Optomed Plc: Half-year Report, January – June 2023

Optomed Plc Stock Exchange Release 4 August 2023 at 9.00, Helsinki

Optomed Plc: Half-year Report, January – June 2023

April – June 2023

• Revenue increased by 0.3 percent to EUR 3.7 (3.7) million.
• Devices segment revenue decreased by 6.5 percent to EUR 1.3 (1.4) million due to a slow quarter of the OEM and Chinese sales channels.
• Software segment revenue increased by 4.2 percent to EUR 2.5 (2.4) million driven by strong healthcare solution sales.
• EBITDA amounted to EUR -0.5 (-0.8) million corresponding to -12.4 (-21.8) percent of revenue, continuing the positive trend from previous quarters.​
• After the review period on 3 August 2023 Optomed announced that Juho Himberg will start as Optomed’s CEO 1 October 2023. Previously Juho Himberg has served as the CEO of Aidian (former Orion Diagnostica), a leading point-of-care diagnostics company with innovative products and services for improving the well-being and quality of life for people around the world. Prior to Aidian, Juho has held several leadership positions globally in healthcare and medical technology companies such as Orton, Stryker, C.R. Bard Inc. and Gambro. The CEO transition plan was announced 14 June 2023. Optomed's current CEO Seppo Kopsala and the Board of Directors have agreed that Kopsala will leave the CEO position once the new CEO is ready to start.
• Outlook unchanged: Optomed expects its full year 2023 revenue to grow compared to 2022.
• Aurora AEYE FDA clearance process: data collection continues.

January – June 2023

• Revenue increased by 4.0 percent to EUR 7.2 (6.9) million.
• Devices segment revenue decreased by 10.9 percent to EUR 2.2 (2.4) million.
• Software segment revenue increased by 11.9 percent to EUR 5.1 (4.5) million.
• Adjusted EBITDA amounted to EUR -976 (-1,750) thousand corresponding to -13.5 (-25.2) percent of revenue.

Key figures

EUR, thousand	Q2/2023	Q2/2022	Change, %	H1/2023	H1/2022	Change, %	2022
Revenue	3,744	3,733	0.3%	7,222	6,947	4.0%	14,660
Gross profit *	2,486	2,149	15.7%	4,962	4,339	14.4%	10,069
Gross margin % *	66.4%	57.6%		68.7%	62.4%		68.7%
EBITDA	-462	-813	43.1%	-976	-1,750	44.2%	-1,952
EBITDA margin *, %	-12.4%	-21.8%		-13.5%	-25.2%		-13.3%
Adjusted EBITDA *	-462	-813	43.1%	-976	-1,750	44.2%	-1,952
Adjusted EBITDA margin *, %	-12.4%	-21.8%		-13.5%	-25.2%		-13.3%
Operating result (EBIT)	-1,009	-1,355	25.5%	-2,052	-2,815	27.1%	-5,097
Operating margin (EBIT) *, %	-27.0%	-36.3%		-28.4%	-40.5%		-34.8%
Adjusted operating result (EBIT) *	-1,009	-1,355	25.5%	-2,052	-2,815	27.1%	-5,097
Adjusted operating margin (EBIT margin) *, %	-27.0%	-36.3%		-28.4%	-40.5%		-34.8%
Net profit/ loss	-1,314	-1,328	1.1%	-2,471	-2,698	8.4%	-5,472
Earnings per share	-0.08	-0.10	13.0%	-0.16	-0.20	19.5%	-0.37
Cash flow from operating activities	-468	-965	51.5%	-913	-1,665	45.2%	-2,370
Net Debt	-883	-825	7.1%	-883	-825	7.1 %	-3,251
Net debt/ Adjusted EBITDA (LTM)	0.7	0.2		0.7	0.2		1.7
Equity ratio  *	63.6%	61.5%		63.6%	61.5%		65.0%
R&D expenses personnel	362	222	63.3%	645	598	7.9%	1,198
R&D expenses other costs	150	147	2.5%	313	356	-12.0%	661
Total R&D expenses	512	368	39.1%	958	954	0.5%	1,859

*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.

CEO Review

Software segment and profitability continues to grow.

The sales growth of Optomed's Software business unit continued, driven by new healthcare software solution deliveries and increased recurring business. In addition to revenue growth, the Software Segment’s profitability was very good during the review period. Similar to previous quarters, we are highly satisfied with this development, as it enables significant investments in launching new products into the market and expanding into the US market.

The Devices Segment that is currently in a transitional phase, had a relatively quiet quarter, although the gap from the comparison period of the previous year was not as significant as in the previous quarter. Sales of devices under our own brand, particularly through our international distribution channels, showed strong growth once again. However, OEM sales declined significantly compared to the previous year. As a result, the Devices Segment's sales slightly decreased compared to the comparison period. The trend where the number of devices sold under our own brand grows more than OEM sales in the Devices Segment, continued strongly during the quarter. This shift in trend has recently had a negative impact on revenue development but a positive effect on sales margins.

