NEXSTIM PLC’S FINANCIAL STATEMENTS BULLETIN 2023

NEXSTIM PLC’S FINANCIAL STATEMENTS BULLETIN 2023




NEXSTIM PLC’S FINANCIAL STATEMENTS BULLETIN 2023

Company announcement, Helsinki 27 February 2024 at 9 am (EET)

NEXSTIM PLC’S FINANCIAL STATEMENTS BULLETIN 2023

NEXSTIM CONTINUED TO GROW COMPARABLE NET SALES WITH A RECORD YEAR-END

July–December 2023

  • The company’s net sales were EUR 4.7 million (2.7), with an increase of 73.5%
  • Comparable net sales increased by 73.5%, to EUR 4.7 million (2.7)
  • EBITDA was EUR 0.6 million (-1.2)
  • The operating result was EUR 0.2 million (-1.5)
  • The profit for the period was EUR 0.1 million (-1.9)
  • Cash flow from operating activities was EUR -0.9 million (-1.4)
  • System sales were EUR 3.0 million (1.3), with an increase of 127.5%. Recurring net sales were EUR 1.8 million (1.4), with an increase of 23.8%

January–December 2023

  • The company’s net sales decreased by 23.9% to EUR 7.2 million (9.5). A one-off license fee of EUR 3.5 million was recorded in the comparative period.
  • The company’s comparable net sales increased by 20.9%, to EUR 7.2 million (6.0).
  • EBITDA was EUR -0.5 million (1.3)
  • The operating result was EUR -1.2 million (0.8)
  • The profit for the period was EUR -1.3 million (1.3)
  • Cash flow from operating activities was EUR -2.3 million (1.0)
  • System sales were EUR 4.1 million (3.1), with an increase of 32.9%. Recurring net sales were EUR 3.2 million (2.9), with an increase of 8.3%
  • The net sales of the Therapy Business decreased by 51.6%, to EUR 3.0 million (6.1). A one-off license fee of EUR 3.5 million was recorded in the comparative period.
  • The net sales of the Diagnostics Business increased by 25.5%, to EUR 4.3 million (3.4).

Business overview

Nexstim is a Finnish medical technology company operating in international markets. Its proprietary navigated Transcranial Magnetic Stimulation (nTMS) technology allows for personalized treatment and diagnostics for patients with challenging brain diseases and disorders. Nexstim provides solutions for non-invasive brain stimulation through diagnostic and therapy applications.

Key performance indicators

(EUR thousand) 7–12/2023

6 months

7–12/2022

6 months

Change, % 1–12/2023 12 months 1–12/2022 12 months Change, %
             
Net sales 4,742.6 2,733.7 73.5% 7,246.3 9,526.7 -23.9%
Gross margin 3,652.6 2,145.7 70.2% 5,645.3 8,285.9 -31.9%
Gross margin, % 77.0% 78.5% 77.9% 87.0%
Adjusted comparable gross margin* 3,652.6 2,145.7 70.2% 5,645.3 4,751.1 18.8%
Adjusted comparable gross margin, % 77.0% 78.5% 77.9% 79.3%
Personnel expenses -2,163.8 -2,333.4 -7.3% -4,429.4 -4,828.8 -8.3%
Other operating expenses -1,608.2 -1,601.4 0.4% -3,091.9 -3,389.0 -8.8%
Operating result 159.3 -1,493.1 -1,227.9 840.3
Profit for the period 115.0 -1,902.6 -1,327.5 1,306.8
Earnings per share** 0.02 -0.28 -0.20 0.20
Diluted earnings per share (EUR)** 0.01 -0.26 -0.17 0.18
             
Cash flow from operating activities -914.0 -1,411.9 -35.3% -2,269.0 1,002.2
Cash in hand and at bank 1,454.6 4,441.3 -67.2% 1,454.6 4,441.3 -67.2%
Total equity 2,836.3 4,068.9 -30.3% 2,836.3 4,068.9 -30.3%
Equity ratio (%) 31.5% 45.4% 31.5% 45.4%

* The gross margin for the period 2022 has been adjusted for the license fee (EUR 3.5 million) for the technology license agreement with Magnus Medical.

Future outlook

Based on business forecasts, the company expects its comparable net sales to grow and operating result to improve in 2024.

