Good morning, everyone. I hope you can hear me. Welcome to this webinar where our CEO, Göran Malmberg, will present Mentice year-end report. My name is Magdalena. I will moderate this call. You will be able to ask questions to both Göran Malmberg and CFO Elisabet Lund after the presentation. Until then, you will be all set to mute. For questions, please raise your hand by clicking the hand icon appearing in your upper left menu. This meeting will be recorded and available with the report on mentice.com. I will now leave the word to our CEO, Göran Malmberg.
Good morning, everyone, or good afternoon, wherever you are. We will do this call in English since we have international participants on the call. Let's start with the first slide. I'll move to the next slide, please. We did announce obviously in early January the expected outcome. I don't think what we have presented today would be a big surprise to anyone, and it's perfectly aligned with what we have said before. I would focus the presentation more on the business and where we're going and the 2020 situation. Obviously, the first slide here is just to do a quick recap of 2019. If you have any more financially related questions, I would probably ask you to ask those questions in the session after my presentation here. Talking a little bit about 2019, obviously, and the fourth quarter.
As we have said before, the medical device side was not performing to our expectations. We had a 10% drop in net sales compared to 2018, which was obviously not what we expected. We have seen and we communicated in the January press release that we have a list of deals from last year that we are tracking. We can see that the beginning of this quarter is improved compared to last year, both from net sales and orders. We have a good hope that we will convert a large part of these deals over this quarter and also next quarter. That's for medical device side. We also see that a lot of the discussions we have had was last year is moving forward in a good way. We have a positive view of the outlook for medical device for 2020.
Moving on to the other segments. The second bullet on the left, we talk about the healthcare system and the teaching side. Really our sales to hospitals, where we have seen an increase of about 6% year-over-year, which is aligned with our expectations. We would expect our growth generally to come from industry and from the strategic alliance side. We had a good search for deals in the last part of the year, and we also see the pipeline for this year looking solid for hospital sales. On the strategic alliances side, we were obviously working a lot to develop the relationship and the underlying structure for that business. As we communicated early part of the year, even we expected to push more systems 2019.
That didn't really happen due to a couple of specific reasons, one being that Siemens had a delay in delivery of their new Cath Lab, which is a requirement for orders. It's the system that is integrated with our system. All in all, we had over 60% growth in that business last year. Still have small numbers, but we are getting up to a point where it's going to impact our business overall. We have delivered some 20 systems already across Philips and Siemens, and we have seen with the delivery of the Siemens Cath Lab to clients now beginning of the year that we are starting to getting orders from customers, which is really positive. That's obviously a big part of our expectation, as we said before, for this year, but also for next coming years.
We also mentioned in the annual report about the agreement with the German Radiological Society, where we have a five-year collaboration agreement. Where they're going to use the Mentice equipment, the Mentice solutions for training and certification of their members. I think it's a significant step. We also see similar discussions with a lot of other medical organizations around the world. Yeah. It's much more substantial discussion on how to use simulation specifically towards certification of doctors. That's a positive move. The other thing that is interesting is that the German Radiological Society very explicitly stated that there's really Mentice, there's really no other solution. If we're going to use it to this level of utilization, Mentice is really the only system or only solution on the market that would be relevant for this. That's also very positive feedback from them. That's pretty much that.
I covered most of the slide, touching a little bit about technology, where we also were very consumed last year with delivering industry-related customization projects. During last year, we added a significant amount of resources, which are stated in the report, which also enabled us to more strategically focus on standard product development, which we stated in the previous report. We can see now that the effect of the work we did last year and the added resources, and the strategy for standard development, is positioning us for quite a significant amount of new product launches during this year. I would say more than we ever had before. That's going to be really relevant to see how that's going to be received by the market.
Then, as we said in the January report as well, I'm stepping in, besides my CEO role, obviously, as responsible for global sales. I have three sales leaders reporting to me, but I'm really taking a personal responsibility for the sales side. Yeah. That's a core summary of the fourth quarter. Let's move into the next slide, please. This, again, I'm not going to really elaborate on this much. All of this is in the report. Obviously, order intake is disappointing, but as we said before in previous calls, we are sensitive to the fluctuation in orders, especially by our large clients. This is what it is. On the net sales side, we had a strong quarter. Compared to 2018, still slightly less, but 2018 was a fantastic year in Q4 especially.
