Decisions made in the course of the strategic options review
Current Report No 40/2019
Date: 10.12.2019
Legal basis: Article 17(1) of MAR – inside information
Further to current report No 34/2018 on the launch of a strategic options review, the Management Board of Medicalgorithmics S.A. (the “Company”, the “Issuer”) announces that in the course of the review of strategic options available to the Company, the Company decided to raise capital through an issue of shares on the Warsaw Stock Exchange (“WSE”).
In the opinion of the Management Board, taking into account the directions of development of the Company’s business, as well as the interest of shareholders, it is justified to raise capital that will enable the subsidiary, Medi-Lynx Cardiac Monitoring LLC (“Medi-Lynx”), to continue the process of changing the business model to the “in-network” model, and that will also enable the Company to conduct research and development work on new products and maintain an optimal level of working capital.
In Q4 2018, Medi-Lynx hired a new CEO whose mission was to change the company’s business model. In the first half of 2019, Medi-Lynx reorganised its sales, optimised its operating activities and initiated the process of negotiating and signing contracts with private insurers (in the “in-network” model). During the year, agreements covering approximately 63% of insured persons in the US were concluded, compared to about 22% at the beginning of 2019. At the end of 2019, the Group plans to increase this coverage to approximately 81% of patients insured in the US.
Following the measures taken, in recent months the Company has started to report an increase in sales volumes reflected in an increase in the number of monitoring sessions initiated and an increase in the number of requests submitted per business day.
The results of changes in the business model delivered to date give grounds for a positive assessment of the measures taken and, in the opinion of the Management Board, their continuation is in the best interest of the Company’s shareholders. In order to continue its business activities, the Company will convene an Extraordinary General Meeting of Shareholders on 7 January 2020 with draft resolutions enabling the Company’s capital to be increased through the issue of up to 20% of new shares on the WSE.