Corporate News: MeVis Medical Solutions releasing preliminary figures for 2007

Foundations for future growth laid

  • License sales volumes in mammography segment up 60 percent
  • Recruiting for software development projects proceeding according to plan
  • Revenues and earnings affected by exceptionals in the fourth quarter

Bremen, February 19, 2008. On the basis of its preliminary figures, MeVis Medical Solutions AG [ISIN: DE 000A0LBFE4; WKN: A0LBFE] achieved a roughly 60 percent increase in the volume of license sales in the digital mammography segment via its OEM partners Siemens AG and Hologic Inc. in 2007. A specialist in disease-oriented software products for image-based medicine and the market leader in breast cancer diagnostics and early detection, MeVis generated revenues of around EUR 7.3 million in 2007 (previous year: EUR 8.3 million).

The decline in revenues over the previous year was very predominantly due to non-recurring effects which primarily arose in the fourth quarter of 2007. Following the acquisition of OEM partner Invivo Corp. by Philips NV in 2006, the billing system and in consequence revenue recognition with Invivo was changed at the end of 2007. As a result, the billing date for software sold to Invivo may be delayed compared with the previous situation. Thus, revenues expected for the fourth quarter of 2007 have been pushed back into 2008. However, the volume of software sold via Invivo rose substantially in the year under review. 'We assume that this favorable trend will continue in 2008 as well,' says Dr. Carl J.G. Evertsz, CEO of MeVis Medical Solutions AG.

A substantial discount was granted to OEM partners in the digital mammography segment in 2007 for the first time in five years after a period of steady growth in the interests of a sustained boost in sales to increase volumes. Although substantially more licenses were sold in 2007 than in 2006, it was not possible to fully recoup the effects of the price cut. The weak US dollar also took its toll on revenues. Roughly 80 percent of the Bremen-based company’s revenues are denominated in US dollars, while its costs are primarily invoiced in euros. These effects were mostly dampened by means of currency hedging. For 2008, a sum of around USD 3 million has already been hedged. In addition, the non-recurring expenses in connection with the Company’s stock market flotation, which cannot be deducted from equity in the IFRS consolidated financial statements, also left traces.

MeVis Medical Solutions is primarily engaged in the development and marketing of innovative high-quality software products for image-based medicine. The average development period is one to three years. The products are sold via OEM partners for whom this software is primarily developed. Says Evertsz: 'The close collaboration underscores the great strategic importance of these partnerships for both MeVis Medical Solutions and the OEM partners.' In 2008 alone there are plans for three new products to be launched. Recruiting forms a critical determinant for the successful development of new products at MeVis Medical Solutions. Despite the general scarcity of qualified staff in the labor market, it was possible to increase the Company’s headcount significantly from 60 at the end of 2006 to 101 as of December 31, 2007. This also included recruiting for the newly established US subsidiary MeVis Medical Solutions Inc. in Wisconsin. As these additional scheduled staff costs are not being capitalized in 2007, personnel expenses were substantially higher in the third and fourth quarters.

Despite these effects, the company assumes that it broke even in 2007 (previous year: EUR 4.7 million). '2007 was a successful year for us despite difficult economic conditions in the United States, which is a crucial market for medical technology, and the weak US dollar,' says Evertsz. 'We achieved important strategic goals and, via our stock market flotation, managed to create the basis for developing further innovative products. Thanks to additional recruiting, we will be able speed up product development. Numerous new products will be launched on the market in 2008 and 2009. We are already a strategic partner for leading international medical technology OEMs such as Hologic, Siemens and Partner and plan to extend these joint activities and gain further OEM partners.'

Turning to 2008, the Management Board projects substantial growth in revenues to EUR 9.0 - 10.0 million and EBIT of EUR 2.2 - 2.6 million. After-tax earnings are expected to amount to in between EUR 3.0 to 3.3 million.

The final figures and the 2007 annual report will be published on April 25, 2008.