Deltex Medical Regulatory News (DEMG)

Deltex Medical Group plc

Pre-close update on the six months ended 30 June 2012

6 July 2012 - Deltex Medical Group plc, the global leader in oesophageal Doppler monitoring ("ODM"), today announces an update on its trading performance for the six months ended 30 June 2012.

Highlights

·; UK surgical probes grew at 30 % - almost double the rate achieved in 2011

·; Installed base of monitors, the platfrom for future growth, increased from 520 to 570 in UK operating theatres

·; NHS drive to implement fully ODM or similar fluid management monitoring technology expected to be launched over the summer

·; Sales on plan at £3.2 million

Deltex Medical entered 2012 with the foundations in place to underpin long term and accelerating growth in its key markets and in the year to date has seen encouraging signs of growing momentum in a number of these markets. Group sales were on plan at £3.2 million (2011: £3.0 million) underpinned by growth in UK surgical probes of £0.3 million to £1.2 million even though the launch of the NHS drive to implement ODM and five other high impact innovations will not be published until later in the year.

The rate of growth in surgical probe sales in the UK has increased markedly since December 2011 and was just over 30% for the first half, nearly double the rate during 2011 and 50% more than the trend growth rate of circa 20% between 2004 and 2011 inclusive. Cumulative year to date UK surgical probe growth rate was around 40% until June when the Diamond Jubilee Holidays and doctors' industrial action contributed to a flat month. The Company believes that the increased rate of adoption of CardioQ-ODM in the UK is attributable to the NICE recommendation of March 2011 rather than the decision of the NHS Chief Executive in December 2011 to implement ODM, the impact of which will only be felt in the future.

The UK surgical installed base increased by 50 monitors to 570 in the first half of the year with a higher proportion of monitors sold than placed following our decision to reduce substantially the monitor price late in 2011. Despite the short-term impact on revenues, the Board is confident that the expanded installed base is a leading indicator for accelerated future probe sales. We have seen renewed interest in the ICU market since the launch of the CardioQ-ODM+ in March and plan to release a substantial upgrade in the autumn.

A number of pending developments in key markets are expected to prove important incremental growth drivers. In the UK, the plan to implement fully ODM across the NHS in England is expected to be launched over the summer, having originally been scheduled for March. A Technology Adoption Pack, commissioned by the Department of Health to support the roll-out, was published in May and, by setting out the evidence for intra-operative fluid management, highlighted that only ODM's evidence base justified the selection of "ODM or similar fluid management monitoring technology" as a priority innovation and that CardioQ-ODM is the only cardiac output monitor recommended by the National Institute for Health & Clinical Excellence ('NICE'). In France, the professional anaesthesia society is expected to publish guidelines before the end of the year stressing the fundamental importance of fluid management and, therefore, ODM during surgery. In Spain, early feedback from the largest trial of intra-operative fluid management ever undertaken may be sufficient to facilitate our starting to push for system-wide adoption of CardioQ-ODM. In the USA the Centers for Medicare and Medicaid Services ('CMS') have announced that in October they will launch a specific procedure code for professional reimbursement of doctors using ODM: this is expected to overcome systemic barriers to CMS implementing successfully its existing national coverage determination.

US probe revenues returned to growth in the second quarter of 2012. We have continued to see good growth in regular probe orders from larger distributed markets including France, Austria, Scandinavia and Italy: our distributors in territories such as Canada, Peru and Australia that order probes in less regular but larger quantities are also reporting satisfactory increases in activity.

Nigel Keen, Deltex Medical's Chairman, commented:

"Deltex Medical enters the second half of 2012 with growing confidence and traction in a number of key markets. All our growth in the first half of the year came from sales of surgical probes, our highest quality as well as our largest source of revenue. Further developments expected to come through in the next few months in a number of key markets are likely to move us closer still towards our goal of healthcare system wide uptake of our products."

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

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.