Annual report 2006 06

Annual report 2006

06

Table of contents 1 The Year in Brief

2 Vision, business concept, strategies and goals 4 The CEO’s report

6 Markets 10 Our product range 12 Emergency Services

14 Cardiovascular Disease Management 16 Clinical Information Systems 18 Employees

20 Research and development 21 Quality and the environment 22 The Board and auditors 23 Management

24 Shares and shareholders 27 Director’s report 31 Financial reports, Group 35 Financial reports, Parent company 39 Notes

53 Auditor’s report

54 Corporate governance report 56 Five year plan

57 Glossary, defi nitions and Annual General Meeting

O

Ortivus’ core expertise is its profound understanding of healthcare, emergency services and public safety processes as well as clinical knowledge and cutting edge IT and data communications. Budgetary cuts within the healthcare sector, an aging population with greater care needs, more centralized specialist care and quality assurance constraints are all trends that support Ortivus’ strategy and business concept.

Ortivus focuses on Europe and North America, and the company has subsidiaries in the UK, Denmark, Germany, Canada and USA. Sales and marketing activities are carried out by partners in selected markets in Europe.

The company was founded in 1985, and is listed on the OMX Nordic Exchange Small Cap list. Ortivus has a total workforce of 165, and its head offi ce is located in Stockholm.

ORTIVUS IN BRIEF

1985

Ortivus is founded with the purpose of developing, manufacturing and marketing a unique system for monitoring patients suffering from ischemic heart disease – MIDA (Myocardial Ischemia Dynamic Analysis). Initial development takes place in collaboration with the Medical and Technological Foundation at Chalmers in Gothenburg.

1987—1991

Clinical prototypes of MIDA are tested and assessed at sites that include the Karolinska and Sahlgrenska hospitals.

HISTORY

1992

The fi rst commercial version of MIDA-Coronet is launched on the Swedish market. Most of the customers choose this system, which gains a strong footing in Sweden.

1994

An OEM agreement (Original Equipment Manu- facturer) is signed with Hewlett-Packard (later Philips Medical Systems) for MIDA. Ortivus acquires Svenska Telemedicin System AB in Gothenburg, which develops and markets various telemedicine applications, including MobiMed.

1995

MobiMed is introduced in a full-scale commer- cial version to the Swedish market.

1997

Ortivus is listed on the Stockholm Stock Exchange ordinary list. Ortivus US is founded in order to establish the company on the US market.

1998

MobiMed PWS-1000 is launched, probably the world’s fi rst complete portable telemedicine terminal for pre-hospital use. Ortivus UK is founded to market MobiMed on the British market.

AL REPORT 2006

ORTIVUS ANNU

• Sales revenues amounted to MSEK 199.8 (173.6)

• The operating loss amounted to MSEK –128.4 (–21.8)

• The loss following fi nancial items amounted to MSEK –127.8 (–18.2)

• The loss following tax amounted to MSEK –149.2 (–17.7)

• The loss per share amounted to MSEK –8.51 (–1.22)

• Ortivus selected as suppliers to the world’s largest health sector IT project. The sale concerned electronic patient records for a total of 800 ambulances in the UK.

• Ortivus confi rms its position as market leader in cardiac monitoring systems in Sweden.

• Ortivus completes its aggressive investment in line with its new strategy and carries out a new share issue for more than MSEK 170.

• Restructuring in Germany resulting from the drastically changed market conditions.

• Ortivus and Philips Medical Systems receive strategically important orders to equip the Piemonte region in Italy with MobiMed systems for pre-hospital care.

• Distributor agreements entered into with partners in Spain, Bel- gium, the Netherlands, Switzerland, Hungary and Greece.

• Ortivus gets a breakthrough order in Canada, with the installation of around 40 MobiMed systems.

THE YEAR IN BRIEF

Key fi gures 2006 2005

Net sales, MSEK 199.8 173.6

Operating loss, MSEK –128.4 –21.8

Loss for the year MSEK –149.2 –17.7

Operating margin, % neg neg

Loss per share, SEK –8.51 –1.22

Return on equity neg neg

Equity ratio, % 68 64

Average no. of employees 172 144

2001

Acquisition of the US company, Sweet Compu- ter Services Inc. in the US, which gives Ortivus a strong market position within administrative systems for ambulance healthcare. Ortivus is the fi rst company in the world to present a medical technology product that uses Blue- tooth technology – MobiMed 300.

2003

Acquisition of the Canadian company AVeL- TECH. This completes the product portfolio, offering positioning and alarms systems for

2004

Co-operation with Philips Medical ends.

A pilot project for a new monitoring system for cardiac intensive care wards, CoroNet, is installed at a trial customer.

2005

CoroNet is launched in Sweden, which results in orders from the Sahlgrenska and Karolinska University hospitals. Around 100 Norwegian ambulances in one health region are equipped with MobiMed. Ortivus UK is strongly involved in negotiations concerning the national IT

North American companies reinforce their posi- tion in the Emergency Services market. In May 2005, MEDOS AG is acquired in Germany. This involves both a broadening and strengthen- ing of the product range in Healthcare IT, and establishment on the German market.

