Deltex Medical Regulatory News (DEMG)

Deltex Medical Group plc

("Deltex Medical" or "the Company")

US authorities publish payment instructions for ODM

Payments to doctors in both surgery and ICU

1 August 2013 - Deltex Medical Group plc (AIM: DEMG), the global leader in oesophageal Doppler monitoring ("ODM"), which measures blood flow in real time enabling fluid level optimisation to enhance recovery after surgery and in intensive care, today announces the completion of the next step in facilitating the uptake of ODM in the US. ODM guided intra-operative fluid management would benefit at least five million US surgical patients a year.

In April, ODM became the first procedure to be separately billable by anesthesiologists in the USA for over a decade. Following the establishment of this procedure specific billing code, the US Centers for Medicare and Medicaid Services ('CMS') have now published payment instructions in respect of ODM.

The document instructs CMS contractors to "recognise and accept" the new procedure specific code for use of ODM in hospitals both in "ventilated patients in the ICU and operative patients with a need for intra-operative fluid optimisation" on all billings made from 1 April. This means that doctors using ODM will be paid $101 in additional remuneration per CMS patient.

See http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R2743CP.pdf

The instructions also set out requirements for CMS contractors to publicise to healthcare professionals the new arrangements for physician payments. These requirements will be triggered by the publication of a "provider education article" which is due to be published shortly, helping to raise awareness of the availability of payment across the US.

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

"CMS's payment instructions for ODM usage set out clearly where CMS requires physicians to be paid for their use of ODM. Since the establishment of a procedure specific billing code for ODM in April, we have seen considerable interest from doctors aware of the decision and we look forward to its forthcoming wider dissemination."

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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.