Optomed Plc Stock Exchange Release 3 November 2022 at 9.00, Helsinki

 Optomed Plc: Interim report, January - September 2022

• Revenue increased by 10.7 percent to EUR 3.7 (3.3) million.
• Devices segment revenue increased by 45.4 percent to EUR 1.7 (1.2) million. The growth rate of the segment was 40.2% at comparable exchange rates.
• In the Devices segment all sales channels but China came out with a solid performance.
• Software segment revenue decreased by 7.9 percent to EUR 2.0 (2.2) million due to the segment focusing more on R&D.
• EBITDA amounted to EUR 0.1 (-0.3) million corresponding to 3.9 (-10.1) percent of revenue.
• EBITDA was positively affected by a Business Finland loan waiver of 0.84 million related to a closed product development project and negatively affected by an inventory provision of 0.20 million, partly related to the impairment of the terminated product development program.
• EBIT was affected by the impairment of the terminated product development program amounting to EUR 1,0 million to which the loan waiver was also related to.
• On 27 October 2022 Optomed decreased its full year 2022 outlook due to uncertainty in China. The Company now expects its full year 2022 revenue to stay on the same level as in 2021.

January - September 2022
 

• Revenue decreased by 5.8 percent to EUR 10.6 (11.3) million.
• Devices segment revenue decreased by 8.6 percent to EUR 4.1 (4.5) million.
• Software segment revenue decreased by 3.9 percent to EUR 6.5 (6.8) million.
• EBITDA amounted to EUR -1.6 (-0.5) million corresponding to -15.1 (-4.2) percent of revenue.
• Optomed announced the results from the prospective, multi-center clinical trial intended to assess its handheld fundus camera Aurora together with AEYE Health's AI for autonomous detection of more than mild diabetic retinopathy, and the FDA clearance process is proceeding as planned.

EUR, thousand Q3/202 Q3/202 Change, Q1 Q1 Change, 2021
2 1 % -Q3/202 -Q3/202 %
2 1
Revenue 3,700 3,342 10.7% 10,648 11,299 -5.8% 14,850
Gross profit 2,967 2,250 31.8% 7,305 8,151 -10.4% 10,558
*
Gross margin 80.2% 67.3% 68.6% 72.1% 71.1%
% *
EBITDA 145 -337 143.1% -1,604 -475 -238.0% -2,002
EBITDA margin 3.9% -10.1% -15.1% -4.2% -13.5%
*, %
Adjusted 145 -337 143.1% -1,604 -475 -238.0% -2,002
EBITDA *
Adjusted 3.9% -10.1% -15.1% -4.2% -13.5%
EBITDA margin
*, %
Operating -1,411 -888 -58.9% -4,227 -2,598 -62.7% -4,780
result(EBIT)
Operating  -38.1% -26.6% -39.7% -23.0% -32.2%
margin
(EBIT) *, %
Adjusted -1,411 -888 -58.9% -4,227 -2,598 -62.7% -4,780
operating
result(EBIT)
*
Adjusted -38.1% -26.6% -39.7% -23.0% -32.2%
operating
margin (EBIT
margin)
*, %
Net profit/ -1,377 -833 -65.3% -4,075 -2,313 -76.2% -4,249
loss
Earnings per -0.10 -0.06 -56.2% -0.29 -0.17 -66.5% -0.32
share
Cash flow -504 -764 34.0% -2,093 -2,450 14.6% -2,940
from
operating
activities
Net Debt -271 -1,052 -74.3% -271 -1,052 -74.3% 213

Net debt/ 0.1 2.0 0.1 2.0 -0.1
Adjusted
EBITDA (LTM)
Equity ratio  63.3% 62.7% 63.3% 62.7% 58.8%
*
R&D expenses 251 386 -34.8% 850 1,354 -37.3% 1,773
personnel
R&D expenses 124 79 56.5% 480 390 23.1% 511
other
costs
Total R&D 375 465 -19.3% 1,329 1,744 -23.8% 2,284
expenses

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

CEO Review

Revenue started to increase again, significant amount of new sales and marketing recruitments done in the US, the resources are targeted especially at the finalization and market introduction of the Aurora AEYE solution

The revenue of the Devices segment turned back to the strong growth track driven by the Western markets. The increase of market demand for our cameras continued in the OEM channel and in all key market areas but China.

