Interim report
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 1 Q U A R T E R L Y R E P O R T 2 0 2 4 Observe Medical ASA I N T E R I M R E P O RT H 1 / 2 0 26 Observe Medical ASA
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T A B L E O F C O N T E N T S H1 / 2026 HIGHLIGHTS ............................. 3 KEY FINANCIALS ................................ ...... 4 CEO LETTER ................................ .............. 5 FINANCIAL REVIEW ................................ .. 6 UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ................................ ......... 10 UNAUDITED EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ................................ ......... 14
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 3 H 1 / 2 0 26 H I G H L I G H T S • Revenue growth: UnoMeter™ revenues reached NOK 14.4 million, representing a 27.4% increase compared to H1 2025, and a 92% increase from H2 H2025. • Increased order intake: Increased market penetration and a broader product offering continue to drive strong order growth across key geographies, with a growth of 73% compared to H2 2025. • Clinical Leadership with UnoMeter ™ Safeti™ Max: Development completed and commercially launched with initial orders from distributors covering 28 countries. Laboratory data confirming infection barrier efficacy will be presented at the International Continence Society (ICS) conference in October 2026. • Expansion of Addressable Market: Portfolio extension within the urological drainage segment leverages the strong UnoMeter™ brand, expanding the target market value from NOK ~670 million to ~2.6 billion. • Innovation Norway loan received: Received a NOK 15.0 million loan from Innovation Norway to support the commercial expansion of the UnoMeter™ portfolio • Dismantling complexity: Wind-up of Biim Ultrasound AS and its subsidiaries, removing non-core activities to focus resources entirely on growth, leading to a non-cash other income in the first half year. • Strengthening our commercial team: Appointed Dorthe Jensen as Sales Director (Europe & South America) alongside senior business development expertise from Torben Sandgren and dedicated commercial coverage for Middle East & Southeast Asia by Arun Kesavan.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 4 K E Y F I G U R E S (Amounts in NOK thousand, except EPS, equity ratio and number of FTE) H1 2026 H1 2025 FY 2025 Operating revenue 14 425 11 327 18 811 Gross result adjusted* 4 253 2 962 5 338 Other income 18 247 2 167 2 253 Operating expenses adjusted* 12 572 13 797 30 973 EBITDA adjusted* -8 319 -10 835 -25 635 Depreciation and amortization 2 418 7 021 13 320 Impairment 0 4 033 41 725 EBIT 5 500 -19 722 -79 066 Net finance 61 674 30 427 Result 5 561 -19 048 -48 639 EPS 0.04 -0.99 -0.73 Equity 29 360 3 677 29 959 Total balance 92 743 133 510 101 169 Equity ratio 31.7% 2.8% 29.6% OPERATING REVENUES GROSS PROFIT* GROSS MARGIN* EBITDA* 14.4 MNOK +3.1 MNOK / +27.4% YoY *Alternative performance measures (APMs), adjusted for other income, inventory write-down and non-recurring opex (see page 22) 4.3 MNOK +1.3 MNOK / +43% YoY 29.5% +3.3 p.p YoY -8.3 MNOK +2.5 MNOK/ +9.1% YoY
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 5 L E T T E R F R O M T H E C E O Dear shareholders, Our focus throughout the past period has been straightforward: build an efficient global distribution platform, deliver products with clear clinical value, drive commercial growth, and build a financially resilient foundation. Commercial Progress and distribution platform We continue to strengthen our market presence • Our third -party distribution network covers 46 countries across Europe, Asia, and South America. This network covers over 90% of the historical UnoMeter™ sales volume. • Commercial traction is improving, with order intake up 73% and sales up 92% compared to H2 2025. • In growth markets such as India, our historic brand standing has allowed us to secure initial commercial orders. UnoMeter™ Safeti™ Max – foundation for c linical leadership A core element of our strategy is taking clinical leadership within infection prevention and urological drainage. With the launch of UnoMeter™ Safeti™ Max, we are addressing critical healthcare challenges related to catheter -associated urinary tract infections (CAUTI), health economics, and sustainability. • In-vitro clinical testing has validated that Safeti ™ Max provides a 100% effective barrier against bacterial migration for 14 days, doubling the 7-day industry standard and drastically improving health economics for our customers. Combined with CE certification and patent protection, this positions the product as a true benchmark for infection control in acute care settings. • Distributors in 28 countries have already placed orders for Safeti™ Max. Initial