As I work my way through the Nordic-listed universe, I often come across smaller, high-quality companies that meet nearly every mark — except valuation. These are businesses I would like to own, but not at today’s price. To keep track of them, and to loop you into my thinking, I’m introducing a new series: The Bench. The idea is to follow the same deep-dive structure as with The Pitch, but remain sidelined until an attractive entry point presents itself. This will mark the first post of this series. Enjoy.
TLDR: Every 40 seconds, someone, somewhere, suffers a heart attack. One in three ends up on an operating table — their life quite literally in a surgeon’s hands. The stakes are high; a failed bypass often means a second operation, or worse, a funeral. Medistim, with ~80% market share in its niche, equips surgeons with the tools to “check the plumbing” before closing the chest. Yet adoption remains surprisingly low with ~55% of coronary bypass and ~95% of vascular procedures still relying on palpation — an outdated method prone to human error.
Following a sharp correction from its 2021 peak, Medistim now trades at ~20x fwd. EV/EBITDA (cons.), though shares have rebounded ~40% on the back of strong Q1-2025 results. Momentum is building again as (i) APAC demand normalizes on the back of delayed hospital investments and distributor destocking; and (ii) margins expand through operating leverage as Medistim transitions toward direct market access. Looking ahead, the upcoming PATENT study could replicate the catalytic impact the REQUEST study had on cardiac — setting the stage for another leg of adoption-driven growth in vascular, a segment that remains even more underpenetrated.
Although the company has all the hallmarks of a high-quality compounder, consistently delivering ROIC-% in the mid 30s and 15-20% FCF margins (post lease), I am not comfortable underwriting Medistim at current levels. At NOK 223/share, the stock still trades ~20% below my estimate of fair value, but the R/R no longer feels clearly in my favor. It stings, especially since the name has been on my radar for some time. That said, markets tend to give second chances.
01. Background
Founded in 1984 as a distributor of surgical products in Norway, Medistim has evolved into a niche quasi-monopoly within intraoperative blood flow measurement and imaging. Its products are used for coronary surgeries (e.g. coronary bypass.) and vascular surgeries (e.g. peripheral bypass), and effectively allows the surgeon to ensure there is adequate blood flow in the grafted artery — real time — before closing the patient1.
Group revenue has grown at a 9.3% CAGR from FY2017-2024A with cash EBITDA margins consistently at ~25% (i.e., excl. capitalized R&D, SBC, cash leases, etc.), and FCF margins of +15% — of which an average +70% have been returned to shareholders annually. Its integrated hard- and software solutions (e.g., MiraQ, INTUI) makes Medistim entrenched in surgeon’s workflow, which — together with the installed base (~3,700 systems) — drives a long runway of durable, re(oc)curring, and high-margin revenue streams from consumables and occasional software upgrades.
Customer concentration is low2, and with most of them being public hospitals, credit risk is limited — a point which will be revisited later. Operations are similarly geographically diversified, with sales generated in Americas (50% of own product sales), EMEA (36%) and APAC (14%), accessed through a blend of long-standing distributor networks and increasingly direct sales teams in key markets. Though non-core, and thus less emphasized in this write-up, Medistim still operates its legacy distribution business in Denmark, Norway, and Sweden.
02. Business Model
Medistim operates a razor-razorblade model whereby initial capital equipment sales breed a long runway of recurring consumable sales (~70% of FY2024A). The company estimates to have an installed base of 3,700 systems, which typically have a lifetime value of 7-8 years3, creating a strong foundation for financial visibility in subsequent years. The vast majority of the installed base is dominated by systems aimed at Cardiac surgery, aided by the REQUEST study results, with a smaller (but growing) base of systems for Vascular surgery, which should be supported by positive outcomes of its recently launched PATENT study.