Due to the numerous clinical studies published during the recent years, Optomed Aurora camera is especially in the Western markets identified and recognized clearly as superior compared to competing products which is shown as increasing market demand for the product. This provides us a solid foundation to increase our sales in the coming years. Despite that the handheld fundus cameras are still a very new and relatively small product category in the fundus camera market, the category grows faster than the rest of the market. The revenue of the Software segment declined mainly driven by software resources focusing more on the development of the Aurora AEYE and Avenue Flow solutions. This was reflected as lower project deliveries and sales during the review period. Right now, the key target of the Software segment, and the Optomed Group, is the finalization and market introduction of the Aurora AEYE solution and the other software products under development. As a result, in the near-term future the revenue of the Software segment is expected to be slightly lower than under normal circumstances.

After the promising clinical trial results of the Aurora AEYE product and the new CPT code based on the use of artificial intelligence for screening of more than mild diabetic retinopathy, we have completed major sales and marketing staff recruitments in the US. Further, we expect that the market demand for the standard model of the Optomed Aurora, also without the AI solution, continues to grow strongly. We see that the US is clearly in short, medium, and long term the most significant growth market where we have great chances to succeed. Obtaining an FDA clearance for a medical devices utilizing artificial intelligence requires significant investments and it is hard to predict when the clearance is going to be obtained. Implementing autonomous, diagnostic artificial intelligence system in healthcare settings is very new and each solution is individual. We are working hard together with our partners to obtain the clearance for our Aurora AEYE solution. However, the products that have been cleared by FDA are later on well protected by high quality criteria and market entry barriers. In the end, this is seen as a significant advantage for the companies that are able to obtain a clearance.

The markets in China continued to be weak during the review period. The local lock downs severely affect sales work and in combination with the overall weak economic and market situation in China, and the changed trade policy currently favouring local companies, make it difficult to build new sales channels in the country. We are currently assessing various strategic solutions and partnership possibilities that could help us to leverage an enormous potential of the Chinese market. The need for Optomed's products is still huge in China in the long term.

The market introduction of other products, such as the Devices segment's new product under development, is postponed until next year, as the Company focuses on supporting the finalization, approval processes and market introduction of the Aurora AEYE product and Avenue Flow software solutions. We believe that the overall market environment and, consequently, the market demand for Optomed's products will develop positively in the near-term future. As a result of the positive clinical trial results received in the beginning of the year, the growth in the Western markets, and the strengthened US sales team, I believe the Company is in many ways in significantly more advanced situation than in the beginning of the year. Due to our limited resources, we continue to focus even more strongly on the strategic key target of advancing the FDA clearance process of the Aurora AEYE solution. During this phase, we will limit our other investments outside the US.

Seppo Kopsala

CEO

Outlook 2022

Optomed expects its full year 2022 revenue to stay on the same level as in 2021.

Telephone conference

A telephone conference for analysts, investors and media will be arranged on 3 November 2022 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 469 153 727#.

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

July - September2022

In July-September 2022, Group revenue increased by 10.7 percent to EUR 3,700 (3,342) thousand. The increase was driven by strong Devices segment sales. All sales channels but China came out with a solid performance. China is still affected by various lockdowns and the revenue from the channel was very low. Optomed is currently assessing strategic rebuilding alternatives in China. Software segment's revenue declined due to the decision to focus software resources on inhouse product development related to Optomed Aurora AEYE and Avenue Flow.

The gross margin increased to 80.2 from 67.3 percent of last year. Business Finland waived a loan of the Company in the amount of EUR 841 thousand related to a closed product development project in Q3 which significantly boosted the gross margin. The gross margin for the third quarter of 2022 adjusted for grants and other operating income would have been 57.4 per cent compared to the normalized 65.9 percent in 2021. The comparison period gross margin was supported by a grant of EUR 48 thousand. The remaining difference is explained by a lower share of Software Segment revenue where the gross margin is normally higher than in the Devices Segment.

