, and Asia Pacific is up 25.8%. So I would like to make some comments about the overall for the sales revenues so far this year. I think that we're all aware of the challenging global macroeconomic situation, with high inflation and interest rates, and our customers around the world are telling us that they're forced to apply increased prudence in their spending and investments. And as a consequence, and not surprising, investments in new capital equipment requires even more careful consideration.
than in normal situations. So Medistim, like many other companies in our industry, is experiencing the effect of this as prolonged sales cycles, and also postponements of purchasing. So deals tend to get postponed, but they're not lost. And then we also see that when a customer finally comes to a positive purchasing decision, we see a higher inclination to opt for the more budget-friendly flow-only systems, as opposed to the more premium-priced flow and imaging solution. Similarly, we also see a tendency for our U.S. customers to opt for the pay-per-procedure or lease models, rather than going for capital purchases. So this is really the background for the, the, well, less growth we're seeing at the moment compared to our historical development.
When looking at the numbers, we should also keep in mind that we are comparing all the time to 2022, the second year in a row with record high growth and profitability, so we are still performing at a very solid level. We do believe that as inflation levels and interest rates peak and start normalizing, we also expect our customers to come back to a more normal purchasing behavior. When it comes to the EBIT, for the first half, we are at NOK 75.7 million, a growth of 6.9%. Again, as I said, high activity out there in the market, and some other factors also contributing to the relatively high expense level that we have, and I'll let Thomas go into the details here.
I will also mention that, in this first half, Medistim has gone direct in two new countries, both in Canada and China. That provides the overview of the situation, and I will leave the next phase here to Thomas.
Thank you, Kari. I will then go through our P&L and balance sheet, and as usual, Kari will go through the split of sales in more detail when it comes to geography splits and split per product. What I will comment on is our expenses when it comes to the P&L. If we look at our cost of goods sold, the level of cost of goods sold has been reduced, and that is as a consequence of product mix. We see more sales of consumables and less sales of capital, and when we sell capital, it's more flow products and less flow imaging products, which has slightly lower margin. Salary and social expenses is up by NOK 6 million, and there are three major reasons for this.
First of all, establishing direct operation in China and in Canada has affected the expenses, but we've also implemented a double shift in production in order to be able to meet future demand on flow probes. And last but not least, Kari mentioned positive help on the top line related to currency. But when it comes to expenses, yes, when we convert to Norwegian kroner, all our expenses in U.S. dollars and euros will then also increase in Norwegian kroner. This is also the case for other operating expenses when it comes to foreign currency, so that's a factor. Again, we're also seeing the increased expenses related to the direct establishment in China and in Canada.
But last but and not least, we have had very high activity level in sales and marketing, participating in exhibitions, and also extensive traveling to these exhibitions, but also our sales force traveling, meeting our customers. Depreciation is slightly lower than last year, and our operating profit, or EBIT, ends at NOK 42.2 million, up almost NOK 5 million compared to the same period last year. So even though we have a high expense level, we have improved our operating profit, and we're still on the EBIT percentage, more than 30%. Net finance is negative this quarter, and it's related to foreign currency as well, with realized and unrealized gains, losses related to foreign currency.
So the negative contribution this quarter is NOK 1.2 million, and this is the reason why our pre-tax profit is just slightly above last year, since we had a very positive contribution last year with the NOK 3.4 million. And profit after tax is at the same level as last year as a consequence. When we look at the year-to-date numbers, I will not go through the expense lines again. The explanations are the same as for the quarter, but only larger numbers. I just want to comment that even though we see some lower volume sales on certain product lines, total sales revenue reported by Medistim is the highest ever for the first half, and that NOK 266.6 million.
It's also the highest operating profit that we are reporting, NOK 5 million above last year's record of NOK 70.7 million, and we end at NOK 75.7 million. Again, we have negative effect on the net finance position with NOK 440,000. Last year was a positive contribution of almost NOK 2.9 million. So that's why we, the pre-tax profit, is only slightly higher than last year. But again, pre-tax profit and profit after tax is the highest profit we've ever reported for the for a first half, just to put things in perspective, and profit after tax ends at NOK 58.6 million.