Go To Market Strategy
The GTM strategy differs across geographies, notably in the U.S., where Medistim has adopted a more flexible commercial model to support market penetration. In recent years, the company has taken steps to reduce reliance on distributors and gain direct market access in its core regions. This enables Medistim to capture a larger share of the economics while strengthening its ties with key decision-makers, incl. procurement authorities, hospital management, and surgeons. This proximity is essential, as a large share of future growth hinges on the company’s ability to drive higher adoption rates. Adoption typically requires ongoing dialogue, education, and clinical engagement to embed Medistim’s technology into standard surgical practice
Unique to the U.S. market, Medistim offers customers flexibility through: (i) capital sales as is standard in other markets; (ii) Pay Per Procedure (PPP) where the the customer must purchase and activate a “smart card” prior to surgery; and (iii) leasing of equipment where the customer pays a upfront to use the equipment for a set period of time, usually monthly or annually.
PPP and leasing agreements typically run 1-3 years, during which the equipment remains Medistim’s property. The three-pronged approach has been instrumental to Medistim’s penetration of the U.S. market and aligns with U.S. hospital procurement practices.
Value Proposition
MiraQ is Medistim’s flagship platform4; a surgical guidance system combining intraoperative blood flow and imaging technologies. It provides real-time, quantitative feedback on blood flow in grafted vessels and visualizes anatomical structures during high-stakes procedures like coronary artery bypass grafting (CABG) and vascular surgery. Hence, the core value proposition lies in reducing the risk of post-operative complications, re-intervention, and mortality.
The underlying technology is based on two core modalities, and one complementary:
Transit Time Flow Measurement (TTFM) measures blood flow by transmitting ultrasound signals across the vessel and calculating flow based on the time difference between upstream and downstream signals. It enables real-time, objective verification of graft patency during operation. TTFM is delivered through reusable probes (~50 times), available in two variants: QuickFit for cardiac procedures and Vascular for peripheral applications.
High-Frequency Ultrasound (HFUS) Imaging generates real-time images by transmitting high-frequency ultrasound pulses and capturing echoes that vary with tissue density. This allows surgeons to identify and correct imperfections during the procedure. Imaging probes are similarly reusable (~100 times).
Doppler Flow Measurement measures point-specific blood flow velocity by capturing frequency shifts in ultrasound signals. Unlike TTFM, Doppler does not provide volumetric flow but rather localized velocity data. It is considered complementary or legacy technology with more limited application today.
Customers can choose between MiraQ Cardiac for cardiac surgeries, MiraQ Vascular for vascular procedures, or MiraQ Ultimate, which combines the functionalities of both Cardiac and Vascular platforms in a single system. Each system come with Flow features (TFFM), while the imaging (HFUS) feature is an add-on. This tiered approach paves the way for a natural upgrade path toward Ultimate over time as adoption deepens across areas of application.
The hardware is supported by Medistim’s own proprietary workflow software which, apart from displaying useful metrics and visuals during operation, also allow for automated report generation to be stored in the hospitals database and patients’ journal. The latest software upgrade, INTUI, which was developed following feedback from surgeons and formally launched in Q2-2025, come with each new MiraQ device. However, it is estimated that ~1,000 previously installed systems can be upgraded with the INTUI software at a slight one-off cost.
Evidence-backed Offering
Perhaps logically, the medical community is driven by clinical evidence. Although Medistim’s technology intuitively addresses a clear gap — there being no viable alternative for objective graft verification — the presence of robust clinical data is nonetheless preferred to tangibilize its claims. Recognizing this, Medistim has actively sought to substantiate the efficacy of its offering through formal clinical studies. In many ways, this is what catalyzed the acceleration in sales observed post 2020.
REQUEST: In 2020, Medistim5 published the results of its REQUEST study, which evidenced the clinical utility of its technology in improving outcomes during CABG procedures. The study found that in 25.2% of CABG surgeries, the surgeon made intraoperative changes to the planned procedure. Crucially, 77% of these changes were directly attributable to insights from Medistim’s TTFM and/or HFUS technologies, while the remaining 12.5% and 10.5% stemmed from manual assessments and undisclosed reasons, respectively.