AL REPORT 2006

Ortivus has a total of approximately 165 employ- ees. Its head offi ce is located in Stockholm. The company’s three Business Units, knowledge centers with focus on both sales and product develop- ment, are located in Sweden, Germany and North America. Other subsidiaries, Sales and Service Units, are located in the UK and Denmark. Ortivus is represented by business partners in other key markets in Europe.

VISION, BUSINESS CONCEPT, STRATEGIES AND GOALS

VISION Ortivus’ vision is to be the customers’ fi rst choice as supplier of integrated information and decision-support systems within the business area Emergency & Patient Management.

BUSINESS CONCEPT Ortivus AB is a Healthcare IT company that offers information and decision-making support systems for Healthcare, Emergency Medical Services and Public Safety in Europe and North America.

Ortivus’ business is divided into three application areas.

• Emergency Services

• Cardiovascular Disease Management

• Clinical Information Systems

The products within Emergency Services aim at making clinical and administrative proces- ses within healthcare, emergency services and public safety more effi cient.

In the Cardiovascular Disease Manage- ment sector, Ortivus develops systems for monitoring patients. A particular focus has been placed on developing fl exible solutions for monitoring heart patients in hospitals, during medical transport and operations.

Our Clinical Information Systems products aim at making healthcare processes more effi cient in specialist areas such as radiology, pathology and cardiology.

From product development to sales and after-market services

To sum up, the products belonging to all of the application areas aim at assisting person- nel, within healthcare, emergency medical services and public safety to make the cor- rect decisions so that they, in turn, can help patients to get the correct care at the right time, in the right place.

STRATEGIES

Ortivus will use its knowledge of processes within the three defi ned application areas, in combination with clinical knowledge and leading technology, in order to create a unique and profoundly specialized customer offering.

Focus on markets and customers Ortivus’ systems and products is developed in close cooperation with its customers and

are noted for their user-friendliness. As our work encompasses the entire chain, from product development to sales and after- market services, there is always an ongoing dialogue with customers, which ensures that new requirements and trends are reacted to quickly.

Ortivus’ product range is complemented with after-market services such as training, software updates, service contracts and consultation.

Internationalization

Ortivus will grow in key markets in Europe and North America. There is a trend towards stricter demands on coordination of IT and emergency services in several European markets.

Ortivus’ sales work is handled partly by own sales organizations and partly by partners.

Product strategy

Ortivus’ solutions build upon existing standards and offer open interfaces in order to facilitate integration with other suppliers’

products and customers’ existing systems.

Ortivus offers modular systems, making it easy for OEM partners to sell the products.

OPERATING AND FINANCIAL GOALS

2007–2008

• Lay the foundation for profi tability and growth through further focusing

• Achieve a positive cash fl ow

Own companies Partners

All of the application areas aim at assisting person- nel within healthcare, emergency services and public safety to make the correct decisions so that they, in turn, can help patients to get the correct care at the right time, in the right place.”

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AL REPORT 2006

T

The international launch of MobiMed and CoroNet has taken longer than expected, partly due to delays in product launches and partly due to our cus- tomers’ long negotiation- and decision processes, in some cases up to 2 years.

We remain, however, optimistic that the fi rst results from these new markets will be seen in 2007. Orders in e.g. Canada, Italy and the UK, provide con- fi rmation of the company’s international growth strategy.

In the UK, Ortivus was selected as preferred supplier to equip 800 ambulances in the Southern Cluster with electronic patient records within the program “National Health Service Connecting for Health” (NHS CfH), one of the world’s largest IT projects in the healthcare sector. Ortivus’

involvement within the framework of the NHS CfH-project has required major investments in product development during 2006. We expect fi rst revenues from the project in 2007. It is encouraging to note that this project also entails potential for add-on sales of MobiMed hardware and monitoring solutions.

In North America, our companies continue to develop their activities in a positive way, with increased profi tability and sales. We have a market lead- ing position for billing services within ambulance organizations. Our North American operations were also able to win a very prestigious and important customer, as well as ensuring a breakthrough order for MobiMed in Canada.

In Germany we experienced a drastic increase of competition within our subsidiary MEDOS’ business area, which over a short time resulted in much

Success and setbacks

THE CEO’S REPORT

ORTIVUS ANNU

lower customer prices. This had a direct impact on the company’s profi tability.

A restructuring project was therefore initiated during early fall and will be concluded in Q1 2007.

The work with a common product platform for the Emergency Services-area has continued. The fi rst products based on this new platform are currently under development.

During the year, Ortivus has made major investments in continued product development, quality assurance and market launches of CoroNet, our fl exible and mobile patient monitoring system for cardiac care units. In 2006, sales of the system were focused on the Swedish market, where we were able to confi rm our market leading position. The order from the Academic Hospital in Uppsala is one example of important contracts signed during the year. An in- ternationalization of the CoroNet system has been initiated, with a clear focus on selected markets in Europe.