EBITDA was EUR 145 (-337) thousand. The increase was mainly driven by the loan waiver, however, the staff costs increased especially in the US. EBIT was affected by the impairment of the terminated product development program amounting to EUR 1,040 thousand to which the loan waiver was also related to.

Net financial items amounted to EUR 15 (36) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB and USD to EUR.

January - September 2022

In January-September 2022, Group revenue decreased by 5.8 percent to EUR 10,648 (11,299) thousand. The Devices segment's revenue decreased by 8.6 percent and the Software segment's revenue decreased by 3.9 percent. In February, Optomed announced the results from the prospective, multi-center clinical trial intended to assess its handheld fundus camera Aurora together with AEYE Health's AI for autonomous detection of more than mild diabetic retinopathy, and the FDA clearance process is proceeding as planned.

The gross margin decreased to 68.6 percent from 72.1 percent last year. In January-September the Company's other operating income includes governmental grants of EUR 879 (753) thousand, which increased the gross margin of both periods. The gross margin for the period adjusted for the total amount of the grants and other operating income would have been 60.4 percent compared to 65.5 percent in 2021.

EBITDA amounted to EUR -1,604 (-475) thousand and EBIT was EUR -4,227 (-2,598) thousand.

Net financial items amounted to EUR 92 (226) thousand and consisted mainly of interest payments to financial institutions and the translation effect of Chinese RMB and USD to EUR.

Cash flow and financial position

In July-September 2022, the cash flow from operating activities amounted to EUR -504 (-764) thousand. Net cash used in investing activities was EUR -797 (-646) thousand and relates to capitalized development expenses. Net cash from financing activities amounted to EUR -172 (1,404).

Consolidated cash and cash equivalents at the end of the period amounted to EUR 5,668 (7,827) thousand. Interest-bearing net debt totalled EUR -271 (-1,052) thousand at the end of the period.

Net working capital was EUR 4,138 (5,298) thousand at the end of the period.

In January-September 2022, the cash flow from operating activities amounted to EUR -2,093 (-2,450) thousand. Net cash used in investing activities was EUR -2,471 (-1,691) thousand and relates to capitalized development expenses. Net cash from financing activities amounted to EUR 3,380 (1,347). Optomed completed a directed share issue consisting of 1,397,853 shares and collected net proceeds of approximately EUR 4.8 million in May 2022.
 

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 Q3/202 Q3/202 Change, Q1 Q1-Q3/2021 Change, % 2021
2 1 % -Q3/20
22
Revenue 1,697 1,167 45.4% 4,122 4,510 -8.6% 5,839
Gross profit * 1,592 722 120.5% 2,875 3,375 -14.8% 4,139
Gross margin% 93.8% 61.9% 69.7% 74.8% 70.9%
*
EBITDA 546 -178 405.9% -417 184 -326.8% -1,014
EBITDA margin 32.2% -15.3% -10.1% 4.1% -17.4%
*, %
Operating -844 -577 -46.2% -2,550 -1,484 -71.8% -3,182
result (EBIT)
Operating -49.7% -49.5% -61.9% -32.9% -54.5%
margin (EBIT)
*, %

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

July-September 2022

In July-September 2022, the Devices segment revenue increased by 45.4 percent to EUR 1,697 (1,167) thousand. All sales channels grew. However, in China the market remained muted. The distributor channel won a promising case in Egypt. Overall, the OEM channel grew significantly as some of the OEM clients were very active.

The growth continued also in the US.

The gross margin was 93.8 (61.9) per cent and it was positively affected by a Business Finland loan waiver of 841 (48) thousand, and negatively affected by an inventory provision of 200 thousand, partly related to the loan waiver. The gross margin without the waiver and the inventory provision would have been 56.0 per cent.  The comparison period gross margin without the other operating income would have been 57.8 per cent.

EBITDA was EUR 546 (-178) thousand or 32.2 (-15.3) percent of revenue. While the increase in EBITDA was mainly driven by the loan waiver, operating expenses increased in the US compared to the previous year due to the significant staff increases.

January-September 2022

In January-September 2022, the Devices segment revenue decreased by 8.6 percent to EUR 4,122 (4,510) thousand.