It is worth noting that REQUEST was not a randomized controlled trial. I.e., it did not compare outcomes between surgeries conducted with vs. without TTFM/HFUS technology; a study design that would have required a far larger sample size and longer-term follow-up to adequately assess differences in outcomes such as graft patency, re-intervention rates, or mortality. Nonetheless, REQUEST has offered valuable observational evidence of how surgeons can integrate intraoperative data into improved decision-making.
Notably, the REQUEST study focused exclusively on cardiac applications, specifically coronary artery bypass grafting (CABG). Recognizing the value of replicating this evidence-based approach in adjacent markets, Medistim has now turned its attention to the vascular segment.
PATENT: In November 2024, Medistim initiated the PATENT study to build a comparable level of evidence for vascular surgery, specifically targeting patients undergoing peripheral bypass procedures (PAD) for Critical Limb Threatening Ischemia (CLTI) below the knee — a patient group where failure rates remain high (~20%) and no standardized intraoperative completion control currently exists. Granted, the company has been successful in growing adoption of its products for vascular surgeries in Scandinavia and Germany, the full potential is held back by the absence of strong clinical documentation and standardized protocols in vascular surgery.
The trial is structured as a prospective, international, multicenter study enrolling 450 patients, with completion targeted by late 2026 and results expected following a 12-month observation period in 2027 or early 2028. If successful, PATENT could serve as the catalyst to unlock penetration of the vascular market (95% white space).
03. Market Sizing and Industry Dynamics
Cardio-vascular disease (CVD) is the leading cause of death globally, and tend to be correlated with age, “first-world illnesses” and lifestyle choices — smoking, physical inactivity, obesity, diabetes, high blood pressure, etc. The market opportunity for Medistim’s offering is fundamentally tied to both the volume of CABG and vascular (mainly PAD) surgeries performed globally and the adoption rates of TTFM and HFUS technologies during these procedures. This section seeks to quantify the market opportunity within each of its two core surgical applications.
Cardiac/CABG
When a patient is presented with poor functioning of the heart, there are usually two treatment avenues, depending on the severity of the case:
CAGB (~20% of procedures): In a CABG procedure, the surgeon typically performs open-heart surgery, though minimally invasive CABG procedures are gaining ground following Intuitive Surgical and J&J launching robotic-assisted surgical systems; penetration is still at LSD-% of volumes. The CABG procedure involves placing grafts — usually segments of the patient’s own veins or arteries — to bypass blocked or narrowed coronary arteries, thereby restoring adequate blood flow to the heart muscle.
PCI (~80%): In a PCI procedure, a catheter is inserted through a blood vessel (often in the wrist or groin) and guided to the site of the blockage. A balloon is inflated to open the artery, and a stent (a small mesh tube) is deployed to keep the artery open. PCI is typically less invasive, with shorter recovery times, but CABG remains the standard of care for more complex or diffuse coronary artery disease due to its superior long-term outcomes in certain patient groups.
Stenting is by far the most preferred treatment for cardiac artery disease (CAD), yet some experts propose we have entered a phase of “over-stenting”6, whereby patients have several stents located in the same artery for various reasons7. Apart from the practical benefits of stenting (i.e. non-invasive, quick), the pro-stenting bias may also be attributable to cardiologists “gatekeeping” patients from CABG procedures. This is because cardiologists are typically the first ones to evaluate the patient and can immediately fix the issue with a stent — only when the blood flow is deemed too poor, which in itself is a subjective assessment by the cardiologist, will the patient be referred to a surgeon.
However, with the launch of Siemens Healthineers’ CT scanner — enabling high-resolution, spectral imaging of coronary arteries — cardiologists and hospitals alike may now have a more objective way to assess the heart’s functioning. While the direct impact of this is tough to assess, it nonetheless suggests an alternative to the status quo and is something I view favorably.