Stable quarter with continued strategic initiatives

October 1 - December 31, 2017

Net sales increased by 5 percent to SEK 76.1 million (72.8).
Organic growth was 6 % (14).
Operating profit increased to SEK 21.7 million (21.6).
The operating margin was 28.5 % (29.8).
Profit before tax increased to SEK 21.7 million (20.8).
Earnings per share were SEK 0.73 (0.75)
Cash flow was SEK 25.5 million (27.4).

January 1 - December 31, 2017

Net sales increased by 17 percent to SEK 309.3 million (265.0).
Organic growth was 16 % (9).
Operating profit increased by 23 % to SEK 90.9 million (74.2).
The operating margin increased to 29.4% (28.0).
Profit before tax increased to SEK 90.3 million (75.8).
Earnings per share increased to SEK 2.92 (2.51).
Cash flow before dividend decreased to SEK 57.9 million (61.5).
The Board of Directors proposes a dividend of SEK 1.50 per share for 2017 (1.50).

CEO's comments

The fourth quarter of 2017 was CellaVision's third best quarter ever, with sales amounting to SEK 76.1 million (72.8), corresponding to growth of five percent and with a negative exchange rate impact of one percent. As a result, organic growth in the quarter amounted to six percent. The operating profit was SEK 21.7 million (21.6), equivalent to an operating margin of 28.5 percent (29.8). Despite major investments in innovation and geographical expansion we have retained our sound operating margin.
For the full year, sales increased by 17 percent to SEK 309.3 million (265.0) and the operating profit was SEK 90.9 million (74.2), corresponding to an operating margin of 29.4 percent (28.0). Exchange rate impact was one percent resulting in an organic growth for the full year amounting to 16 percent. CellaVision's indirect sales model implies that we have unevenly distributed sales with a large variation between quarters.

Market development

Sales in the Americas were SEK 38.6 million (40.1). The comparatively weak development is partly explained by strong comparative figures, partly by some build-up of inventories from previous quarters. However, the number of customer installations and CellaVision's end customer penetration continued to grow at a steady rate, and sales growth for the full year of 2017 was 24 percent.
EMEA reported a weak fourth quarter, with sales amounting to SEK 19.3 million (26.7). The 2017 full year was also weak, with sales of SEK 81.8 million (83.3). We are not content with EMEA's development in recent years and have therefore considerably speeded up establishment of our own organizations for local market support in several countries in EMEA. Market penetration is a long-term endeavor and we expect to see the first positive effects of this in 2018.
APAC reported a strong last quarter in 2017, with growth exceeding 200 percent. This is a result of strong sales, above all in Japan and China. For the full year of 2017, growth was 27 percent. The local market support organizations established in South Korea and Australia in late 2016 are now fully operational.

New technology platform preparing for launch

The new technology platform means that CellaVision can offer a cost-effective solution in digital morphology for small and mid-size hematology laboratories. The new product will give the end customer retained quality of analysis and network connectivity but a lower level of automatization than the offer to large laboratories.
This means that CellaVision will be able to offer package solutions for laboratory chains that include both large central laboratories and smaller satellite laboratories in their operations. This will enable us to achieve further interim goals in our vision of replacing the use of traditional microscopes in hematology laboratories.

CellaVision® Advanced RBC Application

The CellaVision® Advanced RBC Application, a software application that speeds up and simplifies morphological assessment of red blood cells, was approved by the US regulatory authority, the FDA, in August 2017 and during the quarter was launched commercially by our various distribution partners in the USA.

Continued offensive innovation initiatives and geographical expansion

We continuously invest in innovation and geographic expansion in order to generate high sales and profit growth.
Innovation is a key strategy for future growth and to enable us to commercialize more of our many ideas we will further increase our investments in research and development. By strengthening our development organization we will create new growth opportunities, primarily in digital image analysis.
CellaVision is continuing to establish local organizations for market support in priority markets, which in 2017 included Brazil, France, the German-speaking markets in EMEA and the United Kingdom. We will continue the offensive work that began in 2016 with further establishments in 2018 in accordance with our long-term strategy.
Zlatko Rihter,
President and CEO

Questions concerning the interim report can be addressed to:
Zlatko Rihter, CEO, CellaVision AB, Tel: +46 (0) 733-62 11 06, E-mail: zlatko.rihter@cellavision.com
Magnus Blixt, CFO, CellaVision AB, Tel: +46 (0) 708-33 81 68, E-mail: magnus.blixt@cellavision.com

About CellaVision
CellaVision is an innovative, global medical technology company that develops and sells its own leading systems for routine analysis of blood and other body fluids in health care services. The products rationalize manual laboratory work, and secure and support effective workflows and skills development within and between hospitals. The company has leading-edge expertise in image analysis, artificial intelligence and automated microscopy. Sales are via global partners with support from the mother company in Lund and by the market support organizations in the US, Canada, China, Japan, Dubai, Korea, Australia, France, Germany, Brazil and Great Britain. 
In 2017 sales were SEK 309 million and sales continue to increase, with a growth target of at least 15 % per year over an economic cycle. CellaVision's registered office is in Lund, Sweden. The share is listed on the Nasdaq Stockholm, Mid Cap list. Read more at www.cellavision.com