shipments began in late June 2026, with volume deliveries starting from September 2026. • Beyond Safeti ™ Max, we have expanded our product offering from 3 to 7 products. This increases our total addressable market from NOK 670 million to NOK 2.6 billion , with potential for further expansion towards NOK 5+ billion upon the future commercialisation of Sippi® • A major milestone in our strategy to take clinical leadership is the recent acceptance of a peer - reviewed study on UnoMeter ™ Safeti™ Max for publication in Infection Prevention in Practice (IPIP). Authored by independent clinical experts from Karolinska Institutet, the study provides strong scientific validation of our underlying UnoSafeCoat™ technology. Crucially, this independent proof of clinical performance not only gives Safeti™ Max a unique competitive edge in the market today, but it also solidifies the scientific foundation and builds commercial credibility for our next -generation digital platform, UnoMeter ™ Sippi®. Operational execution To drive commercial growth, execution, and regional focus, we have strengthened our commercial organization with medtech leadership, and I am proud to welcome: • Torben Sandgre n as Business Development Director: Driving strategic partnerships and business growth across key accounts. • Dorthe Jensen as Sales Director (Europe & South America): Deepening market penetration and capture market shares. • Arun Kesavan as Sales Director (Middle East & Southeast Asia): Strengthens our commercial execution in fast -growing regional markets, focusing on distributor alignment and immediate market uptake. Our main priority for the second half of 2026 is clear: turn commercial momentum into sustainable revenue growth and reach positive operational cash flow. Thank you to our team, partners, and shareholders for your continued support. Jørgen Mann CEO
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 6 F I N A N C I A L R E V I E W [ U N A U D I T E D] G R O U P R E S U L T S Operating revenues Operating revenues for the first half year amounted to NOK 14.4 million, reflecting a year-over-year increase of NOK 3.1 million / +27.4% driven by increased sales volume of the UnoMeter™ portfolio. Gross result and margin Gross result adjusted of NOK 4.3 million in H1 2026 vs NOK 3.0 million in H 1 2025. Gross margin of 29.5% (+3.3pp YoY) driven by a portfolio shift toward higher margin sales and lower freight expenses compared to same period last year. Other Income Other income for H1 2026 totaled NOK 18.2 million (H1 2025: NOK 2.2 million). The key drivers for the period consist of: 1. Derecognition of group entities leading to an accounting gain of NOK 18 million from the deconsolidation and wind -up of the subsidiary Biim Ultrasound. This transaction carried no cash effect but resulted in a non-operating gain through the elimination of historical net liabilities . 2. Gain of NOK 0.2 million realised from the sale of minor fixed assets. By comparison, other income in H1 2025 (NOK 2.2 million) primarily comprised gains on the derecognition or restructuring of financial liabilities. Adjusted operational expenses Reported operating expenses for H1 2026 were NOK 14.6m (H1 2025: NOK 13.8m). Adjusted for non - recurring restructuring costs of NOK 2.0m, Adjusted OPEX stood at NOK 12.6m. The underlying reduction was primarily driven by lower expenditure on auditing, legal, and external professional services, partially offset by higher non -cash share option expenses and elevated trademark registration and maintenance fees. Adjusted EBITDA Reported EBITDA for H1 2026 reached NOK 7.9 million (H1 2025: NOK -8.7 million), primarily driven by the non-cash derecognition gain of NOK 18.0 million from the Biim Ultrasound wind-down. Excluding the non-operating gain and non -recurring restructuring charges of NOK 2.0 million, Adjusted EBITDA stood at negative NOK 8.3 million. Depreciation and amorti sation totaled NOK 2.4 million for H1 2026, representing a NOK 4.6 million YoY reduction compared to H1 2025 (NOK 7.0 million). The decrease was driven by the deconsolidation of Biim Ultrasound. Net financial income in the first half of NOK 61 thousand compared to NOK 674 thousand in the same period last year . The change is mainly related to currency effects on intercompany loans in SEK and debt in USD, partly offset by the amortization of financial liabilities. Result for the period reached NOK 5.6 million compared to negative NOK 19.0 million in the first half last year (+NOK 24.6 million YoY). Earnings per share, basic and diluted, were NOK 0.04 compared to negative NOK 0. 