Interim Report Q1 - January - March, 2021 Redsense Medical AB (publ)

First quarter,
1 January – 31 March 2021

The Redsense Group

• Net sales amounted to kSEK 1,394 (4,996), a 72 percent decrease compared with the corresponding period in 2020.
• Profit or loss before tax amounted to kSEK -1,036 (241).
• Total equity amounted to kSEK 71,602 at the end of the period.
• Cash and cash equivalents amounted to kSEK 16,502 at the end of the period.

The Swedish Parent Company

• Net sales amounted to kSEK 1,013 (3,795).
• Profit or loss before tax amounted to kSEK -1,189 (26).
• Total equity amounted to kSEK 114,843 at the end of the period.
• Cash and cash equivalents amounted to kSEK 6,987 at the end of the period

Result and position

The Group’s result for the first quarter of 2021 amounted to kSEK -1,036 before taxes, or SEK -0.07 per share. The number of shares outstanding was 14,040,810 as of 31 March 2020. Cash and cash equivalents at the end of the period amounted to kSEK 16,502

 

Significant events 1 January – 31 March 2021
 

The United States Patent and Trademark Office (USPTO) issued a Notice of Allowance for Redsense’s patent application “A device for monitoring hose connectors and body fluid leakage”.

Member of the board Klas Arildsson was appointed CEO for the new wound care subsidiary.

Redsense signed new distributor agreement with Regional Health Care Group in Australia, covering the distribution of the Redsense Alarm system to the markets of Australia and New Zealand.

Redsense received positive feedback from the Swedish Tax Agency on the Lex Asea-distribution of the subsidiary Odinwell AB.

Redsense postponed the Annual General Meeting from 4 May to 12 May 2021 due to formalities surrounding the proposed distribution of the subsidiary Odinwell AB.

 

Significant events after the period

An extraordinary general meeting on 19 April 2021 resolved, in accordance with the Board´s proposal, to distribute the wholly-owned subsidiary Odinwell AB to the shareholders of the company.

Redsense became aware that one of the Company's shareholders, Discover Capital GmbH
(registered in the Company's share register as Axxion S.A), had acquired 250,000 shares in Redsense and thus reached above the level of 5 percent of the total number of registered shares and votes in the Company.

The Board changed the record date for distribution of the subsidiary Odinwell AB, as authorized by the general meeting, to 10 May 2021.

Comments from our CEO

 

Wound-care spin-off well underway as we focus on repeat orders and strategy

As we envisaged, the first quarter of 2021 would in many respects repeat the fourth quarter of 2020; the outcome was similar, and our overall analysis of the trend remains valid. Between the increased mortality among dialysis patients, the repurposing of healthcare resources, and the forced postponement of training, the effects of the COVID-19 pandemic have practically put new sales on hold from the third quarter last year onwards, and the sales we are seeing since mostly comprise repeat orders from previously established customers. Thus, total sales continue to disappoint –for the same reasons – and we saw a loss of MSEK -1.0 for the period. Net sales of MSEK 1.4 compare with MSEK 2.1 in Q3 and MSEK 1.9 in Q4.

We expect sales to continue to suffer due to the pandemic for the first half of the year, until the ongoing vaccination programs normalize the situation. We particularly follow the vaccination progress in the US, our most important market, where more than a quarter of the population is now fully vaccinated. The US health protection agency CDC has designated dialysis patients as a highly prioritized group, both because of their frailty and their frequent healthcare interactions, and is working alongside dialysis providers to distribute vaccines across dialysis clinics.

Strategic oversight and Odinwell distribution

While the full scope of regular operations is pending, more effort has been allocated to digitalization and strategy work. During the first quarter, defining the path forward for the wound care segment has been top of the agenda, and we are seeing the vision materialize. The business area is now contained in the subsidiary Odinwell, and the general meeting has resolved to distribute it to the shareholders for subsequent public listing. The distribution will take place in May, and we are confident that the development of the business and the promising technology will see the best possible prospects in an independent entity.

Our move to digitalized training was born of necessity, but is proving both effective and popular. We find that we can get the message across straightforwardly using video and Teams meetings, and our customers enjoy and often prefer the virtual setting.

We have also embarked on a more in-depth sustainability effort to shed light on the social, economic and environmental consequences of our activities. As part of this work, a voluntary sustainability report has been prepared.

Patents, markets and development projects

From the first day of the quarter, home dialysis in the US has been supported by the Medicare reimbursements under the new and mandatory ETC Model, initially covering 30 percent of the country. Home modalities are gaining ground, as illustrated by the major dialysis provider DaVita's recently announced goal of 25 percent of patients dialyzing at home by 2025, approximately double the present figure – and this strengthens our market position.

During the quarter, a new exclusive distributor agreement was also signed with RHCG in Australia – an important milestone, as it opens up the Oceanian market. In the region, care services are far off for many patients, so home treatment would offer attractive advantages.

While we expect the deviation from normalcy to mark Q2 as well, we must not forget what the normalcy we are awaiting entails for Redsense: we had an excellent first half of 2020, reaching profitability and new peak sales in Q1 and Q2 alike. It is that strong momentum and trend of performance we are waiting to take up again. In the meanwhile, we have continued to improve our business organization and preparedness, and we have accumulated potential quarter by quarter. We remain confident that we will be able to give effect to that potential and execute on our strategy to resume strong and stable growth as soon as COVID-19 ceases to
dominate the healthcare
agenda.