20/08/2003

MediVision presents management's report for the period ended on June 30, 2003

COMPANY ANNOUNCES CONTINUING GROWTH IN REVENUES AND NET PROFIT

THE COMPANY INCREASED ITS HOLDINGS IN THE AMERICAN SUBSIDIARY TO 85%

AMERICAN SUBSIDIARY SIGNS LICENSING AGREEMENT WITH NEXTGEN
 

Yokneam Elit, Israel, MediVision Medical Imaging Ltd. (EURO.NM: MEDV) released today (August 20, 2003) information concerning its operations and the financial results for the six and three months period ended June 30th, 2003.

MediVision has recorded a net profit of approximately U.S. $ 63 thousands for six months period. The second quarter of 2003 is the second quarter in which the Company shows a net profit. The Company and its subsidiary increased the sales in the six and three months period of 2003 by 16% and 14%, compared to the parallel periods of 2002 and reached sales volume of approximately U.S. $ 5,115 thousands and U.S. $ 2,570 thousands accordingly. The Company maintained a high level of Gross profit: 59%.

The EBITDA for the six and three months periods ended June 30, 2003 were approximately U.S. $ 421 thousands and U.S. $ 247 thousands accordingly, an improvement of 130% and 147%, as compared with EBITDA of approximately U.S. $ 183 thousands and U.S. $ 100 thousands for the comparable periods ended June 30, 2002.

In the second quarter of 2003 the company exercised an option to convert $1,150,000 of debt, owed by OIS, into stock, increasing its holdings in OIS by additional 12% to 85% of the common stock of OIS.

Ophthalmic Imaging Systems ('OIS'), the Company's American subsidiary signed on a reseller agreement with NextGen Healthcare Information Systems.

Noam Allon President and CEO of MediVision commented: 'We are pleased with the results which we achieved in the second quarter and first half of 2003. These results precisely conform with our plans and reflect the ongoing interest of our customers in our products as well as our continuing efforts to streamline the company and to improve our profitability. We are also encouraged by the increase of our sales in Germany, which is our focal point in our efforts to increase our market share in Europe. The European community is a vast market and we intend to increase our share in this region as we have done very successfully in the USA'.

Highlights of the Period ended June 30, 2003:

Increase in sales volume - Following the continuous increase in sales volumes in previous quarters, the second quarter of 2003 demonstrates again the on going confidence of the customers and market in the Company. This quarter is the tenth consecutive quarter in which the company presents growth in sales volume over the parallel quarter of the previous year. Medivision's sales for the six and three months periods ended June 30, 2003 were approximately U.S. $ 5,115 thousands and U.S. $ 2,570 compared to approximately U.S. $ 4,417 thousands and U.S. $ 2,264 thoudans sales for the parallel periods in 2002, an increase of 16% and 14% accordingly.

Net profit -This quarter is the second quarter in a row in which the Company shows net profit. This achievement is a further step, following the achievements of previous year, in which the Company has presented a positive Operating Income.

Increasing the holdings in OIS - On June 30, 2003, the Company converted a Working Capital Note at the sum of U.S. $ 1,150 thousands into shares of OIS's common stock. As a result of using the conversion options, MediVision increased its holdings in OIS by 12% and now holds 85% of the common stocks of OIS.

Agreement with NextGen - On July 21, 2003 OIS, the American subsidiary of the Company signed a reseller agreement with NextGen Healthcare Information Systems, a subsidiary of Quality Systems, Inc. (NASDAQ: QSII). Under the terms of the agreement, OIS was appointed as a reseller in the US of two computer practice management and medical records products: NextGen® Enterprise Practice Management (EPM) and NextGen® Electronic Medical Records (EMR).

The Company views this as a strategic alliance intended to diversify OIS's product portfolio and, enable it to offer a wider variety of products and comprehensive solutions to its customer base of ophthalmology departments and practices in the US. The NextGen® EMR system creates and maintains complete medical records with minimal effort while it streamlines workflow, controls utilization, and manages critical data related to patient care outcomes. The NextGen® EPM system is a complete physician management system that provides a common registration system, enterprise-wide appointment scheduling, referral tracking, clinical support, a custom report writer, and patient financial management based on a managed care model.