99 in the first half last year. C A S H F L O W F I R S T H A L F Y E A R 2 0 26 In H1 2026, net cash flow from operating activities was negative NOK 17.0 million (H1 2025: negative NOK 1.2 million). The operational outflow was mainly driven by day-to-day operations, restructuring costs, working capital requirements, and payments of outstanding trade payables and accrued public duties, which included NOK 2.5 million in Covid -19 tax deferrals in Sweden. Net cash flow from investing activities was negative NOK 1. 3 million (H1 2025: 0), driven by capitalized development expenditures for the UnoMeter™ Safeti™ Max. Net cash flow from financing activities was 14.7 million, compared to NOK 2.2 million in H1 2025 . The cash inflow was driven by a NOK 15.0 million new loan facility from Innovation Norway, partially offset by interest payments.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 7 Bank deposits at 30 June 2026 were NOK 7.8 million compared to NOK 3.0 million at 30 June 2025. F I N A N C I A L P O S I T I O N A T 3 0 J U N E 20 2 6 Total assets as of 30 June 2026 amounted to NOK 92.7 million, compared to NOK 133.5 million as of 30 June 2025. The reduction in total assets is primarily attributable to the impairment related to Biim Ultrasound recognized at year-end 2025. Non-current assets totaled NOK 75.8 million as of 30 June 2026, compared to NOK 87.1 million as of 30 June 2025. The asset base primarily comprises goodwill of NOK 32.7 million (NOK 34.1 million as of 30 June 2025) and intangible assets and patents of NOK 43.0 million, associated with technologies and patents for Sippi®, alongside trademarks and assets related to UnoMeter™. The year -over-year change primarily reflects the full impairment of assets related to Biim Ultrasound amounting to NOK 41.7 million as at year end 2025. As of 30 June 2026, the Group had bank deposits of NOK 7.8 million, at 30 June 2025 the bank deposits were NOK 3.0 million. As of 30 June 2026, total equity stood at NOK 29.4 million, up significantly from NOK 3.7 million as of 30 June 2025. The equity ratio was 31.7% at 30 June 2026 compared to 2.8% at 3 0 June 2025, driven by the structural balance sheet optimisation. As of 30 June 2026, the Group’s total liabilities amounted to NOK 63.4 million, compared to NOK 129.8 million as of 30 June 2025. The substantial reduction in total debt reflects the execution of the comprehensive debt restructuring process during 2025. E V E N T S A F T E R T H E R E P O R T I N G D A T E Subsequent to the reporting date, the Group has received a formal waiver from Innovation Norway regarding the financial covenant of min NOK 10 million free liquidity as of 30 June 2026. Because the waiver was granted after the balance sheet date, the Innovation Norway facility of NOK 15.0 million remains classified as short -term interest-bearing debt as of 30 June 2026 in accordance with IFRS. Furthermore, the Group is in constructive dialogue with Innovation Norway to establish an alternative financial covenant that better aligns with the Group’s operational model. R I S K S A N D U N C E R T A I N T I E S The Group is exposed to a range of financial, operational, and strategic risks, which are actively monitored and managed across the organisation. Key risk areas include: Going concern assumption The consolidated financial statements have been prepared on a going concern basis. During 2025, the Group significantly strengthened its financial position through debt restructuring and equity issues, and this was further supported in early 2026 by the fo rmal signing and drawdown of a NOK 15 .0 million loan facility from Innovation Norway. Management’s cash flow forecasts cover at least twelve months from the reporting date. These forecasts are based on continued revenue growth and assume that the Group achieves positive cash flow from operating activities during the fourth quarter of 2026, which is necessary to support the Group’s continued liquidity beyond this period. The ability to achieve this development is dependent on continued growth in sales and order intake and prevailing market condit ions. While management considers its assumptions to be reasonable and notes that the Group has some flexibility to adjust its cost base, a failure to achieve the forecasted revenue growth and operating cash flow would require the Group to obtain additional financing or implement other measures in order to meet its obligations as they fall due. There is a risk that the Group's achievement of positive cash flow from operating activities will be delayed. Accordingly, there is material uncertainty with regard to the going concern assumption, should the Group be unable to reach its forecasted cash flows or unable to obtain financing from other sources. Financial risk As of 30 June 2026, free liquidity of NOK 7.8 million was below the NOK 10.0 million covenant target, resulting in the reclassification of the Innovation Norway facility to short -term interest-bearing debt . Subsequent to the reporting date, the Group has obtained a waiver from Innovation Norway and is in constructive dialogue to establish an alternative financial covenant that better aligns with the Group’s operational model. Operational and market risks Observe Medical operates in the medical technology market and faces common industry risks, including competition from new products with better features or stronger market penetration. Increased competition may also impact pricing potential.