Translation: Original comment published in Finnish on 12/1/2023 at 7:26 am EET. Revenio’s CMD yesterday shed light on the focus areas of the strategy for 2024-2026 and provided interesting information especially on the company's growth ambitions. Important progress is expected in this respect next year. The importance of diabetic retinopathy screening was clearly highlighted as the company shifted its focus towards integrated and proactive eye care pathways. We think the takeaway from the CMD was convincing, especially in the longer term as the company's product and service range expands systematically, but the stock market was apparently disappointed by the company's growth target (-9% yesterday). We may review our forecasts and our view in the near future, but in principle we see no major need for change. A little more clarity on growth initiatives We were particularly interested in the ILLUME solution, software and HOME2 product family, which we see as critical growth drivers for Revenio in the medium term. The importance of ILLUME was particularly emphasized when Revenio highlighted diabetic retinopathy screening as a major new business opportunity. In this way, Revenio is also expanding more directly into Optomed's core area, although the companies have different angles on the market. On the software side, Revenio informed the audience about the new iCare Data Management product, which seemed interesting and well positioned in the market. In the coming years, there are many interesting possibilities in the Revenio story. HOME2's potential made a little more concrete Revenio published for the first time estimates for the glaucoma at-home measurement market, including equipment and services. The company estimates this market potential to be around USD 150 million in 2024 but growing to USD 750 million by 2030. However, this rapid growth requires the solution to obtain reimbursement decisions in key markets (in particular the US). Revenio estimates that news in this area could be available towards the end of next year. We think the company made a very convincing case for the benefits of at-home measurements and longer-term monitoring, but there is still uncertainty about the actual opening of the market. In any case, the high market potential of HOME 2 is clear and the medium-term growth prospects for the product are excellent. Concreteness is still limited and the uncertainty surrounding our forecasts has hardly diminished, but the situation may become clearer next year. No changes to the AI strategy, but a slightly clearer timetable There have been no changes in Revenio's AI strategy, and the company will continue along two different paths. One will focus on device sales, with partner AI brought in, or the other will offer a complete ILLUME solution. The critical market here is the US, where FDA approval is required for the combination of device and AI (separate approvals are not enough). Revenio management indicated that FDA approval of the combination of iCare DRSplus and the AI partner could be expected next year. The company would then be involved in the US AI market, but no specific timeline was given for the comprehensive ILLUME solution. In the latter, Revenio will be able to control the whole, enabling revenue streams also from the use of AI. This naturally makes it more attractive in the long term, but also the traditional device business is naturally very profitable for Revenio. In this way, the importance of AI and software solutions as an accelerator of device sales should not be underestimated. There was little further information on ILLUME's key figures, but the company reported good activity and strong month-on-month growth. What is clear is that, for the time being, the revenue stream is small, but the future potential is very high. Little new information on the current core business There were no surprises in Revenio's comments on the current core business. The company still saw growth opportunities in traditional tonometers (such as the iCare IC200), but we believe the market is growing at a relatively slow pace. In tonometers, Revenio's market position is very strong and, as a result, growth in new devices is slowly approaching market growth. Gradually, the focus of the business will shift to probe sales, which continue to perform well as the device portfolio continues to grow and activity remains at a good level. In imaging devices, Revenio is still a relatively small player (market share below 10%) and with highly competitive products (DRSplus and EIKON UWF), there is significant growth potential. The company expects to continue to capture market share strongly and imaging devices will play a critical role in achieving the company's growth target (3x market growth). Between 2016 and 2022, imaging devices grew by more than 18% per year. We are positive about Revenio's growth prospects in this area and are confident that the company will continue to grow strongly in the coming years. The offering is expanding systematically Revenio again stressed the company's desire to grow also through M&A, which would allow the company to expand its offering, scale and accelerate its profitable growth. We got the impression from the presentations that negotiations for acquisitions have taken place, but the problem has been valuation levels. Stock market valuation levels have corrected strongly in recent years, but the company says this has not happened in private companies. This is a clear brake on acquisitions, but the situation could be expected to level off gradually. Another challenge is that the number of interesting companies in the sector is very limited. In addition to inorganic growth, Revenio also highlighted that new products are on the way in the company's own product development pipeline. Product development investments will continue to represent around 10% of revenue, and the absolute amount has increased strongly in recent years in line with growth. In the coming years, Revenio's product offering should be renewed and possibly expanded, but it is of course difficult to assess this without more detailed information. One known product is the Maia microperimeter, which is expected to be launched in H1’2024. According to the company, there has been demand for the product, so sales can start at a fast pace. Priority areas of the updated growth strategy Revenio's updated growth strategy focuses on the eye care market, and the company aims to raise the quality of clinical diagnostics through product innovation. This is, of course, a logical follow-up for the company's history. In addition, the aim is to streamline clinical care pathways through integrated and proactive eye care solutions, with an emphasis on new software solutions. In terms of sales, the challenge is presented by new customer segments, especially in the screening market, where the company is also entering the primary health care area. Here, the company needs to build new sales channels and address vendor compensation and capability challenges as the focus shifts from selling devices to selling total solutions. In our view, there were no major surprises in the priorities and cornerstones of the strategy, and we wrote about this at general level yesterday. Longer-term prospects remain bright Revenio's share price fell 9% yesterday, largely reflecting investors' reception to the CMD It is difficult to gauge market expectations, but it is likely that at least the company's growth target was disappointing. From 2025 onwards, the company aims for revenue growth to be three times the growth of the ophthalmic diagnostics market (forecast at 4.2%). For the sake of clarity, it is worth noting that the company believes that the growth target is achievable without acquisitions. This would mean an organic growth target of 12-13% per year, but Revenio tends to be moderate with its targets and sets them at a very achievable level. The company exceeded its previous targets by a large margin, albeit with a favorable contribution from the market. For 2025 in particular, we see many significant growth drivers if things develop as expected. In the second half of next year, DRSplus may receive support from the FDA approval for the AI combination, reimbursement for HOME2 may move forward, and Maia is expected to return to the product portfolio. If the market situation picks up in line with our assumptions, we do not consider the current growth forecast of over 16% to be unreasonable. After that, growth will increasingly depend on the development of the previously mentioned growth initiatives, new product launches and possible acquisitions. At the same time, however, it is clear that our forecasts for 2025-2026 are currently above the company's growth targets, which is why we will critically review them in our next update. Overall, our view of a strong long-term outlook for Revenio was clearly supported by the CMD, but challenges remain in the short term. Market gloom is expected to persist for the next six months, and the rate of recovery is still unclear. Revenio's next year is shaping up to be an interesting one, with factors affecting the longer-term direction ahead. A wild card is the possibility of acquisitions, which the company is slowly maturing.

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