Looking at the balance sheet, we have an increase in the intangible assets and a reduction in fixed assets, and the increase in intangible asset is a consequence of our R&D activity and product development. Inventory levels are increasing. We see a normalization in the supply chain, and it's now easier for us to secure end-of-life components and keep security stocks of critical components. Customer receivables increased slightly. It has to do with the timing of sales for the quarter. High level of sales late in the quarter results in higher level of receivables because it's not due yet. Cash is down from NOK 152 million to NOK 90.1 million by the end of the quarter, and this is because of our dividend payment of more than NOK 80 million in May.
Then looking at the equity and liability side of the balance sheet, our long-term debt is not traditional bank debt with interest rates. It's related to our lease obligations and deferred revenue, and amounts to NOK 7.1 million. We do have a solid balance sheet, 80% equity ratio, and that is despite the fact that we paid dividend of more than NOK 80 million, and that also explains why the equity in numbers goes down from NOK 367.7 million to NOK 353.9 million. And with that, I think I will give the word back to Kari to talk more about our split of sales and business segment updates. Thank you.
Yes, so let's take a look further into the business segments update, starting with looking at our imaging probes and imaging systems in unit sales. So, as I started by introducing, is now a phase where we're selling less of our imaging flow and imaging systems of the combined premium solution, where both modalities are included. The price of this device is about twice the price of a flow-only unit. So this quarter, we see eight less flow and imaging units sold as capital. We see lower sales in Asia-Pacific and Americas, but actually some more sales compared to the same quarter last year in Europe and Middle East. For the first half then, we're still eight systems down, meaning that Q1 was flat, and which is a very normal situation.
When the number of systems goes down, the number of imaging probes in units also tend to be a bit lower when we have fewer new installations. When we come to the flow probes and systems and units, I also introduced by saying that we have seen good growth, really good, solid growth, from the flow probes and systems. Still, the number of flow systems this quarter is 4 less, but they are 7 higher in the first half compared to last year. I think it's interesting to see the total sales of systems. Adding up both the flow-only systems and the flow and imaging systems sold as capital, and we see a decline of 12 units this quarter, but half year is only one unit less, for the first half.
As mentioned, we believe that the lack of growth we see is due to the hospital's prolonged decision-making processes and increased prudence to spending, particularly in capital equipment. Happily, we are seeing good growth in the flow probes, and it's good to see that there's no reason to fear that there's a lot of stocking up at our distributors or larger customers, and that we are pushing out flow probes from every territory in the world. So that's very good to see.
If we take a look at the revenue performance by region and correlate the developments in Norwegian currency also with the unit sales and trying to make sense of that, we know that there are some differences here in both currency, sales channel, business models, and system configuration plays a role here. So starting with Americas, we see that the revenues increased with 6.7% in Norwegian currency for the quarter, 8.3% for the first half, but as mentioned, declining 7% currency neutral for the quarter and 5.5% down for the first half. And the reason for this decline is the less capital sales of systems and also imaging systems in particular.
In Asia Pacific, revenues increased with 15.5% for the quarter, 42.3% for the first half in Norwegian currency. Currency neutral, we're seeing the growth was 2%, and 25.8% respectively. And here, the strong increase related to the transition of our China business. As informed before, we have now moved from using a master distributor for the local distributors inside of China and decided to establish our own presence and direct operation in China. So the former distributor has closed several projects before their distribution rights ended, and this is impacting the Asia Pacific numbers. In Europe and Middle East, delivering a strong second quarter after a weak first quarter. Revenues up 41.6%, and currency neutral up 27.5%.
For the first half, the currency neutral growth was at a more modest 4%. Third party, as previously mentioned, 8.4% up for the quarter, 1.5% up for the first half. Looking at the revenue performance now divided by product category, that's also interesting to see. So starting with the procedure sales in the USA, so we know that the number of procedures actually decreased by 7.1% for the quarter and increased by 1% for the first half. And it's the favorable currency that's explaining the higher growth we see in Norwegian currency. Flow probes, as I said, number of units sold increasing to 25.5% for the quarter, also almost 10% for the first half. Very happy to see this.