In order to complete these aggressive investments, we ensured required capital needs through a new share issue, which raised MSEK 173 before issue expenses.

The comprehensive internationalization efforts, ensuring our commitments within the framework of the CfH-project in the UK, the increased price pres- sure in Germany with associated restructuring and write-down of goodwill, delayed product launches, as well as product and quality investment in Car- diovascular Disease Management, are all factors which have had a negative impact on cash fl ow and operating profi t. We are convinced though, that the current activities ensure a future profi table growth.

I would like to conclude by thanking our customers and colleagues for all of their efforts during 2006 and look forward to continuing our strong com- mitment to our mutual efforts to actively contribute to saving lives of people in need.

Mikael Strindlund

Managing Director and CEO Ortivus

In the UK, Ortivus was chosen as the supplier to equip 800 ambulances with electronic patient records for ‘National Health Service Connecting for Health’

(NHS CfH), one of the world’s largest IT projects in the health sector.”

’ ’

AL REPORT 2006

The healthcare sector is undergoing a process of change in all industrialized countries. The higher demand for qualita- tive care, combined with an increasing aging population, means that costs and the need for care are expected to increase heavily in the near future. The change in age distribution in society will probably also involve staffi ng prob- lems. In addition, healthcare is already strugg ling with fi nancial problems, which explains the stringent demands for pro- ductivity and cost effi ciency.

Great demand for complete solutions The driving forces behind this development are various and include effi ciency measures and pressure on costs, but also increased demand from the customers for “one-stop shopping”. In parallel with this, it is also possible to observe a certain market entry of, e.g., Asian companies in the more traditional equipment-oriented medical technology market. This will involve further pressure on prices within areas such as less complicated patient monitoring, etc.

AMBULANCE HEALTHCARE

An ambulance organization has two main tasks to fulfi ll: it must be an effi cient, well- functioning transport organization, and it must also play an integrated part in the medical care process. With products and solu- tions for vehicle direction, positioning, map- ping, as well as communication, we ensure that the correct vehicle, containing the cor- rect equipment is in the correct place when needed. The system for documentation and activity follow-up also permits full control of the vehicle fl eet, analysis and development of the activity, as well as correct invoicing for services performed.

In order to offer qualifi ed care, you need products and solutions that facilitate and support the work and decisions of the staff, increase the medical quality and contribute to an improved total care result. During a call, data to and from the ambulance must be integrated with information from other players in the care chain, until the patient is handed over to the next link in the chain.

The level of maturity for integrated IT solutions within ambulance healthcare is clearly different in different countries. In general, Europe, primarily the Nordic region and the UK, are in the forefront.

Canada resembles certain parts of Europe, while the US, due to its traditions and sys- tem of compensation, often lacks the deeper collaboration across organizational bounda- ries between ambulances and hospitals.

The need for new methods and ways of working that aim at earlier diagnosis, while at the same time providing fast and correct treatment at the right level of care is on the increase. The goal is shorter periods of treat- ment, and better treatment results, which lead to lower costs.

In addition, ways are sought to improve follow-up of illness and the long-term treat- ment process, in which patients are expected to play a more active part. Such expressions as “disease management” and “personalized care” are becoming more signifi cant. As part of this staged change, parts of the care are transferred to simplifi ed care institutions and the home. Requirements are also made to changes in working methods and new organization of labor. Process philosophy is gaining ground more and more in care, as are improved activity follow-up, quality assur- ance and more effi cient administration, as well as new methods having to be “evidence- based”.

Increased use of IT in the care sector Increased use of various integrated IT solu- tions is advocated to an ever-increasing de- gree by national and international coordinat- ing bodies, authorities and politicians. The goal is increased effi ciency, cost reductions, greater care quality and safety. National IT efforts directed at healthcare are therefore taking place in many countries, including the UK, Canada, Australia and Sweden.

The EU research and development program is investing heavily in Healthcare IT.

The whole medical technology market, including the IT sector, is characterized by an ongoing strong consolidation. The respec- tive market segments increasingly consist of a few global players, which are comple- mented by some medium-sized and partly international companies, and a number of often small, local, niche companies. Some of the global players also cover, more or less, both traditional medical technology, such as monitoring and image generation, as well as

A changing landscape where IT solutions are gaining more prominence

THE MARKET

Healthcare

ORTIVUS ANNU An ambulance service with new tasks

One interesting development is the more comprehensive role that the ambulance serv- ice is expected to play in the near future.

Similar proposals and thoughts are being aired in several countries, but have perhaps been most clearly formulated in the UK.

What can now be seen arising is an ambu- lance service that is heavily integrated both with emergency care in various forms and with primary healthcare. Such expressions as “treat and leave” and “treat and refer” are central to these changes. The background to this transformation is the fact that around half of the patients who are taken to hospital at present could have been treated entirely on site, or directly transferred to some other part of the healthcare system, without having to increase the workload on an already overloaded emergency healthcare system.

