Corporate News: MeVis Medical Solutions reporting a successful first half of 2008

31 percent increase in revenues to EUR 5.5 million

  • Further extensions to product range in line with plans
  • High growth-induced expenditure reflected in 18 percent EBIT margin
  • New products to be launched in the market in the second half of 2008

Bremen, August 27, 2008 - The first half of 2008 was a period of growth for MeVis Medical Solutions AG [ISIN: DE000A0LBFE4]. At least a further two new products are to be launched before the end of this year, with more to follow in 2009 and 2010.

A specialist in software for image-based medical technology, MeVis has been recruiting heavily to broaden its product range. As of June 30, 2008, MeVis Medical Solutions consolidated group had 169 employees (year-ago period: 83). Revenues in the period under review rose by 31 percent to EUR 5.5 million (year-ago period: EUR 4.2 million).

“We were able to continue the successful performance which we had achieved in the first quarter of 2008,” says Dr. Carl J.G. Evertsz, CEO of MeVis Medical Solutions. “We achieved a 67 percent increase in license sales in the digital mammography segment, thus demonstrating once more our strong market position as an internationally leading independent vendor of software for the image-based early detection and diagnosis of breast cancer. The joint venture with Siemens, MeVis BreastCare GmbH & Co. KG, contributed EUR 3.4 million to consolidated segment revenues (year-ago period: EUR 2.9 million). Accordingly, digital mammography remains the MeVis Group’s business mainstay (62 percent of revenues).

The Company also achieved strong growth in the Other Diagnostics segment, with revenues rising by 59 percent to EUR 2.1 million (year-ago period: EUR 1.3 million). This development is supported by a new invoicing agreement with our OEM-partner Invivo Corp. effectively reversing the unexpected negative one-off effects experienced during the fourth quarter of 2007. At the same time, the segment earnings of EUR 0.1 million (year-ago period: EUR 0.4 million) came under pressure from heavy spending on extensions to the product range.

Over 80 percent of the Company’s total revenues were generated in the US market due to the close partnership with OEMs Hologic and Invivo.

Consolidated EBIT came to EUR 1 million in the first half of 2008 (year-ago period: EUR 1.8 million), translating into an EBIT margin of 18 percent (year-ago period: 42 percent), while the cash flow from operating activities stood at EUR 0.7 million (year-ago period: EUR 0.9 million). “We are pleased that we have been able to extend our development activities as planned and continue growing profitably despite the heavy expenditure,” says Dr. Olaf Sieker, CFO at MeVis Medical Solutions. “Spending on new products is still having a significant impact on our consolidated EBIT margin at the moment. However, moving forward, we expect these products to also generate EBIT margins of 40 to 50 percent in the medium term in line with our current products.”

With the planned additions to the product range and related recruiting, non-capitalized staff costs in the period under review rose by EUR 0.7 million to EUR 2.3 million (year-ago period: EUR 1.6 million). A capitalization of development expenses in accordance with IAS 38 has been in effect since the beginning of the 2008 financial year. Over the first half of 2008 capitalized personnel expense amounted to EUR 1 million (year-ago period: EUR 0).

In addition, this growth process was accompanied by an increase in other operating expenses by EUR 1.4 million over the first half of 2008 to EUR 2.0 million (year-ago period: EUR 0.6 million) primarily due to increased legal and consulting costs in connection with post-flotation matters and increased rental expenditure as a result of the growth in business.

Net financial result in the first half of 2008 climbed substantially to a positive EUR 0.5 million (year-ago period: negative EUR 0.03 million) chiefly as a result of the inflow of funds from the stock market flotation. Consequently, consolidated net profit after tax held steady as compared to the year-ago period at EUR 0.9 million, translating into earnings per share of EUR 0.67 (year-ago period: EUR 1.65). As of June 30, 2008, the Company had cash and cash equivalents totaling EUR 22.6 million.

At the end of the first half of 2008, MeVis Medical Solutions returned its 25.1 percent share in MeVis Research GmbH to the City of Bremen in preparation for the planned conversion of this non-profit research facility into a Fraunhofer Institute at the end of the year. This will result in a substantial increase in research capacities in Bremen and will also broaden the research basis considerably. Says Evertsz: “This development is of crucial importance for the extensions to our product range. Looking forward, we want to strengthen our commitment to innovation in disease-oriented software solutions.”

Acquired in April of this year from Hologic, the lung CT software for diagnosing lung cancer and automatically detecting nodules is to be launched under MeVis’ own brand name in the immediate future and will be successively built upon with the addition of further functions. Explains Sieker: “We expect the lung CT software to start generating revenues in the third quarter of 2008.” MeVis Medical Solutions also plans to launch a new software solution for neurology (brain surgery) in the fourth quarter of this year.

The company`s financial reports are available for downloading at our website.