(DEMG) Deltex Medical

Deltex Medical Group plc

Pre-close update on the year ended 31 December 2011

5 January 2012 - Deltex Medical Group plc, the global leader in oesophageal Doppler monitoring ("ODM"), today announces an update on its trading performance for the year ended 31 December 2011.

Highlights

·    UK surgical probes continue 20% growth trend

·    Installed base of monitors, the engine for future growth, increased from 450 to 520 in UK operating theatres

·    NHS decision in December 2011 to implement fully ODM or similar fluid management monitoring technology

·    Sales for 2011 in excess of £6.3 million largely reflecting December sales deferred into 2012

·    Cash position of £0.8 million

Deltex Medical enters 2012 with the foundations in place to underpin long term and accelerating growth in all its key markets. In the UK the NHS Chief Executive announced in December 2011 the decision to implement fully ODM or similar fluid management monitoring technology across the NHS: CardioQ-ODM is the only fluid management monitoring technology recommended by the National Institute for Health & Clinical Excellence ('NICE'). The NHS is committed to launch its national drive on ODM by early March 2012. In the USA, following October's presentation by a major US teaching hospital of the results of implementing ODM in surgery within an enhanced recovery programme, we have initiated a number of projects aimed at both increasing sales and positioning CardioQ-ODM for wide-scale adoption. We are making good progress on our first Canadian hospital group implementation project. We are also expecting important developments towards potential systematic adoption in the coming months in France and Spain.

Surgical probe sales in the UK have continued to grow in line with the established 20% compound annual growth rate. This growth rate is yet to show the acceleration expected to follow the NICE recommendation that CardioQ-ODM should be considered for use in all patients undergoing major and high risk surgery: we expect this acceleration to follow the NHS national drive to implement ODM which is to be launched in the first quarter of 2012. December was nonetheless a new record month for UK probe sales, exceeding £300,000 for only the second time ever. After a period of steady growth in US probe sales over two years, the middle part of the year proved challenging as a number of our larger accounts reported significant falls in elective surgery volumes attributed to macro-economic conditions. Momentum in the US started to recover from November although a major order expected late in December for what would be the largest trial of intra-operative fluid management to date was postponed into 2012 pending local ethics committee approvals.

Growth in sales of surgical probes drove overall growth in the UK and in a number of export markets including Canada, Scandinavia, Peru, Australia and France: progress in these export markets helped offset a circa £350,000 year on year fall in monitor sales to the Middle-East, an area subject to political unrest during the year. Our ability to sell monitors to hospitals was held back in most developed healthcare markets by severe restrictions on capital budgets. This impacted on sales in the UK where monitor sales in the final three calendar quarters (the first nine months of the NHS financial year) were nearly £200,000 down on the same period in 2010. Looking forward the Company expects monitor sales volumes in the UK to benefit from a national tendering exercise for cardiac output monitors which will overcome the need for individual hospitals to go through EU procurement processes. The Company had anticipated an immediate boost to monitor sales in 2011 until informed in the second half of December that the award of this tender had been postponed from December 2011 until February 2012. Expansion of the UK surgical installed base has been satisfactory and in line with probe growth. This has been achieved largely by lending monitors but also through the implementation of two new managed care service contracts worth a combined minimum of £340,000 over three years.

Nigel Keen, Deltex Medical's Chairman, commented:

"Deltex Medical enters 2012 with considerable confidence and growing traction in a number of key markets. In December the NHS, the world's largest healthcare provider, decided to implement fully the technology and interventions we have pioneered, developed and demonstrated to be effective. We have also taken keys steps towards creating similar opportunities for transformational growth in a number of export markets including Canada, France, Spain and the USA.

"The financial crises facing most developed economies are having two effects on our business. Firstly our revenue mix is being pushed from capital sales towards higher proportions of higher quality recurring revenue streams: we believe we have now absorbed the worst of the ensuing short term revenue loss from this transition. Secondly healthcare systems are being pushed to address the need to deliver better care, better health and lower costs: this is exactly what we offer and there are few bigger or better evidenced opportunities for health systems than ODM."

For further information, please contact:-

Deltex Medical Group plc                                    01243 774 837

Nigel Keen, Chairman                                         njk@deltexmedical.com

Ewan Phillips, Chief Executive                            eap@deltexmedical.com

Paul Mitchell, Finance Director                            pjm@deltexmedical.com

Nominated Adviser & Broker

Arden Partners plc                                              020 7614 5900

Chris Hardie                                                        chris.hardie@arden-partners.com

Jamie Cameron                                                  jamie.cameron@arden-partners.com

Kreab Gavin Anderson                                        020 7074 1800

Robert Speed                                                     rspeed@kreabgavinanderson.com

Deborah Walter                                                  dwalter@kreabgavinanderson.com

Notes for Editors

Deltex Medical manufactures and markets the CardioQ-ODMÔ system. CardioQ-ODM changes the way doctors care for surgical patients allowing them to recover faster and leave hospital sooner and in better health than they otherwise would do. The performance of the system has been validated through independently conducted, randomised controlled clinical trials and is being translated into routine clinical practice in leading hospitals around the world.

