Final Results

Foundations for sustained growth: significant increase in revenue & operational progress

Creo Medical Group plc (AIM: CREO), the medical device company focused on the emerging field of surgical endoscopy, announces its audited final results for the 12 months ended 31 December 2022.

Financial Highlights:

·     Total sales in the period of £27.2m (FY21: £25.2m), including first revenues from Creo's Kamaptive licensing programme of £1.4m

·     Threefold increase in revenues to £0.9m from Speedboat Inject and CROMA, laying the foundation for further growth in 2023 as the Group continues to commercialise its technology

·     Gross profit up 13.3% to £13.1m (FY21: £11.6m), with gross margin up 2.3% points to 48.3% (FY21: 46.0%)

·     Underlying EBITDA loss of £22.1m for FY22 (FY21: £22.6m) in-line with market expectations, including £13.5m (FY21: £12.9m) of R&D costs

·     Underlying administrative costs reduced in H2-22 vs H1-22 by 5% despite the inflationary environment, and this is expected to continue into FY23 following a restructuring of the R&D teams as we move to the next phase of commercial development with the completion of many projects in FY22

·     £33.7m raised through oversubscribed fundraise in March 2023 (post-period end), providing the Company with a pathway to cash flow breakeven and, ultimately, to profitability

Commercial Highlights (including post-period end):

·     Global cases have more than doubled in FY22 vs FY21. Continued cases in the key USA, EMEA and APAC markets

·    Speedboat Inject now in everyday use treating bowel (lower GI), and oesophagus and stomach (upper GI) indications. Q1-23 cases 50% higher than FY22 quarterly average and Q4-22 actual

·    Continued initial use of MicroBlate Fine for soft tissue ablation within both the pancreas and the liver

·     Multi-national and bespoke regional training and mentoring events held, resulting in 80 confirmed users as at December 2022 (a four-fold increase over FY21), and 91 as at 31 March 2023

·     A slimmer Speedboat Inject was released to market in late Q4-22, significantly increasing Creo's addressable market due to its compatibility with a greater number of smaller endoscopes

·     Kamaptive licensing programme

·   First Kamaptive licensing partnership announced with the world's biggest robotics company, Intuitive (NASDAQ : ISGR), and first revenues received

·   Non-exclusive IP licence and royalty agreement entered into with CMR Surgical, the global surgical robotics business

Operational Highlights (including post-period end):

·     Development of Creo's slimmest Speedboat, Speedboat Flush, with 510k FDA submitted early in 2023

·     Multi-site post-market clinical study announced in Q1-23 with MicroBlate Flex, Creo's microwave ablation device, to evaluate the safety and feasibility in the bronchoscopic treatment of lung lesions, with patients being recruited and the first in-human case for the device expected to take place during Q2-23

FY23 Update and Outlook

Q1-23 trading has been in line with expectations. The Company has experienced strong orders and growing sales in its core technology including cases using the slimmer Speedboat Inject. Consumables sales in Q1-23 were 10% higher than FY22 quarterly average.

Following the re-organisation of the business in Q4-22, costs have been reduced and OPEX in Q1-23 was 10% lower than the FY22 quarterly average.

Management remain confident of achieving their 2023 objectives and delivering on the potential of Creo's technology.

Craig Gulliford, Chief Executive Officer, commented: "2022 saw a significant increase in revenue from core technology as we built on the foundations laid in previous years during the pandemic to deliver further growth and operational progress. With global cases using Speedboat Inject more than doubling in FY22 vs FY21, and a fourfold increase in core technology users, our approach to training, mentoring and converting clinicians into regular users is gaining considerable traction. It has been especially pleasing to see the pioneering work that has been done by our clinicians around the world to expand the use of Creo's technology into new indications, improving outcomes for even more patients. With this being the first full year of commercial operations, post-pandemic, we can now see where and how to apply our resources to achieve increasingly predictable results as we accelerate growth.

"We developed and launched innovative new products, including the slimmer Speedboat Inject, and launched our Kamaptive partnerships in the field of robotic assisted surgery which are progressing well.

"Our post-period oversubscribed funding round provided us with the working capital necessary to continue executing our strategic vision and has provided us with a path to cashflow breakeven. I would again like to reiterate my sincere thanks to our shareholders for their support during the round. This has left Creo well positioned for further sustained growth. We expect to see the continued acceleration of the commercialisation of our core technology and the introduction of new innovative products, as well as the expansion of our Kamaptive programme as we continue to build a world class medical device and tech licensing company."

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