We are confident that our products are highly competitive and well-positioned in the global market. Our pipeline has expanded, including significant organizational tenders in multiple markets. With these initiatives, we anticipate a return to a growth trajectory for the Device's segment, driving revenue growth. Currently, our primary focus is on advancing the FDA approval process for the AI fundus camera Aurora AEYE, which is our most significant ongoing project. We are making progress during the review period and are approaching our target. However, until we have official updates to share, we will refrain from providing further comments on this matter. We have a good understanding of the FDA's expectations and are confident that we can meet them with the ongoing measures we have in place. Additionally, another important project for the company is the completion of the new device development project, which is currently in the CE approval phase.

The company's profitability and cash flow development continue positively. This is influenced by growing and profitable software sales, Devices segments improving sales margins, significant investment projects in their final stages, and declining fixed costs. Our products are technically excellent and competitive, and the development pipeline for new products is strong. The anticipated FDA clearance for AI fundus camera Aurora AEYE that we are targeting will be an extremely significant breakthrough for the company when it materializes.

I am satisfied with the current situation of the company and optimistic about its future prospects. The company and organization are ready to start the next phase.

Seppo Kopsala

CEO

Outlook 2023

Optomed expects its full year 2023 revenue to grow compared to 2022.

Telephone conference

A telephone conference for analysts, investors and media will be arranged on 4 August 2023 at 11.00 EET, (10.00 CET). The event will be held in English. The presentation material will be available at www.optomed.com/investors 10.00 EET at the latest.

The participants are requested to register for the call-in advance by email to sakari.knuutti@optomed.com.

Please see the call-in numbers below:

FI +358 9 856 263 00

SE +46 8 505 218 52

UK +44 20 3321 5273

US +1 646 838 1719

FR +33 1 70 99 53 92

The conference id is 179 385 659#

Please note that by dialing into the conference call, the participant agrees that personal information such as name and company name will be collected.

Group performance

April – June 2023

In April-June 2023, Group revenue increased by 0.3 percent to EUR 3,744 (3,733) thousand. Devices segment revenue decreased by 6.5 percent to EUR 1,273 (1,361) thousand in spite of strong performance of the global distributor sales as the OEM channel had a slow quarter. The Software segment revenue increased by 4.2 percent  to EUR 2,471 (2,372) thousand as the healthcare solution sales continued to perform well.

In April-June 2023, the gross margin increased to 66.4 from 57.6 percent of last year as both segments improved their margins. The increase was mainly driven by the improved profitability of the healthcare solution sales.

EBITDA improved and it was EUR -462 (-813) thousand. The key driver for the improved EBITDA was improved gross profit, however, the OPEX decreased as well.

In April-June 2023, net financial items amounted to EUR -325 (6) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB and USD to EUR.

January – June 2023

In January-June 2023, Group revenue increased by 4.0 percent to EUR 7,222 (6,947) thousand. The growth was driven by the Software segment as the Devices segment’s revenue decreased by 10.9 percent while the Software segment’s revenue increased by 11.9 percent.

The gross margin increased to 68.7 percent from 62.4 percent last year.

EBITDA amounted to EUR -976 (-1,750) thousand and EBIT was EUR -2,052 (-2,815) thousand. The improvement is due to the combination of improved gross profit and decreased OPEX.

Net financial items amounted to EUR -459 (77) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB to EUR.

Cash flow and financial position

April – June 2023

In April-June 2023, the cash flow from operating activities amounted to EUR -468 (-965) thousand. Net cash used in investing activities was EUR -668 (-825) thousand and relates to capitalized development expenses. Net cash from financing activities amounted to EUR -348 (4,208) thousand.

Consolidated cash and cash equivalents at the end of the period amounted to EUR 5,691 (7,097) thousand. Interest-bearing net debt totalled EUR -883 (-825) thousand at the end of the period.

Net working capital was EUR 3,537 (4,239) thousand at the end of the period.

The Chinese customer that Optomed has large due trade receivables from continued to pay as scheduled.

January – June 2023

In January-June 2023, the cash flow from operating activities amounted to EUR -913 (-1,665) thousand.

Net cash used in investing activities was EUR -1,213 (-1,672) thousand and relates to capitalized development expenses.

Net cash from financing activities amounted to EUR -696 (3,595) thousand.

Devices segment

Optomed has two synergistic business segments: Devices and Software.

The Devices segment develops, commercializes, and manufactures easy-to-use, and affordable handheld fundus cameras, that are suitable for any clinic for screening of various eye diseases, such as diabetic retinopathy, glaucoma and AMD (Age Related Macular Degeneration).

EUR, thousand	Q2/2023	Q2/2022	Change, %	H1/2023	H1/2022	Change, %	2022
Revenue	1,273	1,361	-6.5%	2,161	2,425	-10.9%	5,398
Gross profit *	674	642	5.0%	1,233	1,283	-3.9%	3,738
Gross margin % *	53.0%	47.2%		57.0%	52.9 %		69.3%
EBITDA	-217	-464	53.2%	-643	-963	33.2%	-670
EBITDA margin *, %	-17.1%	-34.1%		-29.8%	-39.7 %		-12.4%
Operating result (EBIT)	-578	-843	31.5%	-1,356	-1,707	20.5%	-3,159
Operating margin (EBIT) *, %	-45.4%	-61.9%		-62.8%	-70.4 %		-58.5%

*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.
 

