Modulight Corporation, Company Release, 20 October 2022 at 8.00 A.M. Finnish Time

This release is a summary of Modulight’s business review for January–September 2022. The complete report is attached to this release.

Highlights in July–September 2022

  • Modulight continued to execute the growth strategy and invest in increasing its production capacity and improving other capabilities to realize the company’s long-term potential.
  • Significant progress in the R&D project pipeline including opportunities to accelerate the pay per treatment cloud strategy in the short term.
  • The total number of projects remained 26 (26 in the second quarter of 2022).
  • Customer development projects continue to be affected by COVID-19 related delays and shortages in component availability.
  • Revenue was EUR 1,232 (2,137) thousand. Revenue decline was driven by the uncertainty in the business environment. 
  • EBITDA was EUR -1,342 (1,025) thousand. Profitability was impacted by low revenue and growth strategy implementation.
  • Operating result (EBIT) was EUR -1,812 (716) thousand.
  • Operating result (EBIT) margin was -147 (33.5) % of revenue.

Highlights in January–September 2022

  • Revenue was EUR 3,331 (6,697) thousand.
  • EBITDA was EUR -3,936 (4,183) thousand.
  • Operating result (EBIT) was EUR -5,292 (3,321) thousand.
  • Operating result (EBIT) margin was -158.9 (49.6) % of revenue.

(The figures in brackets refer to the corresponding period of the previous year. This business review is unaudited.)

Outlook for 2022
Modulight has not issued guidance for revenue or profitability in 2022. 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 2022. However, we expect that changes in the operating environment caused by COVID-19 restrictions as well as macroeconomic and geopolitical uncertainty still impact our financial performance in the short term.

Webcast
Modulight's CEO Seppo Orsila will present the result in an English-language webcast, which will be held on October 20, 2022, at 10:30 a.m. EEST. The broadcast can be followed at https://modulight.videosync.fi/q3-2022-results. 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/.

Seppo Orsila, CEO
During the third quarter, we made significant progress with projects in our R&D pipeline including the cloud strategy, continued to execute our growth strategy by investing in production capacity and increased sales visits and marketing activities.
After having been affected by restrictions for a long period of time, we have now been able to travel and visit U.S. customers and clinics every week last month. We also held a record number of exhibits in the U.S., where the number of visitors is far below the pre-COVID era but has clearly increased from the spring. All this has benefited the dialogue with both existing and new customers and as a result, we have made significant progress in our R&D project pipeline, including the identification of promising opportunities to accelerate our pay per treatment cloud strategy in the short term.
During the quarter, the component availability eased somewhat, and we were able to send the deliveries that were delayed in the second quarter. Our revenue in the third quarter was EUR 1,232 million (EUR 2,137) and our EBITDA was EUR -1,342 (1,025).
The most important indicator of our strategic performance, the product development pipeline, remained solid with 26 projects. There are a few large projects in the pipeline that have progressed well, and we were happy to start a new parallel project with an existing customer during the third quarter. Other highlights of the quarter include the good progress of our bladder cancer study with the first patient being treated with our laser, as well as positive development in an FDA audit related to a major project with a leading customer in ophthalmology.
During the quarter, our patent application in the field of remote monitoring and configuring a cloud-based medical device was approved in the U.S. This follows the patent we were granted last year also in the area of remote-controlled medical devices. Additionally, we filed one new patent application during the third quarter in the field of fluorescence imaging. We expect to continue filing other important patent applications this and next year.
The aftermath of COVID-19 still continues to affect us as the restrictions on travelling and site visits slowed down our customers’ research projects and our sales efforts for a long period of time. However, during the third quarter, we were already able to increase our sales and marketing activities despite the remaining restrictions. As our sales cycles are long, we expect that our efforts will support our development in the medium term. Additionally, Russia’s war on Ukraine continues to cause uncertainty in our business environment.
Thanks to our strong balance sheet we have been able to continue the implementation of our strategy and to keep on investing both in people and in equipment. During the quarter, we also celebrated our one millionth entity manufactured. Additionally, I was happy to see that the results of our Employee Satisfaction Survey were again very positive, despite our team’s fast growth and challenging financial performance this year.
In addition to several customer visits, we were also very actively participating in important marketing events. During the quarter we also announced that we were trusted to organize a prestigious congress in the photodynamic field in Tampere, Finland in July next year.  Moreover, we were invited as the first Finnish company to join the Quantum Economic Development Consortium (QED-C) to further support quantum ecosystem initiatives in the U.S. In my opinion, these signify the great appreciation of our stakeholders towards us and our long-term partnership with many of the leading researchers in the field.
We firmly believe that our long-term success is based on our unique technology, and all customer feedback we have received implies that they appreciate our technology and knowhow. This is also very visible in our projects, where customers are increasingly interested in the opportunity provided by our cloud-based services. We are confident that in the long term, we can achieve our financial targets of maintaining our high-rate revenue growth and high degree of profitability. We are currently reviewing our strategy and updating especially the go-to-market strategy. The updates will be announced later this year.

Key figures 1) 

Group
EUR 1,000 unless otherwise noted
7-9/20227-9/20211-9/20221-9/20212021 2)
Revenue1,2322,1373,3316,6979,071
EBITDA-1,3421,025-3,9364,183461
EBITDA-%-108.9%48.0%-118.2%62.5%5.1%
Operating result (EBIT)-1,812716-5,2923,321-753
Operating result (EBIT) margin %-147.1%33.5%-158.9%49.6%-8.3%
Earnings for the period-1,948-2,843-6,318-821-5,061
Earnings per share (EPS, EUR)-0.05-0.09-0.15-0.03-0.15
Acquisition of fixed and intangible assets-3,670-3,088-8,834-6,277-9,617
Free cash flow from operating activities-5,012-2,062-12,770-2,093-9,156
Cash and cash equivalents 3)48,00560,22848,00560,22862,978
Net debt3)-39,451-51,269-39,451-51,269-53,415
Gearing ratio 3)-56.5%-74.8%-56.5%-74.8%-70.1%
Equity ratio 3)85.8%80.3%85.8%80.3%87.0%
Headcount (FTE) 3)6156615652

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

Events after the reporting period
There have been no significant events since the review period.

Financial reporting in 2023
Modulight will publish the financial reporting schedule for 2023 in December 2022.

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