An important part of an integrated am- bulance system is the electronic ambulance records system, and its connection to hospi- tal records systems, national lists of patients, etc. In the same way, documentation for coordination of care, various forms of deci- sion support and well-functioning solutions for confi dentiality, eligibility control and protection of integrity are important. Within the “NHS Connecting for Health” program in the UK, in which Ortivus participates, all of these components are represented.

Effi cient care programs require good IT support

New comprehensive care programs, concen- trating on, e.g., acute stroke, trauma or chest pain/suspected heart attacks have been introduced regionally. This impacts on the needs and design of the ambulance IT and communication solutions. Within the area of chest pain/suspected heart attack, the suc- cess of, e.g., telemedicine from ambulances,

is installed in approximately 70% of all ambulances, data from the so-called Riks HIA register shows that between 2001 and 2004, the time to treatment was reduced by nearly one hour, thanks to the possibility of pre-hospital thrombolysis (which in Sweden requires telemedicine). It has been estimated that long term mortality could be reduced by 30 percent, compared with the reference group (cf. Björklund, et al.)

Data from the same source (Riks HIA) also shows that during the ten-year period in which telemedicine from ambulances was introduced in Sweden (1995-2005), the total mortality as a result of acute heart attack was reduced by 10% (B. Lindahl). This posi- tive trend can of course not be attributed solely to these technological developments, but they have contributed.

CARDIOLOGY AND

CARDIO-VASCULAR DISEASES Heart care is in a process of change. In the case of treatment of heart attacks, the trend is toward being more aggressive in the treat- ment of established cases. PCI (Percutane- ous Coronary Intervention, an operation that expands the coronary artery using a balloon catheter) is increasingly the standard method for treating acute heart attack. The change to this procedure leads to shorter hospital stays and less demanding care for the majority of patients. This procedure makes it important to identify patients to be treated in this way as early as possible, e g in the ambulance, and those whose problems have another source and who must be treated in another way. A number of different tools, e.g., ECG are avail- able to assist in fast selection and prioritizing.

Treatment of the majority of standardized diseases is often determined by internation- ally suggested and recommended guidelines.

The introduction of e.g. national quality reg- isters, also opens for more process-oriented

In order to offer qualifi ed care, you need products and solutions that facilitate and support the work and decisions of the staff, increase the medical quality and contribute to an improved total care result.”

‘‘

AL REPORT 2006

of patient category composition. The share of elderly and people with multiple disorders is increasing and these patients require increased efforts and coordination between different specialists.

More fl exible and easier monitoring solutions are being sought. Patients must be bed-ridden as little as possible and prefer- ably have the opportunity of being able to move around freely while still being moni- tored and without safety being compromised.

The market for patient monitoring sys- tems within the cardiology sector is charac- terized by maturity and is mainly a replace- ment market in most countries. Growth is, therefore, limited in the traditional markets, which are dominated by such companies as Philips Medical Systems, Dräger Medical and GE Medical, which can offer comprehensive and general monitoring systems to meet all of the hospitals’ monitoring needs, such as intensive care, operations, recovery and also cardiac care. In parallel with these, low-price

Asian companies are making entry into the European market.

Specialization is a clear factor for success.

Ortivus has chosen to exploit its unique and historically well-founded expertise to specialize heavily in cardiac monitoring. This, in conjunction with qualifi ed and innovative technical solutions, contributes to Ortivus’

being able to achieve a strong position within this niche, for which the unique needs are not always met by the more general solutions from the larger players. Ortivus is, for example, able to link CoroNet with the ambulance system MobiMed, to ensure an unbroken information chain from the fi rst contact with the patient until he or she is discharged from the hospital. At the same time, Ortivus can offer solutions that can interact with other systems and suppliers, either as sub-system suppliers or as an OEM.

CLINICAL INFORMATION SYSTEMS Process orientation and effi ciency are trends of increasing importance in healthcare .

Access to all relevant patient information is a pre-condition for being able to introduce and develop the patient and care processes.

In the same way, it is important that un- necessary delays are avoided in connection with, e.g., use of the radiology department.

Information that is needed to make the right decisions may come from different sources and take the form of clinical photographs, reports, opinions, audio fi les and video.

As ways of working vary between differ- ent clinics and departments, it is important for suppliers to be able to understand this, as well as be able to adapt and optimize their solutions to the needs of the customer.

Common to several medical specialities is that they, to a great extent, build on image processing, as well as communication and in- tegration with other activities and systems.

MEDOS’ products and services allow Ortivus

The market for patient monitoring systems within the cardiology sector is characterized by maturity and is mainly a replacement market in most countries.”

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ORTIVUS ANNU

CARDIO-VASCULAR DISEASES

Cardiac and cardio-vascular diseas- es are the most common cause of death in the western world. In the US alone, nearly a million people die each year from cardio-vascular diseases. In Sweden, more than 100,000 people each year (approx.

