Interim Report Q2 – April – June, 2021 Redsense Medical AB (publ)

Second quarter,

1 April – 30 June 2021

The Redsense Group

• Net sales amounted to kSEK 1,059 (5,292), an 80 percent decrease compared with the corresponding period in 2020.
• Profit or loss before tax amounted to kSEK -3,833 (93).

First half-year,

1 January – 30 June 2021

The Redsense Group

• Net sales amounted to kSEK 2,205 (10,202), a 78 percent decrease compared with the corresponding period in 2020.
• Profit or loss before tax amounted to kSEK -4,358 (371).
• Total equity amounted to kSEK 41,146 at the end of the period.
• Cash and cash equivalents amounted to kSEK 7,238 at the end of the period.

Result and position

The Group’s result for the second quarter of 2021 amounted to kSEK -4,358 before taxes, or SEK -0.31 per share. The number of shares outstanding was 14,040,810 as of 30 June 2021. Cash and cash equivalents at the end of the period amounted to kSEK 7,238.

Significant events 1 April – 30 June 2021

• 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.
• Annual General Meeting was held on 12 May 2021 and resolved, inter alia, to elect Annette Colin as a new member of the board.
• Redsense Medical’s former subsidiary Odinwell was admitted for trading on Spotlight Stock Market.
• Redsense received TGA approval and market authorization for Australia and New Zealand.
• Redsense published a Sustainability Report for 2020 , marking the Company’s first such initiative.

Significant events after the period

In August, Redsense Medical announced the conclusion of a new distributor agreement with CardioMed Supplies Inc. for Canada and Bermuda.

Comments from our CEO

First signs of the anticipated turn of the tide – customer activity begins to recover

At MSEK 1.1, net sales for Q2 remain on par with the first quarter, and hence continue to disappoint. Nonetheless, we are finally seeing a break in the trend; order intake is increasing in Q3 after the first signs of a normalization appeared over the course of the second quarter. Many COVID-19 restrictions were eased and customers in healthcare regained some room for manoeuvre.

We had in our previous assessments expected the downturn to last into the second half of the year, and that we thereafter once again would be able to gain some pace. This is also what is happening. Orders and customer interest in new sales are once again on the rise, albeit initially at a slow pace – but gauging from what we currently see in the market, with training resuming in various locations and more activity from counterparties, we expect the bounce back from the downturn to become clearly visible in the Q3 bottom line, and even more so when we close the books on Q4.

While the now dominant delta variation remains a cause of concern, the high vaccination willingness and uptake among dialysis patients is reassuring; a recently published US survey found vaccine hesitancy in the group to be half that of the general population, and uptake is promoted by vaccinations offered at the dialysis facilities.

Spin-off successfully brought to completion

The distribution to shareholders of the company’s wound care operations, as contained in the subsidiary Odinwell, was successfully completed during the quarter. The newly spun-out company is now listed on Spotlight Stock Market as of 9 June. Thus, the remainder of Redsense Medical is now also free to move forward with a clear focus and a well-defined structure.

Sustainability report

At the end of the quarter, Redsense Medical announced the publication of its first sustainability report. It has been prepared on a voluntary basis in order to evaluate the company’s operations with regard to all aspects of sustainability, and gives an account of our efforts to improve our own impact and make a difference in our value chain. Our vision is to save lives, and dedicated, transparent and informed sustainability work is one of our means to achieve that.

Important developments in new markets

After the end of the quarter, a new distributor agreement was finalized for Canada and Bermuda, a region with close to 25,000 hemodialysis patients.

In addition, Redsense’s blood loss alarm obtained market authorization in Australia and New Zealand through the Therapeutic Goods Administration’s regulatory approval during the quarter. As previously disclosed, Redsense signed an agreement with Regional Care Health Group in Australia in the first quarter, and the distributor will now be able to begin product demonstrations to introduce Redsense in clinics and provide safer treatment for the 12,000 hemodialysis patients in the region. Home treatment is already popular there, due to the vast distance to clinics in many locations, and we hope that access to a safety solution such as Redsense will further increase adoption of home hemodialysis.

Redsense Clamp closer to market

Alongside Toronto, Berlin and Sweden, Australia is therefore one of the locations where we plan to move the Redsense Clamp – our accessory that will equip the alarm with the ability to stop the dialysis machine’s blood pump automatically –into clinical validation. We also consider it a key strategic market for the future launch of the new product.

Prior to the market standstill, we saw steady sales growth driven by good market penetration in the US market (where our customers include the top five providers) and our ability to offer a unique solution well suited to the macro trends in play, particularly the growth of home dialysis facilitated by political initiative. The goal for the fall is to pick up the strong growth journey where we left off a year ago when markets froze.Our focus remains on the US, and Europe, Asia and Oceania are also interesting markets moving forward. Where the pandemic-related restrictions recede, the benefits of hemodialysis treatment at home that have become apparent to many patients will still remain. All in all, we set forth into the third quarter with great confidence and a landscape of opportunities.