Prior to publication, the information contained within this announcement was deemed by Deltex Medical Group PLC to constitute inside information as stipulated under the UK Market Abuse Regulation

23 September 2024

Deltex Medical Group plc

("Deltex Medical" or the "Group")

Interim results to 30 June 2024

Deltex Medical Group plc (AIM: DEMG), the global leader in oesophageal Doppler monitoring, today announces its unaudited interim results for the six months ended 30 June 2024 ("H1 2024" or the "Period").

HIGHLIGHTS

Financial

§ Unaudited revenue for H1 2024 was flat at £1.1 million (H1 2023: £1.1 million), on substantially lower cash-adjusted overheads

§ 39% reduction in sales and marketing costs during the Period to £259,000 (H1 2023: £425,000)

§ Cash-adjusted overheads in the Period reduced by 35% to £1.0 million (H1 2023: £1.5 million)

§ Significantly improved adjusted EBITDA loss of £274,000 (H1 2023: loss of £361,000)

§ Cash at hand on 30 June 2024 was £326,000 (H1 2023: £107,000)

Business / commercial activities

§ Quotations growing for the new TrueVue monitor - with orders beginning to climb, particularly from overseas territories

§ Encouraging levels of orders for the previous version of the Group's monitor

§ 14% increase in sales of single-use probes in the International division

§ Opportunities for direct sales of Deltex Medical's technology into the UK appear to be increasing

§ Ongoing research work carried out for the new, novel non-invasive device during the Period

§ Natalie Wettler, current Group Finance Director, promoted to also be the Chief Operating Officer, reflecting her increased involvement in the operational management of the Group in 2024. While Natalie Wettler will maintain her finance responsibilities, this will enable the CEO, Andy Mears, to spend more time marketing and selling the new TrueVue monitor, particularly in overseas territories

Nigel Keen, Chairman of Deltex Medical, said:

"The new TrueVue monitor is beginning to show signs of traction, particularly in a number of overseas territories, although the timing of orders remains difficult to predict."

"The prospects for the new, novel non-invasive device remains exciting and we are encouraged by the results of the research carried out in the Period."

"The Board is pleased that Natalie Wettler - the Group's Finance Director - has accepted an additional role as Chief Operating Officer. This will enable Andy Mears, the CEO, to spend more time driving sales of the new TrueVue monitor, particularly into overseas territories where we are seeing increasing demand."

For further information, please contact:

Notes for Editors

Deltex Medical's technology

Deltex Medical's TrueVue System uses proprietary haemodynamic monitoring technology to assist clinicians to improve outcomes for patients as well as increase throughput and capacity for hospitals.

Deltex Medical has invested over the long term to build a unique body of peer-reviewed, published evidence from a substantial number of trials carried out around the world. These studies demonstrate statistically significant improvements in clinical outcomes providing benefits both to patients and to the hospital systems by increasing patient throughput and expanding hospital capacity.

The Group's flagship, world-leading, ultrasound-based oesophageal doppler monitoring ("ODM") is supported by 24 randomised control trials conducted on anaesthetised patients. As a result, the primary application for ODM is focussed on guiding therapy for patients undergoing elective surgery, although sedated patients in intensive care are still an important part of our business. The Group's new, next generation monitor makes the use of the ODM technology more intuitive and provides augmented data on the status of each patient.

Deltex Medical's engineers and scientists carried out successful research in conjunction with the UK's National Physical Laboratory ("NPL"), which has enabled the Group's 'gold standard' ODM technology to be extended and developed so that it can be used completely non-invasively. This will significantly expand the application of Deltex Medical's technology to non-sedated patients. This new technological enhancement, which will be released on the new next generation monitor, will substantially increase the addressable market for the Group's haemodynamic monitoring technologies and is complementary to the long-established ODM evidence base.

Deltex Medical's new non-invasive technology has potential applications for use in a number of healthcare settings, including:

§ Accident & Emergency for the rapid triage of patients, including the detection and diagnosis of sepsis;

§ in general wards to help facilitate a real-time, data-driven treatment regime for patients whose condition might deteriorate rapidly; and

§ in critical care units to allow regular monitoring of patients post-surgery who are no longer sedated or intubated.

One of the key opportunities for the Group is positioning this new, non-invasive technology for use throughout the hospital. Deltex Medical's haemodynamic monitoring technologies provide clinicians with beat-to-beat real-time information on a patient's circulating blood volume and heart function. This information is critical to enable clinicians to optimise both fluid and drug delivery to patients.

Deltex Medical's business model is to drive the recurring revenues associated with the sale of single-use disposable ODM probes which are used in the TrueVue System and to complement these revenues with a new incremental revenue stream to be derived from the Group's new non-invasive technology.