1,200 per 100,000 per head of population) suffer from acute heart attacks, according to statistics from the National Board of Health and Welfare, and more than 10% of them die within 28 days. Chronic heart failure is another signifi cant cardio-vascular disease. At present, it is estimated that around 2%

of the population of the western world are suffering from chronic heart failure. In the case of the US, this involves more than 5 million individuals and for Sweden nearly 200,000.

to offer medical systems for radiology, pa- thology and nuclear medicine, among others, which meet these requirements.

Consolidation and collaboration The market is clearly marked by consolida- tion, with the subsequent competition on prices, an increasing entry of global players, integration requirements, including standardization of protocols and terminology, as well as the ability to handle “change man- agement.” The larger players are extending their offer to their client base by participa- tion in strategic planning, confi guration and design of hardware and infrastructure, as well as implementation of their solution. In addition, integration and benefi t analysis are carried out after implementation. One condi- tion to be able to work in this way is a close relationship with the end customer, as well as understanding the specifi c requirements of each customer.

Cross-border collaboration

A more common use of IT within the health- care sector, based on large, overall solutions from individual global suppliers, will still cre- ate space for niche and local players within special application areas, such as radiology, pathology and cardiology. If success is to be achieved, these small players must be able to interact with other players.

Integration between IT systems and medi- cal technology equipment will increase in importance. This means that it will become more important for specialist players within respective areas to approach each other, or to increase their product range in order to be successful.

Cause No of deaths

All cardiovascular 17.5 million

Ischemic heart disease 7.6 million

Cerebrovascular disease 5.7 million

All cancer 7.6 million

Lung cancer 1.3 million

Stomach cancer 1 million

Liver cancer 662,000

Colon cancer 655,000

Breast cancer 502,000

SOURCE: WHO

LEADING CAUSES OF DEATH IN 2005 (global)

Nearly a million people die each year from cardio- vascular diseases in the US.

1,000,000

AL REPORT 2006

Alarm and support of administrative processes

When an alarm is sounded at the emergency control center, Ortivus offers IT support for ambulances, the rescue services and police in alarm call taking, vehicle routing, assignment transfer, as well as navigation and mapping support. Tools for documentation and qual- ity assurance are available both during and after the mission. The Ortivus product range includes:

Sweet EMS products: Invoicing (Billing), Computer aided disptach (CAD), vehicle routing and call documentation for ambulance organi- zations (Field Data).

AVeL-TECH products: Information system and solutions for public safety services services for dispatch, vehicle navigation, positioning, mapping support and documentation.

Decision support during ambulance transport

The ambulance service is assisted in making more qualifi ed and cor- rect treatment choices when they are given a better basis on which to make decisions during a mission. At the same time, it enables integration of the ambulance service into the overall healthcare process. While the patient is being transported all relevant informa- tion about the patient is transferred between the hospital and the ambulance. On pick-up and during transport, patients’ vital functions are monitored, and clinical decision support, telemedicine consulta- tion and treatment documentation are offered. Ortivus’ solutions also offer activity analysis and follow-up. The product portfolio is called MobiMed.

MobiMed products: MobiMed Telemedicine is a process-oriented telemedicine and information system for ambulances. MobiMed ePR is an electronic patient record where all relevant data from the ambulance is stored.

OUR PRODUCT RANGE

Ortivus’ products support and streamline customers’ processes within Emergency Services, Cardiovascular Disease Management and Clinical Information Systems. Focusing on the patient,

the care provider and the business, Ortivus develops products that contribute to improved care and more effi cient management.

Ortivus is with you all of the way

Hospital care in the specialist sector

Ortivus develops clinical patient information systems within such niche areas as cardiology, radiology and nuclear medicine. Within the cardiology sector, the solutions contribute to increase clinical preci- sion and offer an improved basis for decisions while monitoring and treating heart patients. The clinical information system makes the working processes of departments more effi cient and strengthens them by integrating and coordinating all relevant information about the patient in a single system. Tools for image analysis, documenta- tion and reporting are also available. Ortivus’ product portfolio within these two application areas includes:

CoroNet: A monitoring system for cardiac intensive care, consisting of both bedside monitoring and central monitoring with a worksta- tion for more detailed analysis. Bluetooth technology permits a fl exible solution, in which the patient can move freely, if so desired.

CoroNet includes Ortivus patented and unique MIDA technology for ischemic analysis.

MEDOS PACS (Picture Archive and Communications System): A general image storage and image processing system, based on cur- rent, accepted standards. The system supports the investigations of cardiology and radiology, analysis and fi ling of images from various sources, as well as communication and coordination with systems from other suppliers.

MEDOS MIS (Medical Information System): Process-oriented soft- ware applications that support the workfl ow and processes within, for example, the radiology department. The solutions connect information from different sources in one “electronic patient record,”

in order to provide an overall picture of the patient and a reliable basis for decision.