CardioQ-ODM comprises a monitor and a single patient disposable probe. The probe is placed into the oesophagus through either the mouth or nose and the tip positioned facing the adjacent descending aorta. A low frequency ultrasound signal, generated by the monitor, is bounced off the blood travelling down the aorta and the Doppler principle is used to determine the velocity of the blood flow, expressed in distance per cardiac cycle - 'Stroke Distance'. The monitor also calculates the amount of time that blood is flowing down the aorta as a proportion of a cardiac cycle - 'Flow Time'.

The monitor uses a validated proprietary nomogram to extrapolate volumetric data (Stroke Volume, Cardiac Output etc) from the directly measured flow velocity. The nomogram utilises the patient's age weight and height, effectively to estimate the size of the aorta in which the velocity of the flow is being measured. Crucially this means that any reported relative change in Stroke Volume is absolutely identical to the relative change in the directly measured flow velocity variable of Stroke Distance. CardioQ-ODM immediately and reliably identifies even very small changes in the blood flow velocity allowing doctors to intevene earlier and on smaller changes than with any other approach.

Intra-operative individualised Doppler guided fluid management entails insertion and focusing of the probe to obtain a baseline reading, giving a small (200 to 250 ml) fluid challenge directly into the vascular system and seeing if Stroke Volume (or Stroke Distance) increases by more than 10%. If the increase is more than 10%, repeat fluid boluses are administered until such time as the increase is less than 10%: after this no further fluid is given unless Stroke Volume falls by more than 10% - the process is designed to achieve and maintain the individual patient's optimal Stroke Volume. CardioQ-ODM is also used during surgery to guide administration of vaso-active agents such as inotropes.

The CardioQ-ODM helps patients by enabling doctors to reduce the complications that arise from a medical condition that is common to almost all patients having surgery and many others in intensive care or arriving in the accident and emergency department. This condition is known as hypovolaemia - a reduction in circulating blood volume - and in surgical patients arises as a direct consequence of the combined effects of pre-operative starvation, the anaesthetic agents and the blood and fluid losses associated with the surgical procedure itself. Hypovolaemia means that the body struggles to get sufficient blood to the tissues and vital organs which are consequently starved of essential oxygen. This can cause medical complications including peripheral and major organ failure, which if not dealt with quickly can lead to severe compromise or even death.

There are already over 2,500 CardioQ-ODMs currently in use in hospitals worldwide and distribution arrangements are in place in over 30 countries. In addition, there are currently more than 250 clinical publications on the use of the CardioQ-ODM which have repeatedly:-

·    Validated the results of CardioQ-ODM against known standards for measuring cardiac output

·    Proved that CardioQ-ODM works in a wide range of surgical procedures

·    Proved that CardioQ-ODM delivers 50% or more reductions in post-operative complications and 25% or more reductions in length of hospital stay: better care at lower cost.

The SupraQÔis an entirely non-invasive device which uses an ultrasound probe held at the base of the patient's neck to track the flow of blood in the aorta; it presents the same data as the CardioQ-ODM in a similar format and is used for taking snapshots or monitoring over short periods.

Deltex Medical Group plc

New study shows benefits of CardioQ-ODM™ in bladder surgery

21 December 2011 - Deltex Medical Group plc, the global leader in oesophageal Doppler monitoring ('ODM'), notes the publication of a new study that shows the clinical and economic benefits of using the CardioQ-ODM during major urological surgery.

Doctors (Pillai et al) from the Freeman Hospital in Newcastle-upon-Tyne have published the results of their randomised controlled trial of fluid management during major bladder surgery guided by the CardioQ-ODM, in the December edition of The Journal of Urology.

Patients treated using the CardioQ-ODM recovered more quickly after radical cystectomy:

·     four days average return to mobility compared to eight days in the control group

·     two patients suffered wound infections compared to 10

·     the number of patients suffering from nausea and vomiting at six, 24 and 48 hours after surgery were reduced respectively from six to two, 11 to three and 13 to one

·     earlier return to full diet and normal bowel function

In addition the study reported against a number of health economic markers:

·     fewer patients requiring unplanned admission to intensive care (two vs five)

·     a 49 minute (14%) reduction in operating time (302 minutes vs 351)

·     a four day (18%) reduction in length of hospital stay

Ewan Phillips, Deltex Medical's Chief Executive, commented:

"Deltex Medical has used a robust evidence base to establish a strong market position for the CardioQ-ODM for fluid management during bowel surgery. This new study should enable us to replicate this success in bladder surgery and to do so relatively rapidly in those hospitals that have already adopted or are planning to adopt CardioQ-ODM.