The increase in Norwegian currency, driven both by currency and also by the price increase that we implemented from the beginning of the year, around 10%. Looking at the flow system, the number of units sold was down 10% for the quarter, up 9.6% for the first half. We see that high level sales through our direct channel and also currency explain the increase that we are seeing in the Norwegian currency for the quarter. And for the first half, high level sales through the distributor channel, especially to China and Asia Pacific, results in lower increase in Norwegian currency. Imaging systems and probes, number of units sold was down for the quarter and first half. Sales in Norwegian currency shows a decline both for the quarter and the first half.
Then we will make some comments related to our strategy, and, as well known, we are very focused on our development in the United States, and let's have a look a little bit more detail into how that is going. So, we have shown a very solid track record in our U.S. sales over the past decade, as number of procedures sold per year clearly shows. So about almost 12% annual growth since 2013, and that's also ensured us a solid market position in the U.S. market. This second quarter, and for the first half, we see a decline in U.S. dollars, as mentioned, driven by the softer capital sales.
Also, when we look at the number of procedures, and here we're counting procedures, both from the pay-per-procedure and lease contracts, and also from sales of flow probes as capital. And we see that's down 11% for the quarter, 2.6% for the first half. When it comes to the capital system sales, for the first half, it's pretty flat for the second quarter, and a bit down than for the first half. And what we're seeing is that we are selling more of the flow-only system, as mentioned, and less of the higher-priced flow and imaging units. So we see that the more budget-friendly solution has been preferred during this period.
Finally, and very importantly, we continue to see strong new customer acquisitions, performing very well, both for the quarter and at the same level as for the first half last year. So that's a good thing. Then finally, I would like to also comment on our new partnership on the clinical side. Of course, engaging in clinical collaborations and projects with the best surgeons out there is a very important marketing strategy for the company. So we are very excited about this new collaboration. And we announced now recently that we are partnering with the so-called ROMA:Women Trial. And the principal investigators of this trial is very highly renowned surgeons, which we are really honored to be able to collaborate with.
We believe that this collaboration will provide Medistim with a great opportunity to strengthen our position as a central partner to the innovators in CABG surgery. We believe it will give us great exposure, great access to new key opinion leaders, and also great introduction to new cardiac centers that will participate in this ROMA: Women Trial. So not all of them are using flow technology today. But let me take you a little bit through the background for this collaboration. So everything started with the so-called ROMA trial. That is a prospective randomized clinical trial, looking at the differences in outcomes when you're using a single arterial graft and saphenous vein graft, which is the most common way of doing CABG surgery, comparing that to actually using only arterial grafts, so multiple arterial grafts.
This is the design and the purpose of this study. They will look at a composite of all-cause death, stroke, myocardial infarction, and also repeat revascularization. It's going to be a very long follow-up on this study. It is, as we can see, a very high number of patients being included, so more than 4,000 patients, and it's a high number of centers that are participating in this trial, so more than 60 coming from all over the world. As we can see, U.S., Canada, China, India, and Japan, South Korea, Germany, U.K., Spain, Italy, and many more. So it's really a large trial that will get a lot of attention and is a rare and new study in this field. It's not been published yet, so it's...
The patient inclusion is finished, but it remains to be seen what the results show. This is not a study looking at the use of flow technology at all, but we know that a majority of the patients included in the study has actually been evaluated by flow measurement. So that will also be a subanalysis from this study to look at patients with use of TTFM versus not use of TTFM. So this is, in itself, a very interesting study and an opportunity for Medistim. Now, the ROMA: Women trial, this is an extension of the ROMA trial. So it is a fact that only 20%-25% of patients that are referred to CABG surgery in general practice are women.
We also see typically that there's a very low representation of women in cardiovascular randomized clinical trials, and in the ROMA Trial, it's less than 20%. Of course, why is it so? It shouldn't be like that. So the principal investigators here, as they made the decision, they will do this ROMA: Women extension. It will be the first cardiac surgical trial exclusively dedicated to women. So they will bring in the 800 patients from the ROMA Trial and add 1,200 more. So this is also going to be a very sizable trial. The design of the study and the purpose of the study will be similar to the ROMA study. So it's still a study of using single arterial and the saphenous vein grafts versus multiple arterial grafts.