• EMERGENCY SERVICES • CARDIOVASCULAR DISEASE MANAGEMENT

• CLINICAL INFORMATION SYSTEMS

ORTIVUS ANNU

A couple of minutes earlier, the control center has received an emergency call. Using Ortivus’ CAD system, resources have been rapidly allocated to the mission. Using Ortivus’ AVeL products, which among other features contain GPS and map functions, the ambulance driver has found the fastest route to the site, and the ambulance crew has been provided with all relevant information about the patient. Using Ortivus’

MobiMed system, the ambulance staff monitor the patient’s vital data and inform the doctor at the receiving hospital about the patient’s condition.

08.54 The ambulance team arrives at the accident site

AL REPORT 2006

Clinical applications

Ortivus’ Emergency Services are split into clinical and administrative applica- tions. The clinical applications aim at providing clinical decision support for pre-hospital care, and are marketed under the product name MobiMed.

MARKET TRENDS AND PROJECTS DURING 2006

The Nordic region

During 2006, Ortivus retained its strong position with pre-hospital IT solutions in Sweden. The year has been marked by few new open tenders. For this reason, sales activities in Sweden have mainly focused on added sales to existing customers. The new software version MobiMed 3.0, upgrading old hardware in ambulances, as well electronic patient records, have been successfully deliv- ered to the regional authorities.

In Norway, a MobiMed system was in- stalled in more than 100 ambulances in the Helse Midt-Norge region during spring 2006.

Europe (excluding the Nordic region) The UK is one of the most important markets for MobiMed, with a large installed base of around 400 ambulances and large future potential added sales. In May 2006, Ortivus was chosen by Fujitsu to supply MobiMed ePR, software system for ambulances, as well as a a 9-year support contract. A total of around 800 ambulances in southern England will be equipped with the patient record system within the framework of the IT healthcare project “NHS Connecting for Health.” Delivery and revenue will come in 2007.

Our breakthrough in Italy came in August 2006, with an order from the Piemonte Region for a MobiMed system to be installed in 72 ambulances and 5 helicopters. De- livery, which is a cooperation with Philips

Italy, began in the last part of 2006 and will continue into 2007. The market for MobiMed in Italy in the years to come is estimated to be positive.

The launch and sales of MobiMed via our own sales company in Germany in 2006 have been a disappointment. Discussions with a number of potential reference sites are under way, and assessment of the results of these activities is expected in the second half of 2007. It is, however, too early to make any estimations of the potential size of the German market for MobiMed.

During 2006, distribution contracts for MobiMed were signed with the following new European markets: Spain, the Nether- lands, Belgium, Luxembourg, Switzerland, Greece and Hungary.

Of these, Spain and the Benelux countries are considered to have the best sales poten- tial during 2007.

North America

In 2006, Ortivus received a breakthrough order for 40 ambulances in Quebec that was installed in the summer of 2006. With this reference installation in operation, and tak- ing into consideration the size of the country, and the suitable structure of its healthcare, we consider that continued success for Mo- biMed in Canada should be within reach.

THE SALES PROCESS

The sales process is marked by a high pro- portion of public sector tenders, stringent product certifi cation requirements, sales cycles of approximately 9–24 months, need for knowledge of the processes within the ambulance sector, and modern IT and data communication. Ambulance services are usually run as external, private contractor businesses, which are tied to hospitals on 2–4-year contracts. The healthcare system in a country is usually organized and specifi ed on a regional basis, with complementary

regulations, specifi cation and forms of remu- neration that control direction and focus on a national basis.

The competitive situation and the early market phase place major demands on sup- pliers’ fl exibility for national customization.

Ortivus has a competitive edge thanks to its contact network and experience from several different countries.

OTHER PLAYERS

The main competitors to MobiMed ePR and MobiMed Telemedicine are international suppliers of defi brillators, such as the US companies Medtronic and Zoll and small, local suppliers. Within the electronic patient record sector there are such companies as the Cana- dian company, Medusa and local consultan- cies and IT integration companies.

Administrative applications

The administrative applications in Emergency Services are mainly being de- veloped and marketed in North America.

The applications contain invoicing sys- tems and CAD systems that support the emergency call process for the police and rescue services.

MARKET TRENDS AND PROJECTS DURING 2006

Ortivus’ Emergency Services invoicing sys- tem is a market leader in North America, and developments during 2006 remain positive.

During 2006, a number of new products and system versions have been launched, for example, Billing 5.2, Field Data 5.2 and SweetCAD 5.2.

An important contract worth USD 1,285,000 was signed with the PRIDE Group (Police Regionalized Information and EMERGENCY SERVICES

Strong position in the US and new partners in Europe

ORTIVUS ANNU Data Entry) in southern Ontario. The order

includes change of the organization’s current emergency call system to the Ortivus CAD system.

THE SALES PROCESS

The sales cycles for Ortivus’ administrative applications are relatively short: 1-3 months for Billing, Ortivus’ invoicing system, and 3-9 months for Field Data, the software for reporting and quality follow-ups. Around half of our customers are made up of private ambulance organizations or invoicing companies. These sales processes rarely require public sector procurement. The decision makers are often the owners of the organizations, their Managing Directors and offi ce managers. Purchase of CAD systems requires public procurement processes. The procurement decision is made by a commit- tee and the processes can often be drawn out. Purchase of CAD systems is budgeted for around 12 months in advance and the customers are large organizations with the police and rescue services.

