ContextVision AB

OSE:CONTX

Earnings Call Transcript 2021-Q1

[Fredrik Palm, Chief Executive Officer]

Welcome to a summary of the first quarter in 2021.Let me start with the highlights. We have made important progress within digital pathology installing in reference sites across Europe. We had a positive cash flow, and we continue to see a strong margin within our medical imaging business.Sales in the first quarter ended at SEK 20.3 million, and we continue to be affected by the pandemic. We had negative currency effects of 8.1% compared to the first quarter in 2020. Sales are clearly lower than the corresponding quarter last year. However, that was an exceptional quarter where we signed multiple new contracts on top of receiving unusually high bulk orders. When comparing previous -- with previous quarter, the sales decrease is 14%, but lower sales in the first quarter in comparison with the last in the fiscal year is a normal pattern for us, although 2020 was an exception.Looking at the regional sales, we see that all regions are affected by the pandemic in terms of lower level of sales and a comparison with the first quarter previous year would be unfair since it was an exceptional quarter. Sales in Europe seems to decrease significantly, but this is, to a large extent, related to 2 customers that has been shifted to be booked in our Asia sales. Looking at the sales per modality or divided by product line, it becomes clear that we see lower levels in general with 3D ultrasound as an exception, and we can also clearly see that a very high order intake in Q1 2020 in x-ray is the major difference.In the first quarter, we are back to distribution of sales per product line that we are used to. Q1 2020 was extraordinary. 2D ultrasound is the largest product line followed by x-ray. The share of sales divided by region is similar. Asia remains to be our largest region. So to summarize medical imaging, sales volumes are affected by the pandemic, but it's important to stress that we have no lost customers, the demand remains and builds up in those pandemic times. We have a high interest from present and prospective customers in new products and upgrades, but -- last but not least, I have a very high confidence in a return to growth. Digital pathology. We continue to focus on expanding our network of reference sites where clinical evaluations have reached different stages. We installed at Vall d'Hebron in Barcelona and started clinical evaluations in the first quarter. Additionally, we installed and initiated clinical evaluations at Bicêtre in Paris, a high throughput laboratory fully digitalized. Preliminary results from ongoing studies in various sites start to come. It is still too early for firm conclusions, but what we have seen so far confirms that INIFY offers significant value. Our strategy to build a portfolio with multiple cancer types continue. In R&D, we continue to focus on developing additional functionality in our product for prostate cancer in parallel with performing research in other cancer types causing the heaviest burden on pathologists. The primary one after prostate is colorectal cancer. A financial summary. Sales has already been covered. We ended with an EBITDA ended at minus SEK 1.1 million. Our operating result ended at minus SEK 4 million. We had no capitalization in the first quarter. Current product development project has not yet reached the point where we start to capitalize. Looking at the individual business units. We maintain a good margin in our medical imaging business. The costs for digital pathology are higher since we had no capitalization, and we have started depreciation of the first product, but the main reason for cost increase in general is that we continue to expand the organization across the entire company to be well prepared for growth. We had a positive cash flow of SEK 1.4 million, and our cash position was strengthened further by the end of March.So to summarize the first quarter. Important progress has been made with building the foundation for growth within digital pathology, namely the network of reference sites. We are optimistic about the preliminary results we have seen from ongoing clinical evaluations. There are no lack of demand or interest for our latest products within medical imaging, although sales remained at a lower level. So in my view, it is just a matter of persistence. We continue to follow our strategy, and we have no doubt about our growth plan in the years ahead of us. So thank you for listening and stay safe.