Overall, we said we're going to be on par with last year, and that's what we see here. Operating results is obviously a direct consequence of the revenue and the fact that we have built our organization for larger numbers. That's what it is. Cash is around SEK 50 million by the end of Q4. If you have any more detailed questions, Elisabet and I would answer them after the slides here. Let's move to the next slide, please. Thank you. Looking at where we are right now, where we start the year, as I said, I'm taking the active responsibility for sales. What we worked on with our sales team over the last couple of months is really looking at what went wrong and what can we do to correct that.
Obviously, we are still in the hands of our clients' ability to deliver orders for us, but I think we can do a better job on really understanding and driving the decision processes, which is something that I personally want to get involved in. Also what we talked about is how do we really more concretely relate value with our products, with what the customers are using it for, or how we create value for our customers. Which is an obvious comment, but that's something that we can do a better job on as well. That's really it. Obviously, getting into the large accounts is another part that I'm focusing on, really focusing on maybe the four or five largest clients we have and make sure we can work on long-term relationship. That is a key focus of mine.
I think we see already some promising dialogues in the first part of the year. Hopefully that can result in something further on here. Beside these things, I mentioned that on the last slide, we have several discussion with the similar interventional radiology bodies in U.S., but also other part of Europe. Also other specialties are following very rapidly. This is clearly a positive trend where when I joined Mentice 2008, people said the regulation mandates is around the corner, and I basically said, "I'm not going to wait for that because that could take about five and 10 and 15 years." I have to confess now, what happened in the last year and one and a half years really shows that something is happening.
I've discussed this with other simulation companies in the market, also physicians, and people really see that there's clearly something happening now much, much more rapidly than we've seen before. Still, I think the focus for me and for us is to prove value with the use of the products. I think the regulators and the societies is clearly moving in a much faster pace now than they've done years earlier. We had, clearly, some uncertainties during the later last part of last year. Some of the reasons for the delays of deals were also maybe uncertainties on general marketing conditions. I know we had discussions on the China tariffs and things like that.
I think a lot of those has been eliminated, obviously with the coronavirus popping up in the beginning of the year here, that's obviously add some further confusion, or not confusion, but further insecurity on how that will impact us. We have looked at that specifically. Obviously, first two months of the year, the greater China market has been pretty much closed. Our people down there have been forced to work from home, very few clients will take meetings. That's clearly impacted the interactions, early part of the year. We don't really see that impacting, at least yet, actual business. It's just a delay for the Asian hospital business. Obviously, with the last couple of days, information on outbreak three and stuff, it's hard to know how this will impact us. What we are doing is looking at supply of components and things like that.
We would do corrective action and make sure that we have supply of simulators or components for simulators for the entire year or also going into next year. That's something we will act on immediately. In terms of how that would impact us market-wise, it's still unclear. I guess, unclear for everyone. As I said, on the strategic side, on left side of the slide or right side of the slide here, the Siemens ARTIS icono, sorry for the spelling error there, ARTIS icono, was starting to ship in the beginning of the year. That immediately resulted in orders for us as well. That is really promising. On the technology side, I mentioned that on the last slide, we did some announcement in a congress in San Diego in January. We'll add with a couple of more product launches in the next couple of months.
We will have some major ones in a congress in Paris in May. It's the largest cardiology conference in the world, where we will launch a couple of new products, which we believe will be exciting for the market. all along, over the year, we have five or six pretty significant product launches that we think will impact the market. We are working on this list of delayed deals very closely and monitoring. It's probably a list of 15, 20 deals or so that we are monitoring very closely, trying to make sure that we can close them off as soon as possible. hopefully, and not in significant part of that will happen in Q1. Right. Moving to the next slide, please. for the full year, we didn't provide any guidance in the January report or January press release.
We just based on where we are and relating to 2019's results, we are confident in going back to the growth phase. What we say right now is that we expect to be about 30% for the year. We're not providing any guidance for the EBITDA or the earnings, but we focus on the top line, on the growth side. Overall, I think the position of Mentice, we are the, said before, the only solely focused vendor in this space. Our marketing position is very strong in all segments, also industry, and also obviously with the imaging vendors, we have a unique position. We're the only one offering that solution. All of that together gives us a confidence on our ability to going back to growth for this year.
We obviously carefully forecast on the device side, but we expect to get back to growth on that side. It's obviously important since that's still 60% of our business. Of 66.5% of business. That need to happen. We are carefully optimistic about that. Obviously, we believe that for this year, the strategic alliances in the business to our channel partners there will have an impact and show an impact on the numbers. As I said in my first slide, the healthcare hospital sales will continue to grow, but not maybe with that percentages that we see from medical device and from strategic alliances. Yeah, I mentioned the coronavirus. I will not talk about that again. That's pretty much what I was intended to say today. I think we can open for questions, Magdalena .