 

April-June 2023

In April-June 2023, the Devices segment revenue decreased by 6.5 percent to EUR 1,273 (1,361) thousand due to softness of the OEM channel. The global distributor sales continued to perform well.

The gross margin was 53.0 (47.2) percent. EBITDA was EUR -217 (-464) thousand or -17.1 (-34.1) percent of revenue. During the quarter, Optomed took actions to reduce operating costs especially in the support functions affecting both the Devices segment and the group functions.

January-June 2023

In January-June 2023, the Devices segment revenue decreased by 10.9 percent to EUR 2,161 (2,425) thousand.

The gross margin increased to 57.0 percent from 52.9 percent as the share of higher gross margin global distributor sales has increased compared to lower margin OEM sales.

EBITDA was EUR -643 (-963) thousand or -29.8 (-39.7) percent of revenue.

Software segment

Optomed has two synergistic business segments: Devices and Software.

The Software segment develops and commercializes screening software for diabetic retinopathy and cancer screening for healthcare organizations. The segment also distributes off-the-shelf products from selected partners to supplement its own solutions and expertise and provides software consultation to support the Devices segment screening solution projects.

EUR, thousand	Q2/2023	Q2/2022	Change, %	H1/2023	H1/2022	Change, %	2022
Revenue	2,471	2,372	4.2%	5,061	4,522	11.9%	9,263
Gross profit *	1,812	1,507	20.2%	3,729	3,056	22.0%	6,330
Gross margin % *	73.3%	63.5%		73.7%	67.6%		68.3%
EBITDA	578	478	20.7%	1,368	898	52.2%	2,079
EBITDA margin *, %	23.4%	20.2%		27.0%	19.9%		22.4%
Operating result (EBIT)	393	317	24.2%	1,009	580	74.0%	1,431
Operating margin (EBIT) *, %	15.9%	13.3%		19.9%	12.8%		15.4%

*) Alternative performance measures, see section Alternative Performance Measures for definitions and calculations.

 

April – June 2023

In April-June 2023, the Software segment revenue increased by 4.2 percent to EUR 2,471 (2,372) thousand as the healthcare solutions business continued on its growth track.

The profitability improved due to good performance of the healthcare solution sales. Gross margin increased and was 73.3 (63.5) percent. EBITDA was EUR 578 (478) thousand or 23.4 (20.2) percent of revenue.

January – June 2023

In January-June 2023, the Software segment revenue increased by 11.9 percent to EUR 5,061 (4,522) thousand.

Gross margin increased and it was 73.3 (63.5) percent. EBITDA was EUR 1,368 (898) thousand or 27.0 (19.9) percent of revenue. The increased profitability was driven by improved performance of the healthcare solution sales.

Group-wide expenses

Group-wide expenses relate to functions supporting the entire group such as treasury, group accounting, marketing, legal, HR, and IT.

April – June 2023

Group-wide operating expenses amounted to EUR 823 (827) thousand.

January – June 2023

Group-wide operating expenses amounted to EUR 1,700 (1,685) thousand.

Personnel

Number of personnel at the end of the reporting period.

	6/2023	6/2022
Devices	47	55
Software	46	43
Group common	22	22
Total	115	120

Corporate Governance

Optomed complies with Finnish laws and regulations, Optomed’s Articles of Association, the rules of Nasdaq Helsinki and the Finnish Corporate Governance Code 2020 issued by the Securities Market Association of Finland. The code is publicly available at http://cgfinland.fi/en/. Optomed’s corporate governance statement 2022 is available on the company website www.optomed.com/investors/.

Annual General Meeting

The Annual General Meeting held on 10 May 2023 adopted the financial statements for the financial period ended on 31 December 2022 and discharged the members of the Board of Directors and the CEO from liability for the financial period ended on 31 December 2022. The Annual General Meeting decided to reject the remuneration report for governing bodies. The decision made is advisory.

The Annual General Meeting resolved in accordance with the proposal of the Board of Directors that no dividend will be paid for the year 2022.

The number of members of the Board of Directors was confirmed as six. Seppo Mäkinen, Petri Salonen, Reijo Tauriainen and Anna Tenstam were re-elected as members of the Board and Catherine Calarco and Ty Lee were elected as new members of the Board.

The Annual General Meeting confirmed the annual Board remuneration as follows:

• Chairman of the Board EUR 36,000
• members of the Board EUR 18,000.

In addition, a meeting fee in the amount of EUR 300 is paid to the Chairpersons and EUR 200 to members of the Committees for each Committee meeting. 40 percent of the Board remuneration is paid in Optomed shares and 60 percent in cash. The remuneration will be paid once a year in August, after Optomed’s H1 report has been announced.

The Annual General Meeting decided to re-elect KPMG Oy Ab, a firm of authorized public accountants, as the Company’s auditor. KPMG Oy Ab has informed the Company that Authorized Public Accountant Heidi Hyry acts as the auditor with principal responsibility. Auditor’s remuneration will be paid in accordance with an invoice approved by the Company.

The Annual General Meeting approved the authorization for the Board of Directors to repurchase Optomed’s own shares and to accept them as pledge. Altogether no more than 1,654,135 shares may be repurchased or accepted as pledge. The authorization will be valid until the earlier of the end of the next Annual General Meeting or 18 months from the resolution of the Annual General Meeting.