Mikko Karvinen, CEO of Nexstim:

The end of 2023 was record-breaking for Nexstim in terms of net sales and operating result. In the second half of 2023, we achieved total net sales of EUR 4.7 (2.7) million with an increase of 73.5%. This growth was driven especially by system sales of EUR 2.3 (0.7) million in the Diagnostics business, with a staggering 230.7% growth year-on-year. With this strong growth, we also achieved an operating profitable second half for the first time, with an operating result of EUR 0.2 (-1.5) million and a net profit of EUR 0.1 (-1.9) million. During the second half of 2023, we continued to focus on projects important to the company’s strategic competitive advantage, such as enabling the company’s future growth and improving cost efficiency through our new global team structures. We also received the first system orders and deliveries for our new NBS 6 system in the US market, demonstrating the strong competitiveness of our system in the world’s largest market. I would like to thank Nexstim’s customers, employees, partners, and investors for making this record-breaking year possible.

In line with our main strategic objective, we have continued to focus on profitable net sales growth, and we were right on track for the full year. To our disappointment we did not achieve our target of a positive EBITDA for the full fiscal year 2023, with a loss of EUR -0.5 (1.3) million. To ensure a positive profitability trend, during H1 2023 we conducted change negotiations in the company as part of the transition to a global team organization, which will in future serve Nexstim’s customers better and more efficiently and deliver long-term shareholder value growth. The therapeutic application areas we have chosen (MDD, major depressive disorder and chronic pain) are indications where our unique technology is already delivering clear clinical results and contributing to the profitability of our customers’ operations. We are also continuing discussions on new strategic partnerships to further scale the use of our technology in care.

For the full year 2023, the company’s net sales decreased by 23.9% to EUR 7.2 million (9.5). The decrease in net sales was due to a one-off license fee of EUR 3.5 million for a technology license agreement included in the net sales for the comparative year. In addition, net sales for the comparative year 2022 also included system orders of approximately EUR 1.0 million received in the Diagnostics and Therapeutics business in the previous year 2021. Despite the decline in full-year net sales, we are pleased with the 20.9% year-on-year increase in comparable net sales and the high level of our comparable sales margin of EUR 5.6 (4.8) million, reflecting the favorable development of our selling prices and the success of key hardware component purchases in the current inflationary environment. We can also be pleased with the savings in operating expenses, which achieved savings of around EUR 0.7 million, or 8%, compared to the previous year.

Diagnostics and Therapeutics business update

We have continued to grow our Diagnostics (NBS) and Therapy (NBT® and NBS 6) businesses with new system sales in our key markets in the US and Europe. This portfolio of system is generating a steady stream of recurring net sales, adding stability and predictability to our operations.

The Diagnostics business grew particularly strongly in H2 2023, with net sales of EUR 3.0 (1.3) million, up 122.3%, and for the full year 2023, with net sales of EUR 4.3 (3.4) million, up 25.5%. For the full year 2023, we delivered a total of 15 new diagnostic systems. On the diagnostics side, more than 230 NBS systems have been sold so far to research universities and leading hospitals around the world. We are pleased that more and more of our customers want to use Nexstim systems for both diagnostic and therapeutic purposes. The NBS System 5 configuration, NBS5+, has enabled diagnostic and therapeutic applications on the same platform. This offering allows the US market to have all FDA 510(k) indications available on the same system. Of the 15 diagnostics systems delivered in 2023, all will have both diagnostic and therapeutic applications. We see the combination platform as a clear competitive advantage and now, in 2024, we want to expand the offering of this platform in the form of the latest generation NBS 6 combination system to key markets worldwide.

Net sales for the therapeutics business increased by 27.4% in H2 2023 to EUR 1.8 (1.4) million. For the full year 2023, net sales for the therapeutics business decreased by 51.6% to EUR 3.0 (6.1) million. The decrease was due to a license sale of approximately EUR 3.5 million to Magnus Medical, Inc. which was recognized in the comparative period. During the full year 2023, we sold a total of 1 new NBT® system and 6 new NBS 6 therapy systems: 6 in North America and 1 in Europe and the rest of the world for use in the treatment of major depressive disorder. On the therapy side, at the end of the first half of 2023, there were a total of 84 Nexstim systems with therapy software installed worldwide (29 in the US and 55 in Europe and the rest of the world) for the treatment of depression and chronic neuropathic pain. This number includes both NBT® and NBS 6 systems and NBS systems with optional NBT add-on software installed.

