This release is a summary of Modulight's half-year financial report for January-June 2024. The whole report is attached to this stock exchange release as a pdf file, and is also available on the Modulight website at https://modulight.com/reports-presentations/.

The figures in brackets refer to the corresponding period of the previous year. This half year financial report is unaudited.

Highlights in April–June 2024

• The R&D pipeline grew to 30 (27). The projects focus on the commercialization of Modulight's state-of-art products, which are manufactured in Tampere, Finland.
• Pay per treatment (PPT) business model implementation progressed.
• Operating cash flow and net cash flow improved significantly due to increasing operational efficiency and completion of the investment program.
• Revenue was EUR 965 (1,107) thousand.
• EBITDA was EUR -1,221 (-1,581) thousand.
• EBITDA margin was -126.5 (-142.8) % of revenue.
• Operating result (EBIT) was EUR -2,047 (-2,095) thousand.
• Operating result margin (EBIT-%) was -212.2 (-189.2) % of revenue.
• Result for the reporting period was EUR -1,949 (-2,093) thousand.
• Operating cash flow was EUR -93 (-1,430) thousand.
• Net cash flow was was EUR -1,891 (-5,017) thousand.
• Earnings per share was EUR -0.05 (-0.05).

Highlights in January–June 2024

• Revenue was EUR 2,024 (2,600) thousand.
• EBITDA was EUR -2,535 (-3,010) thousand.
• EBITDA margin was -125.3 (-115.8) % of revenue.
• Operating result (EBIT) was EUR -4,026 (-3,998) thousand.
• Operating result margin (EBIT-%) was -198.9 (-153.8) % of revenue.
• Result for the reporting period was EUR -3,821 (-3,831) thousand.
• Operating cash flow was EUR -1,022 (-3,712).
• Net cash flow was EUR -4,561 (-11,202) thousand.
• Earnings per share was EUR -0.09 (-0.09).

Key figures

1) Audited
2) Figure refers to the end of the review period

Outlook for 2024
Modulight has not issued guidance for revenue or profitability in 2024. As the company’s customer projects are still distributed across varying early stages of development, and predicting developments in the market remains challenging, it is difficult to forecast performance in 2024. However, the company expects that changes in the operating environment caused by macroeconomic and geopolitical uncertainty will still impact its financial performance in the short term.

Seppo Orsila, CEO
In the second quarter, Modulight accelerated the implementation of the pay per treatment (PPT) business model and improved its operational efficiency. Net cash flow improved significantly. We continued our geographical expansion in line with our strategy and expanded our offering to new indications, which increased our product development pipeline.

Revenue in the second quarter amounted to EUR 1.0 million, which was 9% less than in the previous quarter and 13% less than in the corresponding period of 2023. Revenue development was affected by the transition to the PPT business model in line with our strategy as well as delays in delivering engineering prototypes to some customers. During the second quarter, we made progress with the implementation of our PPT business model, which achieved a six-figure revenue, while also expanding the customer base for the model.

Our significant investment program has been completed, which is reflected in improved profitability due to the reduced costs associated with the initial implementation. Our operating cash flow improved significantly, reaching -0.1 million euros (-1.4 million euros) in the second quarter. The completion of the investment program is reflected, as expected, particularly in our overall cash flow, which improved significantly compared to the comparison period. The decrease in one-time costs related to the deployment of new equipment, together with increased operational efficiency, improved our EBITDA by 23% in the second quarter compared to the previous year. Additionally, the reduced workload from deployment of new equipment enabled us to allocate a record number of resources to product development.

Currently, a few leading hospitals on both, East and West Coasts of the United States are regularly using our technology for ophthalmological treatments utilizing the PPT model. Although the sales we receive from the PPT model are still small, it did amount to a low six-figure number in the second quarter. We have put in a lot of effort to tailor our operational models to meet the needs of our customers. We are pleased to see that certain key opinion leaders want to collaborate with us on high-quality medical publications while also developing the opportunities our technology offers to patients. A video by one such key opinion leader reached over 60,000 views on social media by the end of June. The work of these numerous doctors and researchers reflects confidence in our technology and its long-term potential.

Geographical expansion is progressing, and we have made advances particularly in the United States, but also in Europe and Asia. Through local sales and clinical support, our presence in the U.S. has attracted, for example, two Asian pharmaceutical companies as clients. Due to our resources, we have been able to develop our business in Europe and Asia simultaneously with our expansion in the U.S.

Phase III studies have been the primary focus of our clinical work, with new hospitals being included in the studies at an accelerating pace. As we examined several ongoing clinical trials in photoimmunotherapy, we observed that more than half of this global sample of clinical trials are using our product, and the user base continues to grow, which we believe reflects the strong confidence experts have in our product. The widespread use of our product, particularly in oncology, reinforces our belief in its versatility in cancer treatments. The best indicator of the competitiveness of our treatment and technology is the increasing number of projects in key indications. Our partners are generating world-class scientific evidence, further adding to the already impressive count of over 200 peer-reviewed medical reports. However, operationally we are focusing on advancing those projects with short-term potential.

Overall, our product development pipeline grew by two projects. This growth was supported by our efforts to commercialize our platform for various indications, our expertise in the United States, and our clinical network. Two pharmaceutical companies in the United States and Asia made progress in their existing projects and also initiated new ones. We also acquired new customers whose projects expanded our product development pipeline, while at the same time, we removed from the pipeline some projects that we assessed as unlikely to progress to significant commercial scale. I want to emphasize that we manufacture all our products in-house, and in all projects we are commercializing our state-of-art products made in Tampere, Finland.

A major well-known company designated us as a key partner for their lung research in the United States. We are also pleased that a very high-profile quantum company has ordered a product that we are likely uniquely qualified to deliver, thanks to our high-power single-mode laser technology investment program.

Our extensive investment program has now been completed, and in the current global situation, customers increasingly value our state-of-the-art production facility. We also have a strong cash position and the ability to respond quickly to market opportunities and enhance our product development efforts. We will continue to focus on actions aligned with our growth strategy, such as expanding our PPT model, advancing projects, and leveraging technology in the short-term, while also keeping long-term strategic opportunities in mind. We believe that our growth strategy and strengths will contribute to a return to strong and profitable growth during our strategic period, which extends through the end of 2025.

Financial reporting in 2024
In 2024, Modulight will publish the following financial reports:

• Interim report: January–September 2024: October 18, 2024

Webcast
Modulight's CEO Seppo Orsila will present the result in an English-language webcast, which will be held on August 16, 2024, at 2:00 p.m. EEST. The broadcast can be followed at https://modulight.zoom.us/webinar/register/WN_rQ3kQOgSRf6gA7y6mzwSCA. Questions are to be submitted in writing in the webcast portal. CFO Anca Guina will also be present to answer questions. Presentation materials will be available before the start of the event on the company’s website at www.modulight.com/reports-presentations/.