Both the existing single-use ODM probe and the new, non-invasive device will connect to the same, new TrueVue monitor which was released onto the market in November 2023. Monitors are sold or, due to hospitals' often protracted procurement times for capital items, may be loaned in order to encourage faster adoption of the Group's technology.

Deltex Medical's customers

The principal users of Deltex Medical's products are currently anaesthetists working in a hospital's operating theatre and intensivists working in ICUs. This customer profile will change as the Group's new non-invasive technology is adopted by the market. In the UK the Group sells directly to the NHS. In the USA the Group sells directly to a range of hospital systems. The Group also sells through distributors in more than 40 countries in the European Union, Asia and the Americas.

Deltex Medical's objective

To see the adoption of Deltex Medical's new TrueVue monitor, comprising both minimally invasive and non-invasive technologies, as the standard of care in haemodynamic monitoring for all patients from new-born to adult, awake or anaesthetised, across all hospital settings globally.

For further information please go to www.deltexmedical.com

Chairman's statement

Financial results

Unaudited revenue for the six months ended 30 June 2024 was flat at £1.1 million (H1 2023: £1.1 million).

It is encouraging that similar revenue levels to the comparative reporting period in 2023 were achieved in the Period with a substantially lower cost base:

§ the head count in the Period comprised 24 employees, compared with 40 in H1 2023;

§ expenditure on sales and marketing decreased by £166,000 (39%) to £259,000 (H1 2023: 425,000); and

§ cash-adjusted overheads in the Period decreased by 35% to £996,000 (H1 2023: £1,524,000). Further information on the cash-adjusted decrease in overheads in the Period is set out below in Note 6 of the unaudited financial statements.

The significantly lower level of capitalised development expenditure reflects the successful launch of the new TrueVue monitor.

Although the revenue line is not yet benefiting from a substantial volume of sales of the new TrueVue monitor, it is encouraging that enquiries and orders in relation to the TrueVue monitor have been growing, particularly from the Group's network of some 40 overseas distributors.

Single-use ODM probe revenues associated with purchases by the Group's international distributors were also encouraging, with an increase of 14% in the Period, which helped offset a slight decline in single-use ODM probe orders in the UK.

Notwithstanding the cost reduction programme last year, the Group remains highly operationally geared. It is structured so that it can manufacture and deliver significantly higher volumes of both monitors and probes without adding substantially to its current level of overheads.

The gross margin in the Period was broadly unchanged at 67% (H1 2023: 69%). The slight reduction in gross margin in H1 2024 reflects higher levels of lower margin sales of probes to international distributors as well as the effect of reduced manufacturing-related recoveries, and associated inefficiencies, in the first half as production of the new TrueVue monitor was ramped up.

Adjusted EBITDA, which comprises the operating loss adjusted for depreciation, amortisation, equity-settled non-executive directors' fees, share-based payments and certain other items, significantly improved by £99,000 with a loss of £274,000 (H1 2023:£(361,000)).

In contrast to the first half of 2023, where the adjusted EBITDA was negative every month, in H1 2024 there were two months when the adjusted EBITDA was positive.

Loss before taxation in the Period was essentially unchanged at £546,000 (H1 2023: £537,000).

Cash at hand as at 30 June 2024 was £326,000 (H1 2023: £107,000).

Commercial and business activities

New 'TrueVue' monitor

There has been increasing and encouraging levels of interest in the new TrueVue monitor in the markets where it has been launched, including the UK, the EU and in other markets that accept the European Union's CE mark.

In the UK, the new TrueVue System has been successfully included on the NHS Supply Chain national framework and first units have been delivered to an NHS hospital. The Group anticipates selling further units into NHS hospitals in the second half of the current financial year, although there remain some uncertainties around capital expenditure budgets in the UK.

In H1 2024, orders for the TrueVue monitor from continental Europe largely related to purchases by the Group's long-standing network of international distributors that are gearing up to aggressively promote the new TrueVue monitor in the fourth quarter of the year.

Sales of the new TrueVue monitor have commenced in Latin America where two countries have completed local registration filings. The Group believes that there should be further orders from Latin America in the second half of the current financial year, although the timing of cash receipts from this region can be challenging.

In anticipation of increased levels of future overseas sales, the Group's network of international distributors has been expanded and strengthened since the beginning of the year. In particular, new distributors have been signed up and trained in Latin America and in South East Asia where there appears to be encouraging levels of interest in the Group's ODM technology.

