Welcome, all attendees, to Mentice first quarter report. My name is Magdalena, and I will be moderating this call. I will give the word to our CEO, Göran Malmberg, who will take you through this presentation. There will also be a session for questions and answers later on, and I will then unmute the ones with questions, and you can raise your hand in the app. With that, I will say welcome to Göran Malmberg. Please, present.
Thank you so much. Good morning, everyone. Thanks for joining this call. It will be a pleasure to present the first quarter earnings, which we are pleased with. We can move into the slides immediately and get going. Please move to the next slide. Thank you. This is just a disclaimer. A picture of me. All right. Generally, I would say we are very pleased with the performance during the first quarter, considering the difficult times we are in. We had an overall strong quarter in terms of orders and sales. Our medical device industry sector kind of performed 80% above, or 84% to be exact, above the same period last year. Part of this is orders that was moved from last year, but I think generally, we saw a very good interaction with this segment for the first quarter.
We don't really see any direct impact from COVID-19, at least not in the beginning of the quarter. For the hospital sales, the healthcare system, the teaching segment, as we call it, with the sales to hospitals worldwide, that's really where we see the impact of the COVID-19. We have a slower sales on this segment. We were able to compensate that from very strong sales from the two other segments. As I said in the report, we saw in the beginning of the quarter a large impact from APAC. In the later part of the first quarter, going into March, we saw that that also moved to the Western world, U.S. and Europe. That's going to continue. We can see that. I'll talk a little bit more about that further on.
On the strategic alliances side, so our segment where we interact with and sell through Siemens and Philips and Laerdal, we had a very strong first quarter, which is up 160% compared to the same period last year. In the beginning of the second quarter, in April and beginning of May, we received a couple of more orders, the most significant one from a hospital system in Berlin called Charité. It's one of the largest university hospitals in Europe, where Siemens received an order for 3 new cath labs, including the Mentice capability. That's a very good sign, and we really see that this segment is picking up very, very nicely. From the technology side, we had a launch in the beginning of the quarter. We had another one in the end of the quarter.
Really, we are preparing for a lot of interesting product launches for the second quarter now. The COVID-19 has clearly impacted us. I think that we have been acting proactively and early on in a good way. We have seen the effects of the cost restructuring we have done, and I will explain that. Obviously, the immediate effect we're seeing in Q1 is related to the lack of travel or the travel bans and the fact that the congress is not happening. We also have worked a lot to slow down on the use of consultants and also generally looking at our cost structure. We are not reducing our workforce because, as I say in the report, we don't really have less things to do. We have as much to do as ever, we really need our people.
Despite that, we have been able to reduce costs. We are, for Q1, at the same cost level as last year with higher sales. We will see a larger effect of those action going into the second quarter and also the next couple of quarters. Let's move to the next slide. These are just a summary of the numbers here. From an order intake, we were up 30%-ish, 32.5% versus 25.1%. You can see on the rolling 12, we are above the full year 2019, which is a good indication. Obviously, with the COVID situation, we are extremely pleased with that kind of performance. On the net sales, similarly, we are up to 33.8% compared to 27.5%. You can see there as well that the rolling 12 is also above the full year 2019.
The operating result is an effect of, even if we have increased our workforce quite significantly over the last year, with the changes of cost structure we have done and the reduction of travel and such, we have been managing to be way more balanced. You can see, we are just half a million negative on the operating results compared to SEK 8 million negative or 7.9% for the same period last year. Same thing here on the rolling 12, we are significantly better compared to the full year 2019. Cash-wise, we're at SEK 43 million, which is also the same as the rolling 12. That's above last year, but that's not fair really because we had a cash injection during the IPO last year. We are burning cash, but not significant amount of cash. We're pretty pleased with our cash position here as well. All right.
Let's move to the next slide. If you look for the second quarter, as I say, the corrective action that we implemented for COVID-19 will give more effect here in the second quarter. Sorry. We have also implemented a kind of reduction of work hours for the month of May. Right now, we will also continue with that for at least one month in next quarter. That give the direct effect on our current cost levels, obviously. We also obviously applying for the supplements provided by the main governments where we have people, mainly in Sweden and U.S. That will have some effect as well. That is obviously what we do. We can also see that we very early on communicated our willingness to find solutions in this difficult times.