Yes. Then I will ask you, again to raise your hand on the upper left menu, and I will unmute you to let you ask your question. Johan Unnérus wants to ask a question, so please.
Hey, Johan.
Yes. Good morning. Thank you for taking my questions. A few, we can take them one by one, perhaps. You clearly refer to a very dynamic market and that the market continues to be even more dynamic, but I think clearly that didn't convert into growth as expected, especially not on the device side. Is the pipeline to order to sales, can you specify some more? Is it mainly due to the period of increased uncertainty, or do you see longer processes from pipeline to order to sales, or? Could be the first question.
No, I don't really see a change. We have tried to analyze, as I said in the earnings call in November. We talked a lot about that in detail. I think we just ran into a series of reasons during the last part of 2019, which I also can see from some other colleagues in the industry, but also from people dealing with medical device industry, that there was clearly a slowdown and a more cautious behavior by the end of last year, which we believe it's at least partly removed going into this. I don't see any changes in trends or behavior generally. I think that's. If that's answered your question, Johan? Again, you asked about the pipeline. The pipeline we have, we are watching the pipeline closely, obviously, and we are looking at how we convert pipeline into orders, which is obviously a key.
We don't see a change in trend or behavior there, really. I think it's going back to what I said, is that we need to pay closer attention to decision processes and things like that with our clients, and maybe not trust our clients to be able to generate order in the time they are telling us, but really make sure we dig into the details of that. That's sort of my responsibility now with my second hat. Again, was that answered your question, Johan, or?
Yeah, it's a more detailed picture in a way. You also refer to that, it's my understanding, listening from the call, that you already expect some visible improvement in Q1, that some of these orders that were delayed from last year will sort of mature to become firm orders already in Q1.
Yeah.
Does that go for both smaller and larger orders?
Yes. That's the mix. Yeah, we didn't really In the list we pointed out was probably more focused on larger opportunities. We didn't list everything. Yes, absolutely. We have seen, I'm not going to mention any numbers here, but we already have received some, and we expect more for Q1, but also for Q2. I think I mentioned a number in the January press release, and that still stands. We have the converted orders in January and February, absolutely. Based on that list, which will give us the confidence for the first quarter, absolutely.
Thanks. That's useful. Also, perhaps to clarify that you refer to the coronavirus and that it's still early days, but clearly you expect some impact still. You deliver a specific growth target for the year, about 30%. Should we understand this reference to the coronavirus that you expect to manage about 30% still with this effect? Is that something that could go and blur the picture and perhaps make it difficult to reach about 30%?
Yeah, in terms of the forecast for coronavirus, if I would have an answer for that, I probably wouldn't be the CEO of Mentice. I would probably do something else. That's obviously a big question mark for everyone, how that will develop. Sorry. That was my watch. We really say that our underlying business, based on what we know now, yes, we believe that we will be able to manage 30% despite what we know right now about the coronavirus. I think that we have a structure for our Chinese or Greater China business that probably will not be directly affected by the coronavirus. Again, if this spread outside China into other markets where we have significant businesses, like in Europe or U.S., that's clearly going to impact at least the hospital side of our business there.
Again, what we see right now, yes, we expect 30% despite what we know about the coronavirus. That was a long answer, Johan, sorry about that.
No, I understand it's a tricky one, but as long as it's broadly restricted to China, you should, based on what you see now, be able to reach about 30% even considering the corona effect.
Yeah.
Yes. You also referred to some 20 systems or simulation system delivered through the strategic alliance to date, and that both Siemens and Philips are now active.
Yeah.
I don't know how we should phrase it, but to reach the about 30% without giving a specific segment guide, you clearly expect the strategic alliance to grow, well about 30% and the medical device assumingly also, and perhaps the hospital market substantially or significantly below 30%, especially as that could be exposed by the corona. Is that how we should-
Yes
look at it?
That's exactly what I said. Yeah, exactly. Yeah. I said that.
Okay. Thank you.
Go ahead.
Okay. Johan, are you satisfied with your answers? In that case, I will-
Yeah. I might come back. Thank you.
Yes.
Okay. Great.
Thank you.
I will proceed for now, and if there are any other questions from other participants, then please raise your hand by clicking the icon. No, doesn't seem that we have any more questions.
Okay, we will have a conference at Pareto on Monday, which I think is announced on our press release, right? Or on our website, sorry. No? Okay.
This webinar will be available on mentice.com.
Yeah.
Yes.
Okay, good.
Well, no further questions, so that means that we will end this meeting, and we thank you for your participants.
Thank you, everyone.
Thank you.