The gross margin decreased to 69.7 percent from 74.8 percent in the previous year. The first nine months' gross margin adjusted for other operating income would have been 48.4 (58.1) percent. EBITDA was EUR -417 (184) thousand or -10.1 (4.1) 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 Q3/202 Q3/202 Change, Q1 Q1-Q3/2021 Change, % 2021
2 1 % -Q3/20
22
Revenue 2,003 2,176 -7.9% 6,525 6,789 -3.9% 9,011
Gross profit * 1,374 1,528 -10.1% 4,430 4,776 -7.2% 6,420
Gross margin% 68.6% 70.3% 67.9% 70.4% 71.2%
*
EBITDA 475 551 -13.8% 1,373 1,339 2.6% 1,855
EBITDA margin 23.7% 25.3% 21.0% 19.7% 20.6%
*, %
Operating 310 399 -22.3% 890 884 0.6% 1,247
result (EBIT)
Operating 15.5% 18.3% 13.6% 13.0% 13.8%
margin (EBIT)
*, %

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

July - September 2022

In July-September 2022, The Software segment revenue decreased by 7.9 percent to EUR 2,003 (2,176) thousand. Gross margin was 68.6 (70.3) per cent. EBITDA was EUR 475 (551) thousand or 23.7 (25.3) percent of revenue.

The segment has been focusing more on R&D work related to Avenue Flow and Optomed Aurora AEYE. This has a negative short-term effect on both revenue and profitability.

January - September 2022

In January-September 2022, the Software segment revenue decreased by 3.9 percent to EUR 6,525 (6,789) thousand, EBITDA was EUR 1,373 (1,339) thousand or 21.0 (19.7) percent of revenue.

Group-wide expenses

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

July - September 2022

Group-wide operating expenses amounted to EUR 875 (710) thousand. The key driver for the increase were the increased marketing investments.

January - September 2022

Group-wide operating expenses amounted to EUR 2,560 (1,998) thousand.

Personnel

Number of personnel at the end of the reporting period.

9/2022 9/2021
Devices 54 49
Software 42 42
Group common 24 27
Total 120 118

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 2021 is available on the company website www.optomed.com/investors/.

Annual General Meeting

On 10 May 2022, Optomed held its Annual General Meeting (AGM) that adopted the financial statements for the financial period ended on 31 December 2021 and the remuneration report for governing bodies and discharged the members of the Board of Directors and the CEO from liability for the financial period ended on 31 December 2021. The AGM resolved that no dividend will be paid for the year 2021.

The number of members of the Board of Directors was confirmed as five. Xisi Guo, Seppo Mäkinen, Petri Salonen, Reijo Tauriainen and Anna Tenstam were re-elected as 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 AGM decided to 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 Tapio Raappana will continue as the auditor with principal responsibility.

The Annual General Meeting resolved in accordance with the Board's proposal to amend Section II.2.3 of Stock Option Plan 2017B to extend the subscription period for shares by two (2) years, so that the subscription period pursuant to all option rights granted under Stock Option Plan 2017B will end on 1 July 2024.

The 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 1,400,314 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 General Meeting authorized the Board of Directors to decide on the issuance of shares as well as the issuance of option rights 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 1,400,314. 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.  
 

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)

       Seppo Mäkinen

       Anna Tenstam

Remuneration Committee:

       Seppo Mäkinen (Chairman)

       Reijo Tauriainen

       Anna Tenstam

Extraordinary General Meeting

On 6 September 2022, the Company organized an Extraordinary General Meeting as Board member Xisi Guo decided to leave the Board of Directors of Optomed on 19 August 2022. The Extraordinary General Meeting elected Mr. Mars Duan to the Board of Directors of the Company. Mars Duan is independent of the Company and dependent of a major shareholder.

The Board of Directors of Optomed Plc currently consists of the following persons: the Chairman Petri Salonen, Mars Duan, Seppo Mäkinen, Reijo Tauriainen and Anna Tenstam.

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 15,400,997 shares and the Company held 374,566 shares in the treasury which approximately corresponds to 2.4 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/.