Since the beginning of the year, significant work has taken place at the Group's Chichester headquarters across a number of disciplines relating to the optimisation of assembly processes required for the production of the new TrueVue monitor. A small number of minor "teething" issues were identified, which have now been successfully addressed. Confidence in the production processes is growing. The fully-loaded manufacturing costs for the new TrueVue monitor are beginning to decline to anticipated levels as production volumes and associated efficiencies climb.

To reflect the increasing involvement of Natalie Wettler in the operational management of the Group, the Board has promoted Natalie, the current Group Finance Director, to also be the Chief Operating Officer. In addition to retaining her Finance Director responsibilities, she will be charged with spending time on improving the Group's operational activities, including the production facilities, responsibilities that Natalie has been gradually increasing this year. This change in management structure will enable Andy Mear's, Deltex Medical's Chief Executive Officer, to spend more time on new sales initiatives in the UK and internationally for the new TrueVue monitor, securing tenders for the previous version of the monitor, working more closely with the Group's network of overseas distributors selling across the International Division and also carrying out 'voice of the customer' market research for the Group's new non-invasive device.

Previous version of the TrueVue monitor

Deltex Medical often responds to large tenders for haemodynamic monitoring technology that remain extant for a number of years.  As a result, the Group is still winning, and in some cases waiting to hear the outcome of, a number of international tenders on which it has been working for some time with its in-country distributors. Accordingly, the Group is still expecting to win orders for the previous version of the TrueVue monitor; and it has sufficient sub-assemblies and components in stock to be able to rapidly and profitably convert these stock holdings into cash via these historic tender wins.

During the Period there was an encouraging level of orders relating to the previous version of the monitor from a number of distributors. These orders are likely to drive concomitant international probe revenues which is anticipated to help build the Group's book of high margin, recurring revenues associated with its single use probes.

It will inevitably take some time to complete all the necessary regulatory filings for the new TrueVue monitor. Whilst these regulatory submissions are taking place, including in the critical USA market via a 510(k) submission, the Group is positioned to sell the previous version of the monitor in order to help it retain market share.

US regulatory approval for the TrueVue monitor is expected to be granted during 2025.

The veterinary version of the previous monitor has been launched in China and the first order is expected to be received later this year.

Sale of single use probes

Single-use ODM probe revenues increased slightly in the Period to £824,000 (H1 2023: £815,000).

Probe sales in the International division, which rely on purchases by distributors, increased by 14%. This increase helped offset a decline in probe revenues in the UK market, believed to be associated with market uncertainty as to the timing of the launch of the new monitor.

The Group highlights that the same single-use ODM probes are used in the new TrueVue monitor as well as in the previous version of Deltex Medical's monitor. Accordingly, as sales of the new TrueVue monitor increase, then probe revenues are also expected to grow.

New product development

Notwithstanding the focus on the launch of the TrueVue monitor, Deltex Medical's technologists have also made good progress on further research to advance its novel, non-invasive version of Deltex Medical's ODM technology.

The Group believes that this new, non-invasive device, which should have a substantially larger addressable market in terms of applications within hospitals as well as in primary care settings, represents a significant opportunity for the Group to build substantial revenues in the future.

Although this new non-invasive device is still in the research phase, the Group is working on the basis that it will ultimately end up representing a form of digital haemodynamic stethoscope. This will give healthcare workers, ranging from doctors to nurses across a range of departments, immediate access to high quality, real-time haemodynamic data in respect of their patients. This data is expected to give rise to improved and more rapid treatment of patients throughout a hospital or other clinical care-giving facility such as the Accident & Emergency department or a primary care (GP) doctor's surgery.

Further progress on the necessary research work associated with this novel non-invasive device is expected during the second half of this financial year as significantly less technical support will be required from the Group's engineers to support the increase in production volumes of the new TrueVue monitor.

Market feedback and 'voice of the customer' work continues on this new non-invasive technology to enable the Group to develop an optimised commercialisation plan in advance of its launch.

Current trading and prospects

The Group's performance in H1 2024 was encouraging and was broadly in line with internal budgets.

Sales of the new TrueVue monitor are still building and have not reached their anticipated run rate. It remains difficult to predict the timing and quantum of orders for the new monitor, in part as many sales are carried out by international distributors.

As expected, direct sales were a little slow over the summer months, although a number of significant orders were received from Latin America which require onerous documentation to be satisfied prior to shipment.

The Group remains focussed on driving up sales of the new TrueVue Monitor whilst its technical teams continue their work on the new, novel non-invasive ODM device.

Deltex Medical continues to take robust actions in order to attain EBITDA positive trading.

Nigel Keen

Chairman

20 September 2024

Condensed Consolidated Statement of Comprehensive Income
For the period ended 30 June 2024