The Annual General Meeting authorized the Board of Directors to decide on the issuance of shares and other special rights entitling to shares referred to in Chapter 10, Section 1 of the Finnish Companies Act. The number of shares to be issued based on this authorization may not exceed 1,654,135. The Board of Directors is authorized to resolve on all terms and conditions of the issuance of shares and special rights entitling to shares, including the right to derogate from the pre-emptive right of the shareholders. The authorization will be valid until the earlier of the end of the next Annual General Meeting or 18 months from the resolution of the Annual General Meeting.

The Annual General Meeting decided to amend the Articles of Association so that the minimum number of the members of the Board of Directors was reduced from five members to four.

Decisions of the Board of Directors:

At its meeting held after the Annual General Meeting, the Board of Directors elected from among its members Petri Salonen as its Chairman. The committee members were elected as follows:

Audit Committee:

• Reijo Tauriainen (Chairman)
• Catherine Calarco
• Anna Tenstam

Remuneration Committee:

• Seppo Mäkinen (Chairman)
• Catherine Calarco
• Ty Lee

Shares and shareholders

The Company has one share series with all shares having the same rights. At the end of the review period Optomed Plc's share capital consisted of 16,541,355 shares and the Company held 370,066 shares in the treasury which approximately corresponds to 2.3 percent of the total amount of the shares and votes. Additional information with respect to the shares, shareholding and trading can be found on the Company’s website www.optomed.com/investors/.

Risks and uncertainties

The key risks and uncertainties are described in the company’s Annual Report 2022 which was published on 2 March 2023. The complete report is available at https://www.optomed.com/investors/. The risk position of Optomed has not changed since then.

Flagging notifications

5 June 2023 Cenova Capital notified that its total holdings in Optomed shares and votes has decreased to 9.96% of all of the registered shares in Optomed.

Audit review

This financial report has not been audited by the company's auditors.

Financial reporting in 2023

• 3 November 2023 Interim Report for 1 January – 30 September 2023

For more information, contact

Sakari Knuutti, CFO

Tel: +358 (0)50 562 4077

E-mail: [email protected] 

Seppo Kopsala, CEO

Tel: +358 (0)40 555 1050

E-mail:  [email protected]

About Optomed

Optomed is a Finnish medical technology company and one of the leading providers of handheld fundus cameras and screening software. Optomed combines handheld screening devices with software and artificial intelligence with the aim to transform the diagnostic process of blinding eye-diseases such as rapidly increasing diabetic retinopathy. In its business Optomed focuses on eye-screening devices and software solutions related R&D in Finland and sales through different channels in over 60 countries.

www.optomed.com

Alternative Performance Measures

Optomed uses certain alternative performance measures (APMs) with the purpose to provide a better understanding of how the business develops. These APMs, as defined, cannot be fully compared with other companies’ APMs.

Alternative Performance Measures	Definition
Gross profit	Revenue + Other operating income – Materials and services expenses
Gross margin, %	Gross profit / Revenue
EBITDA	Operating result before depreciation, amortization and impairment losses
EBITDA margin, %	EBITDA / Revenue
Operating result	Profit/loss after depreciation, amortization and impairment losses
Operating margin, %	Operating result / Revenue
Adjusted operating result	Operating result excluding items affecting comparability
Adjusted operating margin, %	Adjusted operating result / Revenue
Adjusted EBITDA	EBITDA excluding items affecting comparability
Adjusted EBITDA margin, %	Adjusted EBITDA / Revenue
Items affecting comparability	Material items outside ordinary course of business including restructuring costs, net gains or losses from sale of business operations or other non-current assets, strategic development projects, external advisory costs related to capital reorganisation, impairment charges on non-current assets incurred in connection with restructurings, compensation for damages and transaction costs related to business acquisitions.
Net Debt	Interest-bearing liabilities (borrowings from financial institutions, government loans and subordinated loans) – cash and cash equivalents (excl. lease liabilities according to IFRS 16)
Net Debt / Adjusted EBITDA (LTM), times	Net Debt / Adjusted EBITDA (for the last twelve months, LTM)
Earnings per share	Net result / Weighted average number of outstanding shares
Equity ratio, %	Total equity / Total assets
R&D expenses	Employee benefit expenses for R&D personnel and other operational expenses related to R&D activities

Consolidated income statement

In thousands of euro	Q2/2023	Q2/2022			H1/2023		H1/2022	2022
Revenue	3,744	3,733			7,222		6,947	14,660
Other operating income	34	0			34		37	857
Materials and services	-1,292	-1,584			-2,294		-2,645	-5,449
Employee benefit expenses	-2,190	-2,124			-4,382		-4,367	-8,827
Depreciation, amortization and Impairment losses	-547	-542			-1,076		-1,066	-3,145
Other operating expenses	-758	-838			-1,556		-1,722	-3,193
Operating result	-1,009	-1,355			-2,052		-2,815	-5,097
Finance income	38	302			106		418	569
Finance expenses	-363	-296			-565		-340	-1,024
Net finance expenses	-325	6			-459		77	-454
Profit (loss) before income taxes	-1,334	-1,348			-2,511		-2,738	-5,551
Income tax expense	20	20			40		39	79
Loss for the period	-1,314	-1,328			-2,471		-2,698	-5,472
Loss for the period attributable to
Owners of the parent company	-1,314		-1,328	-2,471		-2,698			-5,472
Loss per share attributable to owners of the parent company
Weighted average number of shares	15,691,727		13,797,968	15,691,727		13,797,968			14,640,697
Basic loss per share (euro)	-0.08		-0.10	-0.16		-0.20			-0.37