It is believed that the multiple arterial grafts may benefit women more, so it's very interesting to see the results of this population compared to the total ROMA trial. We also believe that graft patency assessment may be more important to women because they have smaller coronaries. It's prone to spasm, it's increased technical complexity, and therefore a higher procedural risk. So when we were invited to consider participating in the partnership here, it is the ambition to have graft patency assessment via TTFM for every patient which is going to be included in the ROMA: Women. That's not going to be mandatory as such, but it will be strongly encouraged by the principal investigators.
So TTFM and high-frequency ultrasound will be added to the protocol, and we will see that additional non-using centers will get them an opportunity to adopt the technology, and it will be not promoted by Medistim, but promoted by the investigators in this study. So that is, of course, a much more strong recommendation and again, a great opportunity for us. We also feel it makes sense for Medistim to participate in a trial like this. We also support women in thoracic surgery, so female surgeons, which is also a minority in this space, so it fits very well with our company profile, to put it that way. And of course, this is giving us also access to new world-leading surgeons and centers that we are not in contact with today.
So all in all, we are looking forward to entering this partnership together, and it will take some time to both have all the enrollments and analysis done, but we believe that the whole project will be greatly beneficial for both parties. But of course, we are very excited to see what this can give Medistim going forward as well. So that was the most exciting news from today, and by that, I think we will open up for questions.
Yeah, we have some questions from the web, and the first one is on China. With the strong growth from China through your former distributor in the first half of the year, what do you expect of sales in the second half?
Yeah, good question. As we have reported, both in the first quarter and now in the second quarter, we have seen a very strong sales to the former distributor, which has been maintaining China for us for a number of years, as a consequence of this transition that we are making and which we are in the midst of. So, clearly, we believe that there's going to be a stock-up of products in the inventories of the local Chinese distributors, and probably also with some of the largest customers. So I think we need to be a little bit patient to see really meaningful sales from our own direct operation. But this is very normal when you're making a switch like this.
Thank you. The next one is on the cost base. The cost base is growing as Medistim is expanding your local presence in more markets than before. This will require additional sales growth to maintain margins at current levels. Which markets are you expecting to contribute the most to the future growth?
Well, as we're pointing to the USA, USA has really been the growth driver for Medistim for several years already, and it's making up around 45% of the revenues from our own products. So needless to say, we still rely on growth from the U.S. market, and we do believe that we have a lot more to gain from the U.S. market. I mean, we indicated a 30% market share in CABG. There's a lot of opportunity to convert that to imaging and also a vascular market that is rather unexplored at the moment in the USA. So I would say that near term, the growth will continue to come from the U.S. market.
Of course, we are expecting our new direct markets, both Canada and China, to contribute nicely, a bit over time. Longer term, we are also looking very much to India as a future growth market. At the moment, it's about half the size of the U.S. market, and needless to say, that's a market where we need to build a position for longer future growth.
Thank you. What can you say about OpEx, spending for the second half of the year?
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Yeah. Maybe I should answer that. Well, our spending in the first half has been relatively high. We have the direct initiative in Canada and in China, which obviously adds up to the expenses, and we also had initiatives related to our existing markets, following up our position and building the vascular market, but also ensuring that we are able to grow and continue to grow the cardiac market. Going forward in the second half, and actually forward as well, the direct initiative we will definitely support. That's why we've been going direct, so one should expect expenses related to that, obviously.
We will also, even though sales are a little bit down as of now, continue to build our vascular position, and we will also continue to build the market within cardiac. So, you know, these initiatives that we've been doing for the first half, we will support and continue also going forward.
Thank you. And how has the probe inventory built up in the fourth quarter last year influenced sales in the second quarter this year?
I think Kari has already... Well-
Yeah
... I just took the word, but I think Kari has already answered that question in her introduction. We were also asked this question when we presented the first quarter, because flow sales was then flow probe sales was then quite a little bit soft and due to the fact that we had this price increase and some stock-up at the distributors, at the distributor level. Now, and what we commented on then was that, you know, going into the second quarter, we would- we assume that we will see that this effect was taken in the first quarter.
Looking at the sales number in the second quarter, with the 25% increase in the number of units, I think it's fair to say that this stock-up related to the price increase is already consumed.
Thank you. That was all the questions we had.
Mm-hmm. Thanks.
Okay. By then, we are closing this presentation, and thank you everyone for participating. Thank you very much.
Thank you.