Directed share issue

Optomed completed a directed share issue consisting of 1,397,853 shares and collected gross proceeds of approximately EUR 4.8 million in May 2022. The main purpose of the share issue was to ensure sufficient financing for the implementation of the Company's growth strategy especially in the US diabetic retinopathy screening market and to strengthen its balance sheet. The subscription price was EUR 3.45 per share corresponding to a discount of approximately 6.76 per cent to the closing price of the Company's share on 5 May 2022. The subscription price was credited in full to the Company's reserve for invested unrestricted equity. The investors include institutional and qualified investors with past experience and expertise in the medical devices sector (such as Joensuun Kauppa & Kone Oy, Timo Syrjälä, Markku Kaloniemi, Berenberg funds and SP funds), which the Company expects to support the Company's strategy and demonstrate the Company's attractive position in the market. The new shares were registered in the Finnish Trade Register and trading in the new shares together with the existing shares commenced on Nasdaq Helsinki Ltd on 10 May 2022.

Risks and uncertainties

The key risks and uncertainties are described in the Company's annual report 2021 which was published on 4 March 2022. The complete report is available at https://www.optomed.com/investors/. The risk position of Optomed has not changed since then.

Other events

On 16. August.2022 Optomed announced that Optomed's board of directors has resolved upon a new option plan. The resolution is based on the authorization given by the general meeting of 10 May 2022. The total number of options of Option Plan 2022A is 250,000 and each option entitled to one share of the company. The options are offered to certain key employees. The purpose of the plan is to retain and incentivize key employees.  The subscription price is EUR 4.17 corresponding the closing price of 12 August 2022, and the subscription period is 1 January 2026 - 31 December 2027. The theoretical market value of one option under the plan 2022A is approximately EUR 1.771 per stock option and the theoretical total market value of the plan 2022A is approximately 442,750.00 euros in total. The theoretical market value of a stock option has been calculated by using the Black & Scholes stock option pricing model with the following input factors: share price EUR 4.04 euros, subscription price EUR 4.17, risk free interest rate 0.0%, validity of stock options approximately 3.4 years and volatility 64.07%.

• Vesa Vanha-Honko, OP funds
• Markus Lindqvist, Aktia funds
• Keith Bonnici, Finnish Industry Investment Ltd

Petri Salonen, Chairman of Optomed's Board of Directors, will serve as the Nomination Board's expert member.
 

Audit review

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

• 17 February 2023 Financial Statement Bulletin for 1 January - 31 December 2022

• 5 May 2023 Interim Report for 1 January - 31 March 2023

• 4 August 2023 Half-Year Financial Report for 1 January - 30 June 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: sakari.knuutti@optomed.com 

Seppo Kopsala, CEO

Tel.: +358 40 555 1050

E-mail:  seppo.kopsala@optomed.com

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 Definition
Performance
Measures
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 Operating
result result
excluding items
affecting
comparability
Adjusted operating Adjusted
margin, % operating
result /
Revenue
Adjusted EBITDA EBITDA
excluding items
affecting
comparability
Adjusted EBITDA Adjusted EBITDA
margin, % / Revenue
Items affecting Material items
comparability 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 Net Debt /
EBITDA (LTM), times 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 Q3/2022 Q3/2021 Q1-Q3/2022 Q1-Q3/2021  2021
of euro
Revenue 3,700 3,342 10,648 11,299 14,850
Other 842 48 879 753 810
operating
income
Materials and -1,576 -1,140 -4,221 -3,901 -5,102
services
Employee -2,083 -1,849 -6,449 -6,254 -8,702
benefit
expenses
Depreciation, -1,557 -551 -2,622 -2,123 -2,778
amortization
and
Impairment
losses
Other -739 -738 -2,460 -2,372 -3,858
operating
expenses
Operating -1,411 -888 -4,227 -2,598 -4,780
result

Finance 145 88 563 374 715
income
Finance -130 -53 -471 -148 -263
expenses
Net finance 15 36 92 226 453
expenses