"The results of this study are a timely and powerful reconfirmation of the clinical and economic benefits of CardioQ-ODM that led to the recommendation from the National Institute for Health and Clinical Excellence (NICE) that it be considered for use by the NHS in all major and high risk surgery. The results also suggest that the NICE estimate of savings of £1,100 per patient may have been conservative as it took no account of any reduction in expensive operating time which was indentified in a recent Spanish Government health technology assessment and is also shown here to be substantial."

For further information, please contact:-

Deltex Medical Group plc                                    01243 774 837

Nigel Keen, Chairman                                         njk@deltexmedical.com

Ewan Phillips, Chief Executive                            eap@deltexmedical.com

Paul Mitchell, Finance Director                           pjm@deltexmedical.com

Nominated Adviser & Broker

Arden Partners plc                                              020 7614 5900

Chris Hardie                                                        chris.hardie@arden-partners.com

Jamie Cameron                                                   jamie.cameron@arden-partners.com

Kreab Gavin Anderson                                       020 7074 1800

Robert Speed                                                     rspeed@kreabgavinanderson.com

Deborah Walter                                                  dwalter@kreabgavinanderson.com

Notes for Editors

Deltex Medical manufactures and markets the CardioQ-ODMÔ system. CardioQ-ODM changes the way doctors care for surgical patients allowing them to recover faster and leave hospital sooner and in better health than they otherwise would do. The performance of the system has been validated through independently conducted, randomised controlled clinical trials and is being translated into routine clinical practice in leading hospitals around the world.

CardioQ-ODM comprises a monitor and a single patient disposable probe. The probe is placed into the oesophagus through either the mouth or nose and the tip positioned facing the adjacent descending aorta. A low frequency ultrasound signal, generated by the monitor, is bounced off the blood travelling down the aorta and the Doppler principle is used to determine the velocity of the blood flow, expressed in distance per cardiac cycle - 'Stroke Distance'. The monitor also calculates the amount of time that blood is flowing down the aorta as a proportion of a cardiac cycle - 'Flow Time'.

The monitor uses a validated proprietary nomogram to extrapolate volumetric data (Stroke Volume, Cardiac Output etc) from the directly measured flow velocity. The nomogram utilises the patient's age weight and height, effectively to estimate the size of the aorta in which the velocity of the flow is being measured. Crucially this means that any reported relative change in Stroke Volume is absolutely identical to the relative change in the directly measured flow velocity variable of Stroke Distance. CardioQ-ODM immediately and reliably identifies even very small changes in the blood flow velocity allowing doctors to intevene earlier and on smaller changes than with any other approach.

Intra-operative individualised Doppler guided fluid management entails insertion and focusing of the probe to obtain a baseline reading, giving a small (200 to 250 ml) fluid challenge directly into the vascular system and seeing if Stroke Volume (or Stroke Distance) increases by more than 10%. If the increase is more than 10%, repeat fluid boluses are administered until such time as the increase is less than 10%: after this no further fluid is given unless Stroke Volume falls by more than 10% - the process is designed to achieve and maintain the individual patient's optimal Stroke Volume. CardioQ-ODM is also used during surgery to guide administration of vaso-active agents such as inotropes.

The CardioQ-ODM helps patients by enabling doctors to reduce the complications that arise from a medical condition that is common to almost all patients having surgery and many others in intensive care or arriving in the accident and emergency department. This condition is known as hypovolaemia - a reduction in circulating blood volume - and in surgical patients arises as a direct consequence of the combined effects of pre-operative starvation, the anaesthetic agents and the blood and fluid losses associated with the surgical procedure itself. Hypovolaemia means that the body struggles to get sufficient blood to the tissues and vital organs which are consequently starved of essential oxygen. This can cause medical complications including peripheral and major organ failure, which if not dealt with quickly can lead to severe compromise or even death.

There are already over 2,300 CardioQ-ODMs currently in use in hospitals worldwide and distribution arrangements are in place in over 30 countries. In addition, there are currently more than 250 clinical publications on the use of the CardioQ-ODM which have repeatedly:-

·    Validated the results of CardioQ-ODM against known standards for measuring cardiac output

·    Proved that CardioQ-ODM works in a wide range of surgical procedures

·    Proved that CardioQ-ODM delivers 50% or more reductions in post-operative complications and 25% or more reductions in length of hospital stay: better care at lower cost.

The SupraQÔis an entirely non-invasive device which uses an ultrasound probe held at the base of the patient's neck to track the flow of blood in the aorta; it presents the same data as the CardioQ-ODM in a similar format and is used for taking snapshots or monitoring over short periods.