Deltex Medical Regulatory News (DEMG)

Deltex Medical Group plc

("Deltex Medical" or "the Company")

Chairman's Statement to Annual General Meeting

30 April 2013 - At the Annual General Meeting of Deltex Medical being held today the Company's Chairman, Nigel Keen will make the following statement:

UK

UK surgical probe revenues are on plan to date. In the first quarter of the year they remained broadly at last year's high level and we have seen strong year-on-year growth in surgical probe sales in April.

April saw the start of the first year of a national drive by the National Health Service ('NHS') to implement intra-operative fluid management at pace and scale across the NHS in England. It is too early to assess the likely short term impact of this across the NHS as a whole and target adoption levels for future years will only be published later in the year. To date we have seen considerable variation both in NHS Trusts' awareness of the new requirements and in their state of preparedness to respond. However, we have already seen a sharp step up in probe orders from a small number of hospitals whose plans to comply with or exceed the minimum targets are most advanced.

Since January we have increased the UK surgical monitor installed base by 26 to 641. Securing allocations of restricted NHS capital budgets remains challenging however we continue to focus on driving rapid expansion of the installed base wherever possible. In this context we are pursuing proposals made to NHS Supply Chain to encourage bulk procurement of monitors.

USA

Probe sales in the US are ahead of last year's sales figures and are in line with management expectations.

The USA is the world's largest market for medical technologies. Even though clinical acceptance of the importance of intra-operative fluid management is behind that in Europe, there are growing signs that this is changing. Our two biggest hospital accounts in the USA are also our two best penetrated accounts in the world: we support both of these hospitals with dedicated clinical trainers and are generating high net margins and cash returns from them. US probe revenue growth in 2013 has been satisfactory and we are pursuing a number of opportunities for additional growth in strategically important hospitals.

This year we have announced two major developments which we expect to accelerate the opportunity for national roll out of CardioQ-ODM across the USA. In January we announced the next phase of our collaboration with Premier, the USA's largest healthcare alliance, following a highly successful pilot in 2012 with Duke University Hospital. Importantly, earlier this month we announced that the US Centers for Medicare and Medicaid Services, ('CMS'), have granted ODM a procedure specific reimbursement code and set a national level for physician payments at $101 per patient. This is a very significant step for the Company and means that physicians will be directly incentivised to use our system. Similar payments have provided a powerful driver towards adoption in previous new modality medical devices.

International

Probe sales to our distributors are on target. Our distributors have reported increases in end user sales of our products in the majority of our more important target markets.

CardioQ-ODM+

Since its launch late last year we have seen strong uptake for the new version of CardioQ-ODM+, our system which incorporates both flow and pressure measurements. CardioQ-ODM+ has been designed particularly for use in Intensive Care and clinical feedback has been highly supportive. In the UK, our intensive care probe revenues are ahead of last year. We will shortly apply for US regulatory approval for the system.

Summary

Deltex Medical has built market leading positions in the most developed markets for intra-operative fluid management and is building strong platforms for growth in other evolving major potential markets. Our gross margins are high, particularly on sales of disposable probes, our principal revenue stream, and our costs remain under tight control. We are generating substantial cash returns from our sales operation in the UK, our most developed market, and expect these returns to increase strongly as sales grow further. We have had a strong start for the year in probe sales and the Board looks forward to continued progress throughout the remainder of 2013 and beyond.

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Notes for Editors

Deltex Medical manufactures and markets CardioQ-ODMÔ Oesophageal Doppler Monitoring ('ODM') systems. ODM is the only therapy to measure blood flow in the central circulation in real time. Minimally invasive, easy to set up and quick to focus, the technology generates a low-frequency ultrasound signal, which is highly sensitive to changes in flow and measures them immediately. Randomised, controlled trials using Doppler have demonstrated that early fluid management intervention will reduce post-operative complications, reduce intensive care admissions, and reduce the length of hospital stay.

The CardioQ-ODM has two distinct established clinical applications: firstly, to guide fluid management during surgery and secondly, to monitor cardiac output in critical care settings.

Surgical market

In March 2011 the National Institute for Health & Clinical Excellence ('NICE') recommended that CardioQ-ODM be considered for use in patients undergoing major and high risk surgery and in high risk patients undergoing intermediate risk surgery. NICE estimated the applicable number of such patients in the NHS in England alone to be over 800,000 each year. CardioQ-ODM has been shown to be effective in both elective and emergency surgery and with both general and regional anaesthetics. This recommendation was specific to CardioQ-ODM and was based on the robust evidence base that supports its use.

Subsequent to the NICE guidance, the NHS in England announced its selection of ODM as a high impact innovation to be rolled out across the system fully, at pace and scale with significant financial penalties starting in the NHS 2013/14 financial year ending 31 March 2014.

The NICE evaluation and recommendation confirms that the potential global market for CardioQ-ODM in surgery includes tens of millions of patients, even if confined to developed health economies: the most conservative estimate of the potential value of the market opportunity Deltex Medical has created is in excess of £1 billion per annum. The Company's core focus is on building market leading positions in this surgical market, both geographically and by type of surgery.

Critical care market

In critical care settings, well-equipped hospitals will often have more than one cardiac output monitoring technology available. In this environment, ODM's strengths are that it is quick to set up, easy to use, safe, low cost and the ideal technology for a patient in crisis requiring rapid or frequent intervention. The potential market for cardiac output monitoring in critical care is a fraction of the size of that for intra-operative fluid management.

Through the 2012 launch of the CardioQ-ODM+, Deltex Medical has added the Pulse Pressure Waveform Analysis ('PPWA') approach to monitoring cardiac output to ODM functionality. Doing this has improved Deltex Medical's offer for monitoring applications as well as providing doctors and nurses with a choice of clinical strategies appropriate to individual patients in different clinical settings.

Company goal

Our goal is to make oesophageal Doppler monitoring (ODM) a standard of care for patients in both these markets. We believe that, in most modern health systems, it is essential to have a robust evidence base of both clinical benefit and cost effectiveness in order to achieve system-wide adoption of a new medical technology. Deltex Medical is one of the very first medical technology companies to have completed the investment necessary to build such an evidence base: as a result, use of ODM during surgery has the proven potential to deliver both clinical and economic benefits that are material at each of patient, hospital and system level.

The Company is currently in the implementation phase of achieving this goal in a number of territories worldwide and there are already over 2,800 CardioQ-ODM systems in use in hospitals worldwide. Distribution arrangements are in place in over 30 countries.