If we look at the situation in the market, this affects obviously both our direct hospital clients, but also indirectly, it affects our medical device clients as well who also sell to the hospital market. The downturn for elective procedures is really also causing the ability for healthcare professionals to get relevant practice, both for experienced people and team, but even so for junior kind of doctors in training. In the rest of the world, we call it fellows and residents. Here in Sweden, we call AT and ST doctors. They typically have training in the clinical practice, that is not possible at this time. In many cases, the lack of protective equipment just really limits the ability for any of the students to be part of the clinical practice.
Here we see an ability to really increase the use of simulation training during these times, both for junior healthcare professionals. Also the argument here, similar to what we see in the aerospace industry, where obviously pilots being on the ground for a couple of months and preparing for when flights will start to occur again. They need to be ready, and they need to be up to speed when this happens again. I think the same argument goes here for the healthcare sector. That's actually been working out very well, and we've got very positive feedback on that, and that's really helping out.
What we also have done, which I think I mentioned in the report, is that we have rolled out a kind of complementary technology really to our active clients for conducting web meetings similar to this one, but also including the actual simulator. The ability for all our clients to perform training with our simulators online. We have provided the web camera technology and also software licenses that allows for those kind of remote activities, which also been received in a very positive way. It's obviously very difficult to assess the impact of COVID-19 for both the second quarter and the year. We're not doing that. We saw during March and April that everything changes really by the day. It's really, very difficult to see.
We see that the device industry segment and the strategic alliance segment is moving on in a nice way. The difficulty we have is on the hospital side. We are creating sales on the hospital side, and we are making headway. Asia Pacific is opening up slowly, or at least part of Asia Pacific. We expect China to move back. We can travel in China. We can meet clients in China. Same thing in Japan. While other parts of Asia is obviously still very difficult, like India and other places where they're probably going in the other direction. We see positive signs, and we will be able to slowly open up the hospital sector. It's obviously, as you say, very hard to understand what's going to happen tomorrow. What else? We're continuing very good dialogues with the different societies in the world.
We had the contract and agreement with the German Radiological Society during the last quarter of last year. We continue with similar dialogues with multiple societies, both here in Europe and the U.S. I think we will see a lot of things happening here in the next year with that, which is very positive for the use of our products. What else? As I said, we have several both hardware and software launches planned for this quarter and also later part of the year. I think what we will launch now in May and June in this quarter will have a good effect of our client interaction, market interaction. On the medical device industry, we still see that we get a lot of good feedback on the work we do with patient-specific simulation, also related to new imaging modalities around ultrasound.
We would just typically gear that structural heart procedures, that's a very promising area, the technology that we have is extremely strong. That's something that we continue to see a lot of opportunities popping up there. Initially, mostly with medical device industry, I think eventually with the hospital side there as well. All right, we can move to the next one, which is actually the last slide before the questions. Maybe I'm moving faster, we'll give you an opportunity to ask your questions. As I said, we will avoid doing any prognosis for the full year due to the pandemic. I have to state, we say that in the report, that we are very positive towards the mid and long-term development here. We are moving in the right direction.
We get very good feedback on the direction of the strategy we have, which we outlined last year during the IPO. We welcome that for many years, obviously. That is really very comforting in terms of the mid and longer term development. We also see that the strategic alliances collaboration here is finally picking up. We expected to see some of that in last year, but we really see now that this is picking up. We believe that a lot of the drop we unfortunately will see in the hospital side, I think we will compensate with the increases with sales from these partners. This is really picking up in a good way, and we started off the year in a very positive way here.
This is something that we will talk more about going on, but we have a commitment from Corindus Vascular Robotics as well here with the robot-assisted surgery, which is now a division of Siemens. That's something we'll talk more about going forward, which is also very positive. Overall, made this short and sweet. I think we are, as I say, very pleased with the performance we have for the first quarter and also going into this quarter. I think with the situation and with circumstances around the pandemic, I think we have managed to adapt to the situations and really move in a very good way. We are very agile in terms of our cost structures. We managed to keep that to the level of a year ago, despite the increased organization. I think it's a good achievement.