Nexstim’s cash and cash equivalents as of 31 December 2023 totaled EUR 1.5 million. In addition, thanks to strong sales for the remainder of the year, the Company had current trade receivables of EUR 2.7 million at the end of 2023. With the profitable growth development, we aim to minimize our potential new equity needs.

Strategic focus on growth and profitability

In line with our strategy to the end of 2024, Nexstim will continue to provide patients with personalized and effective treatment and diagnostics for severe brain diseases and disorders. We have already started the process of updating our strategy and we will share more about this as we move forward, but I believe that our strategy will continue to build on strong growth in both diagnostics and therapeutics. The growth and profitability performance of both our Diagnostics and Therapy businesses will play a key role in our efforts to minimize our future capital requirements on our journey towards continued profitability.

In February 2022, we announced the sale of a license for our technology related to Nexstim’s NBT® system to Magnus Medical, Inc. The total value of the agreement was estimated at approximately EUR 17 million, including a five-year royalty period. Magnus Medical has recently provided Nexstim with additional information regarding its first commercial product, which the Company believes creates uncertainty regarding potential 2024 royalty payments. We will continue to monitor the status of the commercialization of Magnus Medical’s product and do not currently estimate to receive any royalty revenue from Magnus Medical during 2024 in our business forecasts.

Our second main strategic objective for 2023 was the launch of the new NBS 6 system, enabling easy-to-use systems and future add-on modules in the same hardware. The development and launch of the new product generation is an essential part of Nexstim’s strategy for the 2020-2024 period. NBS 6 is a new combination system built on Nexstim’s unique, clinically established technology and the modular system concept makes it easy to add new features to existing systems. The new system creates long-term value for Nexstim’s customers and investors alike. The first launch in April-May 2023 was for the therapy applications. Nexstim’s Therapy business markets and sells the NBS System 6, which has FDA marketing and distribution approval for the treatment of MDD in the US. The NBS System 6 is also CE-approved in Europe for use in the treatment of major depression and chronic neuropathic pain. The first NBS 6 systems were successfully delivered to customers in the US in late 2023, and we will continue to develop the product during 2024, with the strategic goal of also launching diagnostic applications as part of the new NBS 6 system.

Our third main strategic objective for 2023 was to expand the network of Nexstim exclusive partner clinics, primarily in the US and Europe. This would involve installing Nexstim systems in neuroscience clinics, following our renewed strategy and working primarily with our partners. The new partnerships will focus on strategic investments in service organizations, particularly in the broad US market.

We are very pleased with the continued collaboration with Dr. Kuluva and his clinic in California. Our joint venture PNC Management Services LLC was the first strategic partnership agreement and for Nexstim, a minority stake in the company was the first practical step in this important strategic development path. We were pleased to announce a second strategic partnership late in the year with Dr. Nadkarni’s clinic in New Jersey, USA. These partnerships will allow us to work even closer to our patients and collect accurate data on the patient population to assist our future development efforts. This data can lead to further development of our clinic business model or the promotion of new indications. The private equity firm set up by Nexstim aims to further expand Nexstim’s network of partner clinics in the US. We look forward to continuing to develop our collaboration with Dr. Kuluva and Dr. Nadkarni’s expert teams, which will allow Nexstim’s TMS technology to treat more patients in the US. We are currently in several collaborative discussions with potential partner clinics in the US and are working hard to attract new partner clinics to grow our network.

Building future growth paths

Our system is clearly differentiated from other TMS systems on the market today that do not have navigation capabilities. In the future, the need for navigation capabilities is likely to become even more important in technologies that could treat brain diseases in an increasingly diverse range of ways. This could open a new market for TMS treatments for Nexstim, distinct from the current treatment of patients with severe depression or chronic neuropathic pain.

Nexstim has successfully expanded its global distribution partner network over the past few years, and we believe that further significant growth, particularly in the Diagnostics business, can be achieved through increasingly broad marketing and distribution partnerships. Through such strategic distribution partnerships, it is possible to cost-effectively reach an increasing number of customers with information about Nexstim’s system and services, as well as potential representation in markets where it would not be as quickly and economically feasible to build on our own. The technological leadership of our products, their ease of use and the scalability of additional modules create an attractive platform for growth through partnerships.