OTHER PLAYERS

An important player within Emergency Services in North America is Zoll, which supplies both invoicing and CAD products.

Other, signifi cantly smaller, competitors in the North American market are Healthware, Imagetrend, EMS Charts, RAM and Medmedia.

SStar EMS is a private-for-profi t Emer- gency Medical Service (EMS) that serves a large portion of Oakland County, Michigan, an area of 1.3 million people north of Detroit. Bill Grubb, partner and CEO of Star EMS, says that their mis- sion statement integrates with their motto

“There is no higher honor than to be given the responsibility to care for another hu- man being.” Bill has led his organization to operate according to this philosophy, and word has spread as exemplifi ed by their rate of growth: from an average of 65 to over 700 service calls per week in under four years. Certainly, Bill’s involvement at nearly every level of the organization, including spending days working the am- bulance runs, has a great deal to do with the organization’s excellence in fl uency, effi ciency, professionalism, level of quality and employee morale. Ortivus is proud that Star EMS has partnered with them, using the Sweet software applications as part of the operational component of the business.

Star EMS began using Sweet-Billing in 2003, when they began operations.

The Sweet-CAD and Sweet-Field Data applications are also part of the Star EMS operational system. Bill states that the integration of the information between the three Sweet applications is crucial, as it eliminates key strokes and data entry time signifi cantly. He also appreciates the

customer service he has received from Ortivus and says that, “If a problem occurs, we don’t want to have more than one company to work with.” Time is important, especially in the business of healthcare.

The drive for achieving excellence is found throughout Star EMS, as demon- strated in June of 2006 when Star EMS hosted an Ortivus Group training. Although Ortivus has conducted group trainings at customer sites in the past, this was the fi rst “hands-on” group training coordinated with a customer, which involved set-up and preparation for hosting other EMS services on-site with functional computer systems working from a common database for each person. Kim Boyd, the Billing Man- ager for Star EMS, who coordinated the event, said: “I considered it a great suc- cess and we would love to host another training at some point. We had several relatively new employees and the cost of bringing the User group to our location versus sending multiple employees out of state for training was considerably less. It is a great benefi t to have your [Star EMS]

entire staff receive hands-on training at the same time. As a group, we were able to think of questions or problems that were specifi c to our company and resolve them together.

We also invited people in from other services. All participants in the group training share the same state-specifi c requirements. Collectively, we were able to answer one another’s questions along with our awesome trainer. It never ceases to amaze me that each and every time I attend an Ortivus User Group or Group Training, I learn something new that the program can do for our service.”

Star EMS

The UK is one of the most important markets for MobiMed, with a large installed base of around 400 ambulances and large future potential added sales.”

Case

‘‘

AL REPORT 2006

CoroNet, Ortivus’ system for monitor- ing cardiac patients has been positively received on the Swedish market. The system is now about to be launched on selected key markets in Europe.

THE SALES PROCESS

The market for monitoring systems is mature, but new telemetry technology has opened up new segments and business opportunities.

Cardiac monitoring systems are mainly sold through public sector procurement processes, when all, or parts, of the hospital’s total re- quirements within acute departments, cardiac intensive care, operations and recovery need renewal. Specially developed applications are set against the benefi t of only having one supply for the entire requirement.

Comprehensive clinical tests, reference visits and demonstrations are typical for this process, which can often extend past 12 months.

Both purchasing managers, cardiologists, IT and business managers, as well as users,

are involved in the decision process.

Competition in prices for qualifi ed cardiac monitoring by telemetry is considered to be hardening, but new functionality and innova- tion still gives us a premium price and the clinical evaluation is still the most important in many markets.

MARKETS The Nordic region

During 2006, Ortivus still occupies a dominant position in the Swedish market for cardiac monitoring systems in cardiac intensive care. Orders have been received from the Academic hospital in Uppsala, and the regional hospital of Norra Älvsborg for delivery of the CoroNet application.

Europe (excluding the Nordic region) During the year, establishment of sales chan- nels and launch of CoroNet has taken place in Belgium, Germany, the UK, Norway and Denmark either through our own subsidiaries or through partners.

All of the contractual partners have previ- ous experience with sale of cardiac monitor- ing systems and have extensive knowledge of the clients and the market. Expansion will continue at the start of 2007 with new partners starting up in Italy, Spain and Aus- tria. During 2007, Ortivus will also consider the possibility of strategic collaboration with other suppliers within the application area, in order to secure continued growth in Europe.

OTHER CARDIOLOGY PLAYERS The global market for patient monitoring systems is dominated by such companies as Philips Medical, Dräger Medical and GE Medical. The primary products from these companies offer more overall and general monitoring systems for hospital’s general monitoring needs, for example, intensive care, operations, recovery and also cardiac care. Ortivus has a proven strong product in CoroNet, and our specialty in cardiac monitor- ing is considered to provide great opportuni- ties to occupy a strong position in selected European markets within this niche.