Consolidated condensed comprehensive income statement

In thousands of euro	Q2/2023	Q2/2022	H1/2023	H1/2022	2022
Loss for the period	-1,314	-1,328	-2,471	-2,698	-5,472
Other comprehensive income
Foreign currency translation difference	166	-43	244	-120	139
Other comprehensive income, net of tax	166	-43	244	-120	139
Total comprehensive loss attributable to Owners of the parent company	-1,148	-1,372	-2,227	-2,818	-5,333

Consolidated balance sheet

In thousands of euro	June 30, 2023	June 30, 2022	Dec 31, 2022
ASSETS
Non-current assets
Goodwill	4,256	4,256	4,256
Development costs	7,200	7,115	6,562
Customer relationships	1,053	1,275	1,164
Technology	483	585	534
Other intangible assets	381	355	379
Total intangible assets	13,374	13,586	12,895
Tangible assets	769	664	852
Right-of-use assets	1,231	1,029	1,448
Deferred tax assets	17	14	15
Total non-current assets	15,391	15,293	15,210
Current assets
Inventories	2,954	3,161	2,998
Trade and other receivables	4,590	5,190	4,568
Cash and cash equivalents	5,691	7,079	8,524
Total current assets	13,235	15,429	16,090
Total assets	28,627	30,722	31,300

In thousands of euro	June 30, 2023	June 30, 2022	Dec 31, 2022
EQUITY
Share capital	80	80	80
Share premium	504	504	504
Reserve for invested non-restricted equity	46,912	43,089	46,896
Translation differences	296	-207	51
Retained earnings	-27,117	-21,879	-21,717
Profit (loss) for the financial year	-2,471	-2,698	-5,472
Total equity	18,203	18,888	20,342
LIABILITIES
Non-current liabilities
Borrowings from financial institutions	2,983	3,822	3,380
Government loans	837	1,871	906
Lease liabilities	744	640	1,058
Deferred tax liabilities	349	425	387
Total Non-current liabilities	4,913	6,758	5,731
Current liabilities
Borrowings from financial institutions	794	368	794
Government loans	193	193	193
Lease liabilities	515	405	412
Trade and other payables	4,008	4,112	3,828
Total current liabilities	5,510	5,077	5,227
Total liabilities	10,423	11,835	10,957
Total equity and liabilities	28,627	30,722	31,300

Consolidated statement of changes in shareholders’ equity

Equity attributable to owners of the parent company

In thousands of euro	Share capital	Share premium	Reserve for invested non-restricted equity	Translation differences	Retained earnings	Total
Balance at January 1, 2023	80	504	46,896	51	-27,189	20,342
Comprehensive income
Loss for the period					-2,471	-2,471
Other comprehensive income
Translation differences				244		244
Total comprehensive income for the period				244	-2,471	-2,227
Share options			16		72	88
Total transactions with owners of the company			16		72	88
Balance at June 30, 2023	80	504	46,912	296	-29,588	18,203

Equity attributable to owners of the parent company

In thousands of euro	Share capital	Share premium	Reserve for invested non-restricted equity	Translation differences	Retained earnings	Total
Balance at January 1, 2022	80	504	38,526	-88	-21,970	17,052
Comprehensive income
Loss for the period					-2,698	-2,698
Other comprehensive income
Translation differences				-120		-120
Total comprehensive income for the period				-120	-2,698	-2,818
Share options			4,563		91	4,654
Total transactions with owners of the company			4,563		91	4,654
Other adjustments						0
Balance at June 30, 2022	80	504	43,089	-207	-24,577	18,888

Equity attributable to owners of the parent company

In thousands of euro	Share capital	Share premium	Reserve for invested non-restricted equity	Translation differences	Retained earnings	Total
Balance at January 1, 2022	80	504	38,526	-88	-21,970	17,052
Comprehensive income
Loss for the period					-5,472	-5,472
Other comprehensive income
Translation differences				139		139
Total comprehensive income for the period				139	-5,472	-5,333
Share issue			8,371			8,371
Share options					253	253
Total transactions with owners of the company			8,371		253	8,624
Balance at December 31, 2022	80	504	46,896	51	-27,189	20,342