Building shareholder value in exceptional circumstances

Despite the tightening global political situation, our expectations for 2024 are in many ways positive. Nexstim will continue its determined efforts to enable personalized and effective therapies and diagnostics for challenging brain diseases and disorders. We strongly believe that our work will support long-term shareholder value growth through stronger competitive advantages, rapid growth and improved financial results. We remain optimistic about the future but will continue to monitor developments in the global political landscape while advancing our own business.

Nexstim’s business areas

Diagnostics Business

  • Nexstim’s NBS 5 system is the only CE-marked and FDA-cleared non-invasive solution for pre-surgical mapping of the motor cortex in brain cancer. Clinical data has been generated demonstrating the value of Nexstim’s unique navigation system for pre-surgical mapping with regard to patient outcomes.
  • The system allows surgeons to be better prepared and more aggressive with tumor resection, due to their confidence in the location of the motor and speech cortex because of pre-surgical mapping.
  • More than 230 Nexstim diagnostic systems have been sold to research universities and leading hospitals across the world.

Therapy Business

  • Nexstim’s NBT® and NBS 6 systems are based on its unique navigated Transcranial Magnetic Stimulation (nTMS) technology, which allows for personalized, accurate, reproducible, and non-invasive brain stimulation.
  • In May 2018, Nexstim launched its Navigated Brain Therapy (NBT®) system in the United States for the treatment of MDD, following FDA clearance in November 2017.
  • Nexstim launched the NBS 6 system for therapy use in 2023. The NBS 6 is a new generation Nexstim system with a modular system concept that makes it easy to add new features to existing systems.
  • Both NBT® and NBS 6 systems are CE marked for the treatment of major depression and chronic pain, and have FDA approval for the treatment of major depressive disorder (MDD).
  • We have an active commercial installed base of 84 therapy systems across four continents (includes both NBT® and NBS 6 systems and NBS systems with optional NBT® add-on software installed).

Publication of financial information

The annual report for the financial year that ended on 31 December 2023 will be published on 6th March 2024. The company’s half-year report January-June 2024 (H1) will be published on Friday 16th August 2024.

Results briefing on 27 February 2024

The company will hold two webinars for the media, analysts, and investors on Tuesday 27 February 2024. Mikko Karvinen, CEO, and Joonas Juokslahti, CFO, will present the company’s financial and operational results, and will answer questions.

The first live webinar will be in Finnish, starting at 10.30 am (EET). The second webinar will be held in English at 3 pm (EET).

Webinar details:

To attend the webinars, please register via the links below. Registered participants will receive more information via email.

Webinar in Finnish on Tuesday February 27, 2024 at 10:30 am (EET): Sign up here >>
Webinar in English on Tuesday February 27, 2024 at 3:00 pm (EET): Sign up here >>

Helsinki 27/02/2024

Nexstim Plc

Board of Directors

Further information is available on the website www.nexstim.com or by contacting:

Mikko Karvinen, CEO
+358 50 326 4101
mikko.karvinen@nexstim.com

The company’s Certified Advisor is Carnegie Investment Bank AB (publ).

About Nexstim Plc

Nexstim is a Finnish, globally operating growth-oriented medical technology company. Our mission is to enable personalized and effective diagnostics and therapies for challenging brain diseases and disorders.

Nexstim has developed a world-leading non-invasive brain stimulation technology for navigated transcranial magnetic stimulation (nTMS) with highly sophisticated 3D navigation providing accurate and personalized targeting of the TMS to the specific area of the brain.

Nexstim’s Diagnostics Business focuses on commercialization of the Navigated Brain Stimulation (NBS) system. The NBS System 5 is the only FDA cleared and CE marked navigated TMS system for pre-surgical mapping of the speech and motor cortices of the brain.

Nexstim’s Therapy Business markets and sells the NBS System 6 which is FDA cleared for marketing and commercial distribution for the treatment of major depressive disorder (MDD) in the United States. In Europe, the NBS 6 system is CE marked for the treatment of major depression and chronic neuropathic pain.

Nexstim shares are listed on Nasdaq First North Growth Market Finland.
For more information, please visit www.nexstim.com

        

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