Intelligent Ultrasound (AIM: MED)  said it has reduced its loss at the EBITDA level despite reduced revenue due to the COVID-19 pandemic and remains on track towards a stream of future clinical AI product revenues next year.

In its half-year report to 30 June 2020, said group cost savings had limited its EBITDA loss to £1.2m from £1.3m in H1 2019 on reduced revenue of £2.5m compared to £3.1m in the comparative period in 2019.

Revenue from both UK and North America simulator direct sales operations increased by 8% to £1.9m (H1 2019: £1.8m), driven by ‘an exceptional performance’ in the UK which doubled sales to £0.96m (H1 2019: £0.45m) and surpassed 2019 full year revenues of £0.7m.

However, revenue generation in North America was affected by a COVID-19 related freeze in discretionary spend that reduced sales by 29% to £0.9m (H1 2019: £1.3m). 

Nevertheless, MED said it expects the new COVID-19 training module to help sales recover in H2 2020.

Despite this 20% reduction in revenue, gross margin improved by 2% to 59%, largely due to the increase proportion of direct sales generated in the period.

Riccardo Pigliucci, Chairman of MED, said “the COVID-19 lockdown materially affected the period and has “dramatically constrained” the company’s ability ‘to physically demonstrate and therefore sell ultrasound training simulators to hospitals around the world.”

Despite the disruption during the period, MED successfully raised £5.2m from new and existing shareholders in May 2020 and maintains a strong cash position of £10.1m (31 December 2019: £7.3m) as at 30 June 2020.

Shares in Intelligent Ultrasound have gradually climbed from 10.25p in the past month opening at 11.75p this morning following the release of the half-year report.

The group said its Clinical AI Division has continued to make ‘significant progress’ during the period despite the pandemic having restricted some access to doctors and trial patients and having delayed delivery of some new hardware components for its AnatomyGuide product.

The division has accelerated development of two Covid19 and Prostate AI-based software products with early stage commercial discussions already commenced.

Meanwhile, the company’s previously signed long-term licence and co-development agreement for its ScanNav AI software, with a leading unnamed global ultrasound equipment manufacturer, remains on track for royalty per unit revenues during 2021, it noted.

“We are pleased to have traded relatively well during the first wave of the pandemic, but it remains hard to predict sales with the current restrictions and the potential for a second wave of the virus, further limiting access to our customers and collaborators in hospitals around the world,” said Pigliucci.

The group said its strong cash position, combined with a growing ultrasound simulator product range and a stream of future clinical AI product revenues - which it anticipates first revenues from next year - should enable the group to reach its profitability inflection point.

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