Profit (loss) -1,397 -853 -4,135 -2,372 -4,327
before
income taxes

Income tax 20 20 59 58 78
expense

Loss for the -1,377 -833 -4,075 -2,313 -4,249
period
Loss for the
period
attributable
to
Owners of the -1,377 -833 -4,075 -2,313 -4,249
parent
company
Loss per
share
attributable
to owners
of
the parent
company
Weighted 14,180,928 13,399,424 14,180,928 13,399,424 13,441,437
average
number
of shares
Basic loss -0.10 -0.06 -0.29 -0.17 -0.32
per share
(euro)

Consolidated condensed comprehensive income statement

In thousands of euro Q3/202 Q3/20 Q1 Q1-Q3/2021 2021
2 21 -Q3/20
22
Loss for the period -1,377 -833 -4,075 -2,313 -4,249

Other comprehensive income
Foreign currency translation -21 -55 -141 -189 -253
difference
Other comprehensive income, net of -21 -55 -141 -189 -253
tax
Total comprehensive loss -1,398 -888 -4,216 -2,502 -4,502
attributable to Owners of the
parent company

Consolidated balance sheet

In thousands September 30, 2022 September 30, 2021 Dec 31, 2021
of euro
ASSETS
Non-current
assets
Goodwill  4,256  4,256  4,256
Development  6,287  5,735  6,338
costs
Customer  1,220  1,441  1,386
relationships
Technology  560  662  636
Other  360  434  358
intangible
assets
Total  12,683  12,528  12,975
intangible
assets
Tangible  932  447  433
assets
Right-of-use  920  888  1,205
assets
Deferred tax  15  12  13
assets
Total non  14,549  13,875  14,626
-current
assets
Current
assets
Inventories 2,833  2,902  2,936
Trade and 4,782  5,454 4,631
other
receivables
Cash and cash  5,668  7,827  6,804
equivalents
Total current  13,283  16,183  14,371
assets

Total assets  27,832  30,058  28,998

In thousands of euro September 30, 2022 September 30, 2021 Dec 31, 2021
EQUITY
Share capital  80  80  80
Share premium  504  504  504
Reserve for invested  43,137  38,377  38,526
non-restricted equity
Translation -228 -23 -88
differences
Retained earnings -21,803 -17,775 -17,721
Profit (loss) for the -4,075 -2,313 -4,249
financial year
Total equity  17,613  18,850  17,052
LIABILITIES
Non-current
liabilities
Borrowings from  3,579  3,857  3,813
financial
institutions
Government loans  1,030  2,064  1,940
Lease liabilities  538  511  818
Deferred tax  406  482  463
liabilities
Total Non-current  5,553  6,915  7,034
liabilities

Current liabilities
Borrowings from  596  661  1,071
financial
institutions
Government loans  193  193  193
Lease liabilities  400  382  396
Trade and other  3,477  3,058 3,252
payables
Total current  4,666  4,293  4,912
liabilities

Total liabilities  10,218  11,208  11,946

Total equity and  27,832  30,058  28,998
liabilities

Consolidated statement of changes in shareholders' equity

Equity
attributable
to
owners
of the parent
company
In thousands Share Share Reserve Translation Retained Total
of euro capital premium for differences earnings
invested
non
-restricted
equity

Balance at 80 504 38,526 -88 -21,970 17,052
January 1,
2022
Comprehensive
income
Loss for the -4,075 -4,075
period
Other
comprehensive
income
Translation -141 -141
differences
Total -141 -4,075 -4,216
comprehensive
income for
the period
Share issue 4,611 4,611
Share options 167 167
Total 4,611 167 4,778
transactions
with owners
of the
company
Other 0
adjustments
Balance at 80 504 43,137 -228 -25,878 17,613
September
30, 2022

Equity
attributable
to
owners of the
parent
company
In thousands Share Share Reserve Translation Retained Total
of capital premium for differences earnings
euro invested
non
-restricted
equity

Balance at 80 504 37,470 166 -18,147 20,073
January 1,
2021
Comprehensive
income
Loss for the -2,313 -2,313
period
Other
comprehensive
income
Translation -189 -189
differences
Total -189 -2,313 -2,502
comprehensive
income
for the
period
Share issue  0
Share options  907 286 1,193
Total 907 286 1,193
transactions
with owners
of the
company
Other 86 86
adjustments
Balance at 80 504 38,377 -23 -20,088 18,850
September 30,
2021