Consolidated cash flow statement

In thousands of euro	Q2/2023	Q2/2022	H1/2023	H1/2022	2022
Cash flows from operating activities
Loss for the financial year	-1,314	-1,328	-2,471	-2,698	-5,472
Adjustments:
Depreciation, amortization and impairment losses	547	542	1,076	1,066	3,145
Finance income and finance expenses	333	403	470	330	618
Other adjustments	-44	15	-55	30	-770
Cash flows before change in net working capital	-479	-369	-980	-1,273	-2,479
Change in net working capital:
Change in trade and other receivables (increase (-) / decrease (+))	-252	-872	-21	-438	204
Change in inventories (increase (-) / decrease (+))	82	115	-14	-184	-68
Change in trade and other payables (increase (+) / decrease (-))	223	568	139	671	172
Cash flows before finance items	-426	-557	-875	-1,223	-2,171
Interest paid	-34	-10	-52	-22	-76
Other finance expenses paid	-7	-398	13	-420	-123
Interest received	0	0	0	0	0
Net cash from operating activities (A)	-468	-965	-913	-1,665	-2,370
Cash flows from investing activities
Capitalization of development expenses	-606	-750	-1,124	-1,281	-2,249
Acquisition of tangible assets	-62	-75	-89	-391	-780
Net cash used in investing activities (B)	-668	-825	-1,213	-1,672	-3,029
Cash flows from financing activities
Proceeds from share subscriptions	12	4,892	16	4,945	9,012
Share issue transaction costs	0	-382	0	-382	-682
Proceeds from loans and borrowings	0	14	0	14	0
Repayment of loans and borrowings	-235	-213	-465	-778	-912
Repayment of lease liabilities	-125	-103	-247	-205	-415
Net cash from financing activities (C)	-348	4,208	-696	3,595	7,003
Net cash from (used in) operating, investing and financing activities (A+B+C)	-1,483	2,418	-2,822	257	1,605
Cash and cash equivalents at beginning of period	7,179	4,630	8,524	6,804	6,804
Effect of movements in exchange rate on cash held	-5	31	-11	17	115
Cash and cash equivalents at end of period	5,691	7,079	5,691	7,079	8,524

Selected notes

Corporate information and basis of accounting

Corporate information

Optomed is a Finnish medical technology group (hereafter ‘Optomed’ or ‘Group’) that specialises in handheld fundus cameras and solutions for screening of blinding eye diseases, established in 2004.

The Group’s parent company, Optomed Plc (hereafter the ‘Company’), is a Finnish public limited liability company established under the laws of Finland, and its business ID is 1936446-1. It is domiciled in Oulu, Finland and the Company’s registered address is Yrttipellontie 1, 90230 Oulu, Finland.

Basis of accounting     

Optomed’s consolidated financial statements has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The preparation of this interim report also takes into account the amendments to IFRS standards that have become effective by January 1, 2023.

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with Group`s last annual consolidated financial statements as at and for the year ended 31 December 2022. This Interim financial statements do not include all of the information required by IAS 34: selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group`s financial position and performance since the last annual financial statements.

All presented figures have been rounded so the sum of the individual figures may differ from the presented total figure.

Financial ratios have been calculated using exact figures.

This report has been authorized for issue by the company`s board of directors.

Critical management judgments and related estimates and assumptions                                                                        

The preparation of financial statements under IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the end of the reporting period as well as the reported amounts of income and expenses during the reporting period. These estimates and assumptions are based on historical experience and other justified assumptions, such as future expectations, that Optomed management believes are reasonable under the circumstances at the end of the reporting period and the time when they were made.                                                                                                                

Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. The estimates and underlying assumptions are reviewed on an on-going basis and when preparing financial statements. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was based, or as a result of new information or more experience. Such changes are recognized in the period in which the estimate or the assumption is revised.             

       

Use of judgment and estimates

  

Judgements that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognised in the financial statements, relate to the following areas:

— Determining trade receivables credit risk

— capitalisation of development costs: determination of development expenditure eligible for capitalisation

— impairment testing of development expenditures

Reportable segments

Q2/2023

In thousands of euro	Devices	Software	Group Admin	Total
External revenue	1,273	2,471	0	3,744
Net operating expenses	-599	-659	0	-1,258
Margin	674	1,812	0	2,486
Depreciation and amortization	-360	-184	-2	-547
Other expenses	-891	-1,234	-823	-2,948
Operating result	-578	393	-825	-1,009
Finance items	0	0	-325	-325
Loss before tax expense	-578	393	-1,149	-1,334

Q2/2022

In thousands of euro	Devices	Software	Group Admin	Total
External revenue	1,361	2,372	0	3,733
Net operating expenses	-719	-865	0	-1,584
Margin	642	1,507	0	2,149
Depreciation and amortization	-378	-162	-2	-542
Other expenses	-1,106	-1,029	-827	-2,961
Operating result	-843	317	-829	-1,355
Finance items	0	0	6	6
Loss before tax expense	-843	317	-822	-1,348

H1/2023

In thousands of euro	Devices	Software	Group Admin	Total
External revenue	2,161	5,061	0	7,222
Net operating expenses	-928	-1,332	0	-2,260
Margin	1,233	3,729	0	4,962
Depreciation and amortization	-713	-359	-4	-1,076
Other expenses	-1,876	-2,362	-1,700	-5,938
Operating result	-1,356	1,009	-1,704	-2,052
Finance items	0	0	-459	-459
Loss before tax expense	-1,356	1,009	-2,163	-2,511

H1/2022

In thousands of euro	Devices	Software	Group Admin	Total
External revenue	2,425	4,522	0	6,947
Net operating expenses	-1,143	-1,466	0	-2,609
Margin	1,283	3,056	0	4,339
Depreciation and amortization	-743	-319	-4	-1,066
Other expenses	-2,246	-2,158	-1,685	-6,088
Operating result	-1,707	580	-1,689	-2,815
Finance items	0	0	77	77
Loss before tax expense	-1,707	580	-1,611	-2,738