CARDIOVASCULAR DISEASE MANAGEMENT

Continued strong position on the Swedish market

T he Academic hospital is responsible for ambulance services in the coun- ty of Uppsala, and serves around 315,000 inhabitants of the county. The ambulance service is becoming increasing- ly important, as many medical actions can be carried out before the patient arrives at the hospital. Over the two last decades, it has been possible to send ECG and tele- medicine information from ambulances.

Information used to be documented on paper, which was subsequently scanned in the hospital system.

”The old record handling system did not manage suffi ciently comprehensive reporting. Nor was it possible to update the list of medicines that was constantly

being changed,” explained Per Andersson, Operations Manager for the ambulance service in Uppsala county.

UPPSALA AMBULANCE SERVICE chose Ortivus MobiMed for transfer of detailed informa- tion from the ambulance to the treatment hospital. The system is a tool for treatment outside the hospital premises, assessment, resource planning and research.

The next step is to make it possible to export the journal created in the ambulance directly into the hospital’s administrative system.

“You could say that the new system is like moving from MS DOS to Windows XP.

We benefi t from this system every day, as Uppsala ambulance service in Uppsala county

the information about what has happened at the accident site is often unique.

The new software gives nursing personnel access to this underlying information in a completely new way. It is very important in the patient’s continued treatment,” concludes Per Andersson.

Case

ORTIVUS ANNU

08.54 Ecte del ute min ut elenim volore09.05 The cardiologist at the receiving hospital directs the ambulance to a PCI lab

The cardiologist who has received information from the ambulance in real time can establish that the patient is suffering a heart attack and should receive treatment as quickly as possible. He therefore directs the ambulance to a hospital in the vicinity where the patient undergoes a PCI surgery.

AL REPORT 2006

MARKET TRENDS

Political and fi nancial trends impact on healthcare in general. In Germany, where MEDOS enjoys the largest sales, the healthcare market is currently in a process of great change: The health sector reform 2006/2007, as well as adopted changes to legislation, erases the former boundaries between direct mobile and more stationary units. The new healthcare reform also sup- ports collaboration between small medical practices, clinics and specialist units.

In order to avoid expensive hospital stays, the level of outsourced activities is constantly increasing. Small units, often com- mercial and privately owned, are established in direct contact with the hospital. New forms of invoicing have been introduced, in which payment is made at a previously established fi xed cost for the patient’s entire care period.

This avoids part invoicing and reduces total costs. Optimization of the processes, se- curing necessary cost-reducing measures, as well as increased demand on profi tability can only be secured by safe and stable software solutions that actively support the care cycle.

In 2007, the fi rst trials began of the new electronic patient card (Gesundheitskarte), which poses a comprehensive challenge to both industry and the health sector.

In parallel with this, the market is under- going consolidation. Hospitals are merged, acquired, large purchasing chains are formed, clinics are merged and purchased, as are small medical practices.

The industry is also undergoing signifi cant consolidation. Many small companies have been purchased by large players in a short time. This consolidation is expected to con- tinue. The change in the German market has led to heavily increased competition, with

signifi cantly lower end customer prices as a result. This change really gained speed at the end of Q2 2006, when market conditions changed dramatically, leading to a drastic worsening of gross margins, in addition to lack of growth in volumes.

In addition to existing competitors, new players are expected to attempt to enter the market for, primarily, digital image process- ing, which in turn will lead to further pres- sure on prices.

MEDOS has a good reputation, a special- ized product portfolio, as well as ongoing investment in the MIS system for various clinical specialist areas. In light of this, a positive business development of MEDOS is expected.

MEDOS’ positioning

MEDOS AG has been developing and market- ing clinical information systems for 28 years.

Emphasis is placed on optimizing work fl ows within, and also between, different clinical specialties (including radiology, nuclear medicine, radiation therapy and pathology).

Even if the market is characterized by a few large MIS and PACS players, MEDOS’

competitive edge is considered to be good because of the company’s broad expertise in offering integrated solutions in a complex environment. These customer-oriented solu- tions generate good revenues from service contracts with all of its customers.

The market for digitalization of radi ology departments is growing. Even among smaller radiology centers a demand for digital solutions is noted. During 2006, MEDOS has been successful in strengthening its position in this segment. MEDOS’ competitors in this segment are smaller companies that offer attractively priced PACS solutions. MEDOS’

offer of integrated RIS/PACS solutions is CLINICAL INFORMATION SYSTEMS

Specialized offers and digital solutions

MEDOS MIS and PACS solutions have been specially developed to support the process fl ow and clinical documentation, both within hospitals and large and small general practices.

The main focus is on radiological ap- plications, such as order management, planning, documentation, diagnosis, com- munication and integration of medtech equipment, distribution of status reports and invoicing services. Ortivus aquired MEDOS in May 2005 and the company’s products and services are currently sold in Germany and Denmark.