An in-between quarter though with stronger market presence as well as product sales approval in the USA

CEO's comments
After six quarters of good growth in the human healthcare segment CellaVision experienced negative sales growth in the third quarter of the year. CellaVision has an uneven order flow with variation between quarters. Accumulated growth for the first nine months was 21 percent and is in line with the previously communicated target of 15 percent annual growth over an economic cycle. Our assessment is that CellaVision's future development in the short and long term is unchanged positive.

For the quarter, sales decreased by ten percent to SEK 61.3 million (68.3) compared with the same period in the previous year, when sales growth was 50 percent in the human healthcare market. Exchange rate impact in the quarter was slightly positive; plus one percent. The operating profit was SEK 10.2 million (19.5), equivalent to an operating margin of 16.7 percent (28.5). The lower operating margin is mainly explained by a lower sales volume.

Market development
Sales in the Americas fell by about eleven percent compared with the same period in the previous year, which was a quarter that experienced growth of 30 percent in the human healthcare market. Apart from the strong comparative figures, the quarter's decrease is explained by some buildup of inventories in previous quarters by CellaVision's various distribution partners. However, the number of customer installations and CellaVision's end customer penetration continued to grow at a steady rate.

EMEA again reported a quarter with sound sales growth; about 23 percent. It is worth noting, however, that the comparative quarter in 2016 for EMEA was relatively weak.

Sales in APAC decreased by 28 percent in the third quarter of the year compared with the same period in the previous year. Despite the decrease compared with the corresponding quarter in 2016 the underlying trend is positive for the region as a whole. Sales in China continued to show strength, while other markets in the region saw a weaker quarter. 

Geographical expansion: United Kingdom / Ireland
CellaVision is continuing to establish local organizations for market support in priority markets and establishment of the organization in the United Kingdom/Ireland during the quarter was part of this. This establishment means that CellaVision now has 12 local organizations for market support that gives the company a presence in a total of 25 countries. Establishing local organizations for market support is a key strategy for securing sustainable growth globally and CellaVision is planning for further establishments during the year.

The veterinary market
CellaVision is continuing its long-term marketing activities in the veterinary market, and in the previous quarter, a distribution agreement was signed with Sysmex in the Americas.

Distribution expansion prepares launch of new technology platform
Progress on the new technology platform is going according to plan, with considerable investments in research and development. Apart from this, there are production preparations and marketing activities ahead of the launch that is planned for the second half of 2018 for the markets that do not require FDA or equivalent certification based on clinical validation.

In preparation for the coming launch of the new technology platform, with analyzers for small and mid-size labs in both the human healthcare and veterinary markets, CellaVision entered into a global distribution agreement with Boule Diagnostics. The company is active in the segment for small and mid-size labs and thus an important partner for ensuring future access to digital morphology for this type of lab. Discussions are in progress with more distribution partners in this segment.

FDA clearance of the CellaVision® Advanced RBC Application
During the quarter was the CellaVision® Advanced RBC Application, a software application that speeds up and simplifies morphological assessment of red blood cells, was cleared by the US regulatory authority, the FDA. This makes the product commercially available in the USA and globally, since the application has already been approved and launched in CellaVision's other markets.

Zlatko Rihter,
President and Chief Executive Officer

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