2022

In thousands of euro	Devices	Software	Group Admin	Total
External revenue	5,398	9,263	0	14,660
Net operating expenses	-1,659	-2,933	0	-4,592
Margin	3,738	6,330	0	10,069
Depreciation and amortization	-2,489	-649	-8	-3,145
Other expenses	-4,408	-4,251	-3,361	-12,020
Operating result	-3,159	1,431	-3,368	-5,097
Finance items	0	0	-454	-454
Loss before tax expense	-3,159	1,431	-3,823	-5,551

Revenue

In thousands of euro	Q2/2023	Q2/2022	H1/2023	H1/2022	2022
Finland	2,391	2,066	4,911	4,172	8,606
Rest of the Europe	234	682	470	997	1,715
Rest of the World	1,119	985	1,841	1,778	4,340
Total	3,744	3,733	7,222	6,947	14,660

Other operating income

In thousands of euro		Q2/2023	Q2/2022	H1/2023	H1/2022	2022
Other operating income		34	0	34	37	857
Total		34	0	34	37	857

Other operating expenses

Other operating expenses	Q2/2023	Q2/2022	H1/2023	H1/2022	2022
Sales and marketing	-192	-204	-339	-378	-784
Research and development	-43	-82	-132	-263	-361
General and administration	-523	-551	-1,085	-1,081	-2,049
Total operating expenses	-758	-838	-1,556	-1,722	-3,193

Other operating expenses also comprise changes in expected credit losses and realized credit losses.

Tangible assets

In thousands of euro	Machinery and equipment 30.6.2023	Machinery and equipment 30.6.2022	Machinery and equipment 31.12.2022
Cost
Balance at January 1	3,512	2,721	2,721
Additions	88	405	791
Balance at End of Period	3,600	3,126	3,512
Accumulated depreciation and impairment losses
Balance at January 1	-2,660	-2,288	-2,288
Depreciation	-170	-174	-372
Balance at end of period	-2,830	-2,462	-2,660
Carrying amount at January 1	852	433	433
Carrying amount at June 30/ December 31	769	664	852

Leases

Leased tangible assets

In thousands of euro	30.6.2023	30.6.2022		2022
Additions to right-of-use assets	280	35		671
Depreciation change for right-of-use assets	-253	-211		-428
Carrying amount at the end of the reporting period	1,231	1,029		1,448
Leased tangible assets comprise business premises and are presented as a separate line item Right-of-use assets in the consolidated balance sheet.
Lease liabilities
In thousands of euro	30.6.2023	30.6.2022		2022
Current	515	405		412
Non-current	744	640		1,058
Total	1,260	1,044		1,470

The above liabilities are presented on the line item Lease liabilities (non-current / current) in the consolidated balance sheet, based on their maturity.

Intangible assets and goodwill

30.06.2023

In thousands of euro	Goodwill	Development costs	Customer relationships	Technology	Other intangible assets	Total
Cost
Balance at January 1	4,256	13,978	2,222	1,023	1,054	22,533
Additions	0	1,099	0	0	33	1,132
Balance at June 30	4,256	15,077	2,222	1,023	1,087	23,665
Accumulated amortization and impairment losses
Balance at January 1	0	-7,416	-1,057	-489	-676	-9,638
Amortization	0	-461	-112	-51	-30	-653
Balance at June 30	0	-7,877	-1,169	-540	-706	-10,291
Carrying amount at January 1	4,256	6,562	1,164	534	379	12,895
Carrying amount at June 30	4,256	7,200	1,053	483	381	13,374

30.06.2022

In thousands of euro	Goodwill	Development costs	Customer relationships	Technology	Other intangible assets	Total
Cost
Balance at January 1	4,256	11,815	2,222	1,023	951	20,267
Additions	0	1,245	0	0	48	1,293
Balance at June 30	4,256	13,060	2,222	1,023	999	21,560
Accumulated amortization and impairment losses
Balance at January 1	0	-5,477	-836	-387	-593	-7,292
Amortization	0	-468	-111	-51	-51	-681
Balance at June 30	0	-5,945	-947	-438	-644	-7,973
						-
Carrying amount at January 1	4,256	6,338	1,386	636	358	12,975
Carrying amount at June 30	4,256	7,115	1,275	585	355	13,586

31.12.2022

In thousands of euro	Goodwill	Development costs	Customer relationships	Technology	Other intangible assets	Total
Cost
Balance at January 1	4,256	11,815	2,222	1,023	951	20,267
Additions	0	2,163	0	0	103	2,266
Balance at December 31	4,256	13,978	2,222	1,023	1,054	22,533
Accumulated amortization and impairment losses						-
Balance at January 1	0	-5,477	-836	-387	-593	-7,292
Amortization	0	-899	-222	-102	-83	-1,306
Impairment losses	0	-1,040	0	0	0	-1,040
Balance at December 31	0	-7,416	-1,057	-489	-676	-9,638
						-
Carrying amount at January 1	4,256	6,338	1,386	636	358	12,975
Carrying amount at December 31	4,256	6,562	1,164	534	379	12,895

Financial assets

Carrying amounts - at amortized cost

In thousands of euro	30.6.2023	30.6.2022	31.12.2022
Trade receivables
Recourse factoring	0	358	324
Other trade receivables	3,442	3,673	3,232
Total trade receivables	3,442	4,031	3,556
Cash and cash equivalents	5,691	7,079	8,524
Total	9,133	11,109	12,080

Due to overdue trade receivables, financial assets are subject to an increased risk of credit loss.

