SyntheticMR

CEO comments

During the second quarter, SyntheticMR's sales amounted to SEK 12.4 million (11.9), a marginal increase compared to the previous year. However, the development differs clearly between markets. In the USA, sales increased to SEK 6.1 million (2.0), mainly driven by OEM business, while demand for SyMRI remains low. In Europe, sales increased to SEK 4.7 million (4.2), where the development was the opposite – OEM was weak while our direct sales of SyMRI showed very good growth. Asia was the disappointment of the quarter, where sales fell to SEK 1.6 million (5.8) due to postponed business in Japan and delayed deliveries in India.

A key obstacle for SyMRI in the US is the uncertainty surrounding research funding through the NIH. President Trump has proposed cuts of approximately 40% (equivalent to USD 18 billion) and a restructuring of the agency. However, the Senate Appropriations Committee, which consists of both Republicans and Democrats, has voted to increase the budget, including significant additional investments in Alzheimer's research. This creates significant uncertainty and many of our customers are therefore in a "wait-and-see" mode. A decision is expected in the fall.

The acquired Combinostics business in Finland continues to develop well. ARR* for the product cNeuro increased during the quarter to SEK 11.2 million, corresponding to approximately 30% since the beginning of the year. New deals are being added continuously, with some not yet included in ARR as the start date is after June 30. Customer loyalty is high and we see basically no dropouts. The product is currently only available in the US and EU, with regulatory processes underway to enable a launch in Asia as well. We are also making good progress in R&D where the development team is cross-fertilizing technologies for future product updates.

Sales from the Finnish acquired business amounted to SEK 2.5 million during the quarter. Excluding this, sales from comparable units decreased by just over 15%. This is partly explained by currency fluctuations, as the company sells in USD and EUR but reports in SEK. Despite this, the development is not satisfactory. To reverse the trend, SyMRI sales in the US must recover, cNeuro continues to grow, OEM partners must launch 3D cameras broadly and sales in Asia must stabilize so that we do not experience such large swings from quarter to quarter.

We continue to have good cost discipline and are seeing the effects of previous cost-saving measures. Operating profit amounted to SEK –8.6 million. Despite this, ongoing operations generated a positive cash flow, primarily through efficient management of working capital in general and a reduction in accounts receivable in particular. Cash decreased by SEK 3.2 million to SEK 19.4 million at the end of the quarter. Currency effects had a negative impact, primarily from the strengthened Swedish krona. We have not been affected by US tariffs and do not expect to be in the future.

In May, a major American study of SyMRI 3D was published in the American Journal of Neuroradiology. The study shows that synthetically generated T1- and T2-weighted MRI images are at least as high in clinical quality as conventional images. When five leading neurologists rated images from 189 patients at six hospitals in the US, our synthetic images were rated as better. Our technology therefore drastically reduces the time for MRI scans and the quality is rated by clinicians as better. This is without taking into account the advantages of the quantitative biomarkers, which are SyMRI's unique strength.

Despite delays in the launch of 3D cameras, uncertainty around NIH funding, and macroeconomic challenges, we are confident in our long-term position. SyntheticMR is a world leader in synthetic quantitative MRI – a technology that meets a growing global healthcare challenge where the shortage of radiologists is a growing bottleneck, not least in the Alzheimer's field.

On June 13, the board announced that Lena Åredal has been appointed as the new CEO, effective December 15. We are pleased to confirm that Lena will take office on September 1. I will therefore return to my role as CFO. Lena brings strong commercial experience and the ability to build high-performing teams, which will strengthen SyntheticMR's growth journey.

*Annual Recurring Revenue

Johanna Norén 
Acting CEO SyntheticMR

This is a translation of the Swedish version of the report. When in doubt, the Swedish wording prevails.