I say we have really good collaboration in the marketplace and also solid pipeline. Again, from day to day, you don't really know what's going to happen here with respect to the pandemic. That makes it very difficult. You're driving blindfold almost here. Anyway, positive signs, positive outcome, I think, and we are plugging away in as good way as possible here and have a very good view of the future for Mentice. With that, maybe move to the next slide. Again, show the image I don't like of myself. Open up for questions, Magdalena.
Yes. If you have any questions, please raise your hand by clicking the hand button icon, and I will unmute you. If you have also any questions for Elisabet Lund, our CFO, or to Göran. We have a question here from Johan Unnerus. I will unmute you. Let's see.
Can you hear me?
Yep, I can hear you, Johan. Welcome. Thank you.
It's good for you as well that you can work from a distance.
Yes.
Yeah, a few questions. The OpEx was very much in line with last year. That's pretty comforting. You're taking more actions, as you said. I guess even if the visibility for the full year is very low, as you stated, realistically, the expectations for Q2 should be low as it's pretty much the peak of disturbances, even if it's sort of easing a bit. Anyway, what can we expect in terms of OpEx for Q2? Should it be lower quarter-on-quarter and lower compared to last year? What should we expect?
Yeah. What we can expect. Elisabet, would you want to answer that?
As Göran mentioned here, we are taking corrective actions to lower the cost. That is the expectation, at least for the upcoming quarter, where we already see effects of the savings or the cutdowns. Again, going forward, it's harder to say. It depends on the situation where everything else is going. Yes, the answer is yes to that.
We can say, Johan, that the actions we are taking with the reduced work hours, both for ourselves and external consultants, we have a part of our development performed by consultants, which makes it obviously easier to scale up and down. We have moved down on the use of resource consultants for Q2 and Q3. That's also having an effect. We expect that we will get back to a little bit more like normal after the summer, September and onwards. Again, it's impossible to say, in the current prognosis we have, we have assumed that we will have slightly higher cost again going into the end of Q3, so September and the rest of the year. We might need to continue also for the remainder of the year.
As it looks like right now, both Q2 and Q3 will have lower OpEx compared to both Q1 and the same period for last year.
Thank you. That's detailed feedback. What about the medical device? It was clearly rather strong in Q1, and the impression from the call and the Q1 announcement is that you're more concerned about the hospital side, teaching. Is it possible to say anything on the medical device outlook for Q2 and Q3?
Yeah. The products we have in many cases, I wouldn't say all cases, but in many cases are related to planned product launches. Typically, we start those projects six to 12 months before an actual launch. At least so far, and I'm being careful here, the medical device companies have not generally postponed their product launches, at least the one that are maybe six months ahead and more. Those projects are still going on, and we have a large pipeline of those kind of projects, both for this quarter and next quarter and the fourth quarter. Yes, we see that continuing. We have had just a couple of situations for medical device now in the first four months of this year where they specifically have said that they are cautiously moving their investment forward before they know the development of the COVID side.
That's happened in two specific situation. Generally, people are preparing and moving on because they don't want to lose time to market with new product launches.
That's the more advanced launch projects. It's still reasonably robust in the outlook. What about the dynamics then for the medical device projects that are being launched in this situation? Is the simulation support used in a different way than normal?
Yeah. Yes. Both the one that require clinical studies, things like that, those are obviously very difficult to conduct in this period of time. The early stage where you have clinical studies in progress or planned, that is more difficult. There we might see some delays and have seen some delays. With ongoing projects and sales, people are trying to use our simulators, and I think a lot of our clients have done that very effectively. We have done as well, to do a lot of remote activities like webinars, web-based training. Situation where they actually send a simulator to the client and have the client run a session with people being online looking at it, or the other way around, that the device company run the session. A lot of our clients is spending a lot of time in internal training.