Exposure to credit risk and loss allowance

Optomed considers it has heightened risk regarding Chinese customer's trade receivables. The credit risk concentration has been formed and is associated with an increased credit loss risk due to overdue trade receivables. Chinese customer has paid its overdue receivables according to planned schedule.

In thousands of euro	Gross carrying amount	Weighted av. loss rate%	Loss allowance
At June 30, 2023
Current (not past due)	1,877	0.5%	9
Past due
1-30 days	170	1.5%	3
31-60 days	35	4%	1
61-90 days	8	9%	1
More than 90 days past due	279	12%	33
Specific loss allowance	1,600	30%	480
Total	3,970		528

In thousands of euro	Gross carrying amount	Weighted av. loss rate%	Loss allowance
At June 30, 2022
Current (not past due)	1,800	0.5%	9
Past due
1-30 days	172	1.5%	3
31-60 days	45	4%	2
61-90 days	11	9%	1
More than 90 days past due	30	12%	4
Specific loss allowance	2,332	30%	700
Total	4,391		718

In thousands of euro	Gross carrying amount	Weighted av. loss rate%	Loss allowance
At December 31, 2022
Current (not past due)	1,664	0.5%	8
Past due
1-30 days	161	1.5%	2
31-60 days	7	4%	0
61-90 days	29	9%	3
More than 90 days past due	12	12%	1
Specific loss allowance	1,962	30%	589
Total	3,836		604

Financial liabilities

In thousands of euro	30.6.2023	30.6.2022		31.12.2022
Non-current financial liabilities
Borrowings from financial institutions	2,983	3,822		3,380
Government loans	837	1,871		906
Lease liabilities	744	640		1,058
Total	4,565	6,333		5,344
Current financial liabilities
Borrowings from financial institutions	794	368		794
Government loans	193	193		193
Lease liabilities	515	405		412
Trade payables	785	1,159		869
Total	2,287	2,123		2,268
Total financial liabilities	6,852	8,456		7,612

Fair values - financial liabilities measured at amortized cost

Optomed considers that the carrying amounts of the financial liabilities measured at amortized cost substantially equal to their fair values.

Financial covenants

Optomed's borrowings from financial institutions contain a financial covenant (equity ratio) and Optomed also has to meet certain key operative targets.

Optomed has to comply with the financial covenant terms specified in the loan agreement terms at the financial year-end. Equity ratio is calculated using the agreed formula. The table below summarizes the Group's financial covenant term and compliance during the reporting period.

	Covenant term	Actual ratio	Applicable level
Nordea loan
At June 30. 2023
Equity ratio	50%	60.9%	Optomed Group
Cash amount	2 million	5.7 million	Optomed Group
At June 30. 2022
Equity ratio	50%	61.5%	Optomed Group
Cash amount	2 million	7.1 million	Optomed Group
At December 31. 2022
Equity ratio	50%	62.1%	Optomed Group
Cash amount	2 million	8.5 million	Optomed Group
OP loan equity ratio
At June 30, 2023	35%	65.3%	Optomed Group
At June 30, 2022	35%	62.7%	Optomed Group
At December 31, 2022	35%	66.1%	Optomed Group

Company’s Equity ratio is calculated as follows depending on the lender:

Nordea loan equity ratio calculation formula:  Adjusted equity/(Balance sheet total+ Leasing liabilities)

OP loan equity ratio calculation formula:  Adjusted equity/(Balance sheet total- received advances)

Optomed was in compliance with the covenant as at June 30, 2023.

Related party transactions

In thousands of euro	Revenues	Trade receivables	Other expenses
Jan 1 - Jun 30 2023	0	0	-40
Jan 1 - Jun 30 2022	0	0	-40
Jan 1 - Dec 31 2022	0	0	-80

*Comparison figures for Jan1-Jun 30 2022 numbers have been corrected in revenues and trade receivables category.

Revenue and trade receivables and some of the other expenses relate to the major shareholders of Optomed Ltd considered to be related parties to the parent company. Related parties: due to changes in the board of directors, the owners will no longer be related parties in 2022.
 

Other expenses consist of consulting fees paid to the Chairman of the Board of Directors.

Events after the review period

After the review period on 3 August 2023 Optomed announced that Juho Himberg will start as Optomed’s CEO 1 October 2023. Previously Juho Himberg has served as the CEO of Aidian (former Orion Diagnostica), a leading point-of-care diagnostics company with innovative products and services for improving the well-being and quality of life for people around the world. Prior to Aidian, Juho has held several leadership positions globally in healthcare and medical technology companies such as Orton, Stryker, C.R. Bard Inc. and Gambro. The CEO transition plan was announced 14 June 2023. Optomed's current CEO Seppo Kopsala and the Board of Directors have agreed that Kopsala will leave the CEO position once the new CEO is ready to start.