Corporate News: Profitable first quarter for MeVis

MeVis Medical Solutions continues to profit from strong maintenance business

  • Consolidated sales of € 3.7 million stay at previous year’s level
  • Share of maintenance business rises to 42% (previous year 28%)
  • New license business drops 20% to € 2.1 million (previous year € 2.6 million)
  • Earnings before interest and taxes (EBIT) amount to € 0.5 million (previous year € 0.2 million)
  • EBIT margin is 14% (previous year 4%)
  • Financial result comes to € -0.2 million (previous year € -0.3 million)
  • Earnings before taxes increase to € 0.2 million (previous year € -0.1 million)
  • High volume of deferred taxes impacts consolidated earnings of € -0.2 million (previous year € -0.1 million)

Bremen, May 30, 2011 – MeVis Medical Solutions AG [ISIN: DE000A0LBFE4], a leading software company in medical imaging, today announced its results for the first quarter of 2011. Consolidated revenues have been rising again for the first time in three quarters and at € 3,718 k reached the same level as in the first quarter of 2010. The composition of consolidated sales continued to change in favor of the maintenance business. While this business carried on developing dynamically with revenues growing by 51% to € 1,545 k (previous year € 1,021 k), revenues from license sales dropped by 20% to € 2,086 k (previous year € 2,614 k).

New business therefore continued to stagnate at the level of the previous three quarters. The main reasons for this development were market saturation effects in the company’s core business of digital mammography in the US, one of its key sales markets. The competitive positions of individual equipment and component manufacturers in the area of breast MRI have been shifting in the wake of the latest consolidations in this market.

The Digital Mammography segment once again proved to be a solid pillar of the company with sales growing by 6% to € 2,876 k (previous year € 2,720 k). This is primarily due to the further significant increase in maintenance revenue, which contributed 48% (previous year 31%) to segment revenues in the period under review. Throughout the Group, the share of maintenance revenue went up to 42% (previous year 28%).

New products in the neurology and lung diagnostics business continued developing disappointingly in a stagnating market environment. Revenues in the Other Diagnostics segment therefore went down by 16% to € 842 k (previous year: € 999 k). The company’s lung product Visia™ CT-Lung System once again did not generate any significant sales in the past quarter.

“We just released the first cardiac product jointly developed with our Dutch industry partner Medis for sale outside the USA in mid-May,” said Thomas E. Tynes, President & CEO of MeVis Medical Solutions, Inc., Pewaukee, USA, and member of the Executive Board of MeVis Medical Solutions AG. “This is an application based on our Visia™ technology to support MRI-based diagnostics of cardiovascular disease.”

The company plans to launch further applications beginning in the first quarter of 2012.

“Apart from the established product features of our software applications, which make them valuable for advanced clinical use, our Visia™ applications particularly stand out with their improved integration capabilities and architecture allowing for a more cost-effective adaptation to existing medical imaging IT systems,” commented Dr. Carl J.G. Evertsz, CEO of MeVis Medical Solutions AG. “This, we hope, will improve our access to further industry partners.”

Capitalized development costs within the Group rose by 56% to € 782 k during the period under review (previous year € 502 k). The drop in staff costs by 10% to € 2,510 k (previous year € 2,784 k) also contributed to the 44% increase in earnings before interest, taxes, depreciation and amortization (EBITDA) to € 1,413 k (previous year € 982 k). The number of employees fell by 6% from 169 to 159 full-time equivalents at the end of the quarter. Other operating expenses went up by 18% and came to € 727 k during the period under review (previous year € 617 k). This is mainly the result of legal and consulting costs rising to € 87 k (previous year € 4 k).

Depreciation and amortization on previously capitalized development costs, which went up as planned by 32% to € 529 k (previous year: € 401 k), were offset by a slight drop of 18% in other acquired intangible assets to € 259 k (previous year: € 314) on account of the balance sheet adjustment at the end of 2010. Total depreciation and amortization climbed by 9% to € 904 k during the period under review (previous year € 832 k). The rate of total capitalization, in other words the ratio between depreciation and amortization on capitalized development costs and newly recognized own development activities, amounted to 0.68 in the period under review (previous year 0.70).

Earnings before interest and taxes (EBIT) therefore increased by 239% to € 509 k (previous year € 150). The EBIT margin rose correspondingly to 14% (previous year 4%).

Earnings before taxes climbed to € 223 k (previous year € -97 k), corresponding to a return on sales of 6% (previous year -3%). Taking into account much higher income tax expenses, which mainly consisted of expenses from deferred taxes that do not have an effect on liquidity, consolidated net loss for the period came to € -190 k (previous year € -150 k). Earnings per share therefore amounted to € -0.11 (previous year € -0.09). Deferred taxes primarily originated from the strategic acquisition of Siemens’ shares in MeVis BreastCare Solutions GmbH & Co. KG and the recognition of development costs.

Liquid funds came to € 10,429 k at the end of the first quarter (December 31, 2010: € 8,162 k).

“In light of business developments to date, we are confirming our forecast contained in the 2010 consolidated annual report. We expect another slight reduction in consolidated sales for the current financial year, based on the decrease in the new licensing business at the group level in the 2010 financial year,” stated Dr. Robert Hannemann, member of the Executive Board of MeVis Medical Solutions AG. “Consolidated earnings before interest and taxes (EBIT) should be slightly positive on account of the ongoing savings regarding operating expenses, the reduced number of employees and the lower risk of impairment losses resulting from the balance sheet adjustment on December 31, 2010.”

Taking into consideration the development of US dollar exchange rates, the currency in which around 80% of bills are invoiced within the Group, as well as current market and business developments, the Executive Board will define its forecast during the course of the financial year.

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

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