We had several activities over the last month where we had more than 50 people from a single device company participating in a specific webinar. We are doing that as well. We're doing one webinar in Europe in the morning and one webinar in the U.S. in the afternoon every day where we invite clients to get training and information on specific products. Clearly they need to adopt and change because there's no one in the world right now, besides maybe parts of Asia and China, where you have the possibility to meet doctors and clients face-to-face.
Is this an opportunity that, in this situation, can you offer solutions in a different way? Perhaps sort of test trials or sort of marketing or to increased engagement, the usage of these solutions?
Yeah. We are offering or we are conducting those dialogues. We haven't been able to close any projects with that argumentation. Clearly that is a discussion we're having, both on the hospital side and industry side, what they can do with simulation, and really see simulation as an opportunity during these difficult times. The example I said, I think is the most prominent one with fellows in U.S., for instance, where everyone knows that the bulk of the training they get is by watching expert doctors or experienced doctors performing procedures. That is not the case now. This year's graduating fellows in U.S. will not have the same experience that you generally have. We see a lot of our clients is bumping up simulation activity to try to counteract and provide that experience on the simulator instead of in the cath lab.
I think generally, this will change the behavior of, both our behavior, but I think even more so the behavior of our clients. I think this probably will stay also after the pandemic. I think we have opened our eyes, and our clients have opened their eyes and see that they will find different ways of actually doing things. I'm not sure that was the exact answer to your question, but yeah.
No, that's helpful. Strategic alliances is clearly making significant progress in healthcare systems. Earlier, the impression is that the Siemens partnership collaboration is especially dynamic. Is that?
Yes
part of this positive trend in Q1 as well?
Yes. I would say, on the one, those three, Laerdal has been moving on in a nice way, and they're increasing their sales in a fairly steady, not that fast-growing, but it's a steady pace over the last, say, 12 to 18 months. With Philips, we had all of the infrastructure in place only in January. We see a lot of activities with Philips now, which is very positive, but they have not moved to any actual sales recently. With Siemens, as you say, they have now started to ship their newest cath lab, where we have our integration connected to. That is really moving very fast. Yeah. That's the main contributor to the increased sales from strategic alliances side. We are almost on order level now compared to where we were for the full year last year.
It's been a very strong start for that kind of collaboration.
Is it possible to say anything on the outlook and visibility? You mentioned robotics already. For the cath lab side and generally with the Siemens collaboration in, is it coming quarters?
I think we doubled the sales from 2018 into 2019 for strategic alliances for Siemens and Philips. We will continue with similar growth into this year. I'm not going to reveal too much I can't deliver on. Yeah. I will refrain from giving you some exact growth numbers, but we expect to continue. As I said, we are almost on par with the full year 2019 already now. 2020 will be a good year for that segment.
I was not expecting detailed figures, but I was thinking more in lines of the dynamics, the visibility, and the outlook, what you can see in terms of Q1 was clearly very good with Siemens. Do you have good reason to believe that it's something that we can see also Q2, Q3?
Yeah. So far, yes. So far it seems like those larger investment from hospitals and to replace a cath lab or to buy a new cath lab is still ongoing, and it seems like those longer acquisition cycles are not impacted by COVID-19, at least not to the level of the things that need to start from scratch. It seems like that will continue, and we have a massive amount of activities together with these partners, Siemens and Philips, that makes me comfortable that we will continue to see good progress in the next coming quarters. Yes.
Thank you. I'll drop back if there are any others having questions, and I can follow up later if possible. Thanks.
Thanks, Johan.
Thank you, Johan, for all those questions. If anyone else have questions, then please raise your hand and I will unmute you. No, there seems to be no further questions. I'll guess, Göran, that we will wrap this up.
Okay. I'm grateful for all of you joining, and I hope you share my view that this was a very good report. I'm not sure the market have seen it the same way, but it's interesting times, as we said. We look with confidence to the future here. We are keeping our head down and continue to work, and I'm sure there's going to be a nice ride for the future here. Thanks a lot for you that listen in, and we'll come back to you in the next quarter, if not coming prior. Thanks a lot.
Thank you.