Equity
attributable
to
owners of the
parent
company
In thousands Share Share Reserve Translation Retained Total
of euro capital premium for differences earnings
invested
non
-restricted
equity

Balance at 80 504 37,470 166 -18,147 20,073
January 1,
2021
Comprehensive
income
Loss for the -4,249 -4,249
period
Other
comprehensive
income
Translation -253 -253
differences
Total -253 -4,249 -4,502
comprehensive
income for
the period
Share issue 0 
Share options  1,055 340 1,395
Total 1,055 340 1,395
transactions
with owners
of the
company
Other 86 86
adjustments
Balance at 80 504 38,526 -88 -21,970 17,052
December
31, 2021

Consolidated cash flow statement

In thousands of euro Q3/202 Q3/202 Q1 Q1 2021
2 1 -Q3/20 -Q3/202
22 1
Cash flows from operating activities
Loss for the financial year -1,377 -833 -4,075 -2,313 -4,249

Adjustments:
Depreciation, amortization and 1,557 551 2,622 2,123 2,689
impairment

losses
Finance income and finance expenses 37 -65 0 -266 -472
Other adjustments -782 140 -752 -217 454
Cash flows before change in net -565 -207 -2,204 -673 -1,579
working capital
Change in net working capital:
Change in trade and other receivables 496 42 64 -1,662 -1,409

(increase (-) / decrease (+))
Change in inventories 345 -332 159 -327 -340

(increase (-) / decrease (+))
Change in trade and other payables -725 -250 20 288 516

(increase (+) / decrease (-))
Cash flows before finance items -449 -748 -1,962 -2,373 -2,811

Interest paid -38 -9 -60 -39 -66
Other finance expenses paid -17 -7 -72 -39 -64
Interest received 0 0 0 1 1
Net cash from operating activities (A) -504 -764 -2,093 -2,450 -2,940

Cash flows from investing activities
Capitalization of development expenses -449 -443 -1,729 -1,324 -2,112

Acquisition of tangible assets -349 -202 -742 -367 -462
Net cash used in investing activities -797 -646 -2,471 -1,691 -2,574
(B)
Cash flows from financing activities
Proceeds from share subscriptions 7 501 4,952 864 1,012
Share issue transaction costs 0 0 -382 0 0
Proceeds from loans and borrowings 0 1,000 0 1,000 1,366
Repayment of loans and borrowings -73 0 -880 -203 -327
Repayment of lease liabilities -106 -98 -310 -314 -414
Net cash from financing activities (C) -172 1,404 3,380 1,347 1,637
Net cash from (used in) operating, -1,473 -5 -1,184 -2,794 -3,876
investing and financing activities
(A+B+C)

Cash and cash equivalents at beginning 7,079 7,818 6,804 10,608 10,608
of period
Effect of movements in exchange rate 63 13 48 13 73
on cash held
Cash and cash equivalents at end of 5,668 7,827 5,668 7,827 6,804
period

*Comparison figures for 2021 numbers have been corrected in Operating activities category.

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, 2022.

All presented figures have been rounded. Financial ratios have been calculated using exact figures.

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting, although not all requirements of IAS 34 Interim Financial Reporting have been followed. This interim financial statement should be read in conjunction with Group`s last annual consolidated financial statements as at and for the year ended 31 December 2021. This Interim financial statements do not include all of the information required for a complete set of IFRS financial statements: 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.

Reportable segments

Q3/2022

In thousands of euro Devices Software Group Admin Total
External revenue  1,697  2,003 0  3,700
Net operating expenses -105 -629 0 -734
Margin 1,592 1,374 0  2,967
Depreciation and amortization -1,390 -165 -2 -1,557
Other expenses -1,046 -900 -875 -2,821
Operating result -844 310 -877 -1,411
Finance items 0 0 15 15
Loss before tax expense -844 310 -863 -1,397