Information with regard to the Financial Situation For the period ending June 30, 2003
 

CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. Dollars (in thousands - except per share amounts)

Management's Discussion and Analysis of the Financial Condition and Results of Operations of the Company

Sales

The consolidated Sales for the six and three months periods ended June 30, 2003 aggregated to approximately U.S. $ 5,115 thousands and U.S. $ 2,570 thousands as compared to Sales of approximately U.S. $ 4,417 thousands and U.S. $ 2,264 thousands for the comparable periods of 2002 reflecting an increase of 16% and 14% accordingly. During the period ended June 30, 2003 88% of the Company's Sales were in the U.S.A., 10% were in Europe and 2% were to domestic and other markets.

Gross profit

Gross profit for the six and three months periods ended June 30, 2003 were approximately U.S. $ 3,023 thousands and U.S. $ 1,524 which are 59% of sales revenues, as compared with gross profit of approximately U.S. $ 2,625 thousands and U.S. $ 1,335 thousands, which were 59% of sales revenue for the comparable periods of 2002.

Research and Development Expenses

In accordance with International Accounting Standards (IAS), the Company does not capitalize its research and development expenses. Accordingly, statements of operations include research and development expenses. The Company's total R&D expenses for the six and three months periods ended June 30, 2003 amounted to approximately U.S. $ 519 thousands and U.S. $ 288 thousands or 10% and 11% of sales revenue respectively. The participation in R&D expenses related to the CGLT project by the BIRD-F during the six and three months periods ended June 30, 2003, which is included as a deduction of research and development expenses, amounted to approximately U.S. $ 153 thousands and U.S. $ 73 thousands, therefore net R&D expenses were approximately U.S. $ 366 thousands and U.S. $ 215 thousands accordingly, as compared to net R&D expenses of approximately U.S. $ 391 thousands and U.S. $ 238 thousands for the comparable periods in 2002. The R&D expenses for the six and three months periods ended June 30, 2003 are attributed mainly to the R&D efforts made in conjunction with integration between MediVision products and AGFA products and the CGLT project.

Selling and Marketing Expenses

Total Selling and Marketing expenses for the six and three months periods ended June 30, 2003 were approximately U.S. $ 1,501 thousands and U.S. $ 785 thousands, which are 29% and 31% of total sales revenues respectively, as compared to approximately U.S. $ 1,314 thousands and U.S. $ 686 thousands, which were 30% and 30% of total sales revenues during the parallel periods of the previous year. Marketing expenses include expenses stemming from marketing campaigns, trade shows, advertising in professional publications, travels, salaries and commissions.

General and Administrative Expenses

General and Administration expenses include mainly management salaries, professional services, rental, maintenance and various provisions. Total General and Administrative expenses for the six and three months periods ended June 30, 2003 were approximately U.S. $ 892 thousands and U.S. $ 358 thousands, which are 17% and 14% of the total sales respectively, as compared to approximately U.S. $ 910 thousands and U.S. $ 398 thousands, which were 21% and 18% of the total sales during parallel periods of 2002. The decrease in General and Administrative expenses in U.S. $ and in percentage of revenues further illustrates the success of the company in the implementation of a company wide streamlining plan.

About MediVision

MediVision specializes in digital imaging devices for ophthalmic applications with an emphasis on diagnostics related to the eye retina. MediVision's products are designed to provide digital upgrades for a range of ophthalmic imaging systems, thus significantly enhancing imaging capability and providing its users with advanced diagnostic tools. The company's goals are to achieve significant market share and be a market leader in the ophthalmic digital imaging field.

The company owns a 85% interest in Ophthalmic Imaging Systems Inc. based in Sacramento, California, USA.

This Release contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Management of the Company as well as assumptions made by and information currently available to the Management of the Company. Such statements reflect the current views of the Company with respect to future events, the outcome of which is subject to certain risks and other factors, which may be outside of the Company's control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results of outcomes may vary materially from those described herein as projected, anticipated, believed, estimated, expected or intended.

For more information, please contact :
Ariel Shenhar
MediVision Medical Imaging Ltd.
Vice President, Chief Financial Officer
Tel. ++972-4-9894884
Fax ++972-4-9894883
cel. ++972-52-821728

P.O. Box 45, Yokneam Elit Industrial Park 20692, Israel

ariel@medivision-ois.com

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