Q3/2021

In thousands of euro Devices Software Group Admin Total
External revenue  1,167  2,176 0  3,342
Net operating expenses -445 -647 0 -1,092
Margin 722 1,528 0  2,250
Depreciation and amortization -399 -152 -1 -551
Other expenses -900 -978 -709 -2,587
Operating result -577 399 -710 -888
Finance items 0 0 36 36
Loss before tax expense -577 399 -674 -853

Q1-Q3/2022

In thousands of euro Devices Software Group Admin Total

External revenue  4,122  6,525 0  10,648
Net operating expenses -1,248 -2,095 0 -3,342
Margin 2,875 4,430 0  7,305
Depreciation and amortization -2,133 -483 -6 -2,622
Other expenses -3,292 -3,057 -2,560 -8,909
Operating result -2,550 890 -2,566 -4,227
Finance items 0 0 92 92
Loss before tax expense -2,550 890 -2,474 -4,135

Q1-Q3/2021

In thousands of euro Devices Software Group Admin Total

External revenue  4,510  6,789 0  11,299
Net operating expenses -1,135 -2,012 0 -3,147
Margin 3,375 4,776 0  8,151
Depreciation and amortization -1,668 -455 -1 -2,123
Other expenses -3,191 -3,437 -1,997 -8,626
Operating result -1,484 884 -1,998 -2,598
Finance items 0 0 226 226
Loss before tax expense -1,484 884 -1,772 -2,372

In thousands of euro Devices Software Group Admin Group
External revenue  5,839  9,011 0  14,850
Net operating expenses -1,700 -2,592 0 -4,292
Margin 4,139 6,420 0  10,558
Depreciation and amortization -2,168 -608 -2 -2,778
Other expenses -5,153 -4,565 -2,843 -12,561
Operating result -3,182 1,247 -2,844 -4,780
Finance items 0 0 453 453
Loss before tax expense -3,182 1,247 -2,392 -4,327

2021

Other operating income
 

In thousands of euro Q3/2022 Q3/2021 Q1-Q3/2022 Q1-Q3/2021 2021
Other operating income 842 48 879 753 810
Total 842 48 879 753 810

Other operating income consist of Business Finland waived loan (841 thousand), received grants and profit from sales of fixed assets. During the financial years 2021-2022 Optomed has received government grants from various organizations, such as Business Finland.

Other operating expenses
 

Other operating expenses Q3 2022 Q3 2021 Q1-Q3 2022 Q1-Q3 2021 2021

Sales and marketing -200 -164 -578 -445 -674
Research and development -36 -28 -298 -388 -412
General and administration -503 -546 -1,584 -1,539 -2,772
Total operating expenses -739 -738 -2,460 -2,372 -3,858

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

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. Planned schedule was renegotiated in July.

In thousands of euro Gross carrying amount Weighted av. Loss

loss rate% allowance

At September 30, 2022
Current (not past due)                 1,572   0.5% 8
Past due
1-30 days                    144   1.5% 2
31-60 days                    135   4% 5
61-90 days                      12   9% 1
More than 90 days past due                      37   12% 4
Specific loss allowance                 2,211   30% 663
Total                 4,112    684

In thousands of euro Gross carrying amount Weighted av. Loss

loss rate% allowance

At December 31, 2021
Current (not past due)  1,143 0.5% 6
Past due
1-30 days  67 1.5% 1
31-60 days  10 4% 0
61-90 days  2 9% 0
More than 90 days past due  40 12% 5
Specific loss allowance  2,382 30% 715
Total  3,644  727

Financial liabilities

In thousands of euro  30.9.2022  30.9.2021  31.12.2021 

Non-current financial liabilities 
Borrowings from financial institutions  3,579 3,857 3,813
Government loans  1,030 2,064 1,940
Lease liabilities  538 511 818
Total  5,147 6,433 6,571

Current financial liabilities 
Borrowings from financial institutions  596 661 1,071
Government loans  193 193 193
Lease liabilities  400 382 396
Trade payables  1,004 928 944
Total  2,193 2,164 2,604
  
Total financial liabilities  7,340 8,596 9,175

Business Finland loan amount of 841 thousand was waived during the Q3 2022.

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. This estimate corresponds to the fair value hierarchy Level 3, as the measurement of the said liabilities is based on Optomed management view.

Events after the review period

No material events after the reporting period.