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 8 The Group’s operations are characterized by third party dependencies across two key areas: the commercial effectiveness of international distributors and the production integrity of our manufacturing partners. Commercially, growth is contingent upon the capacity of the distribution network to penetrate local markets and successfully secure competitive tenders. Operationally, the Group maintains a high degree of reliance on its manufacturers to uphold stringent quality standards and meet delivery timelines, as any disruption could delay commercialization and impact market position. The Group is further subject to risks stemming from geopolitical volatility, as ongoing global conflicts continue to disrupt raw material supplies, financial markets, and international logistics. These directly affect access to critical components and lead to fluctuating freight costs, to which the Group is particularly exposed regarding shipments from China. Such fluctuations and logistical disruptions may lead to increased transportation costs and delayed deliveries, which could in turn negatively affect the Group's margins and market position. To mitigate these risks, the Group focuses on supply chain resilience and cost management routines. Furthermore, the Group recognizes that climate -related factors and extreme weather events can disrupt international logistics and manufacturing, while evolving environmental regulations may impact product requirements. Regulatory Environment and the International Procurement Instrument (IPI): The Group manufactures a significant portion of its medical device portfolio in China and serves the European market primarily through independent distributors participating in publ ic procurement processes. On June 30th 2025 the EU adopted new rules related to the EU procurement directives (Directive 2014/23/EU, Directive 2014/24/EU and Directive 2014/25/EU). The rules apply to the procurement of medical devices through tender procedures in the EU, where the estimated value o f the tender is EUR 5 .0 million exclusive of VAT or more. The rules aim at regulating the access of economic operators and the use of medical devices originating in the People’s Republic of China to the EU public procurement market. As the rules are still new and the reaction from the tenderers remains to be seen, the actual effect on Observe Medical remains uncertain but the effect of the rules will be monitored closely in cooperation with its distributors across the EU. Protecting intellectual property is crucial to the Group’s long-term success. Failure to do so, or infringement by third parties, could harm brand value and business operations. Ensuring compliance with applicable laws and regulations is a key priority for Observe Medical. This includes adherence to data protection standards (GDPR) and maintaining robust IT security to protect against potential cyber threats. Non -compliance or security breaches can result in financial penalties, operational disruptions, and reputational damage. Observe Medical is mindful of the risk profile associated with limited internal resources and “key person” dependency. Such conditions may impact operational flexibility and the capacity to navigate unforeseen challenges. Consequently, risk management rema ins a top priority for both Management and the Board. To strengthen the organization and enhance operational capacity, recruitment of new resources has been initiated Research and development expenditures are managed across the product portfolio in accordance with our strategic priorities. Investment decisions about whether to proceed with development projects are made on a project-by-project basis. Limited financial resources may delay planned developments, hence there is risk of delayed launch of Sippi®. O U T L O O K Observe Medical’s vision is to become a leading global Medtech company, driven by the commercialization of proprietary medical solutions that enhance patient care and support positive health economics. The Group is building a scalable Nordic medtech platfo rm, combining a portfolio of proprietary products and innovation with partnerships that leverage its manufacturing, development, regulatory, and commercial capabilities to bring new technologies to market. Observe Medical has undergone a strategic refocusing, allowing for a disciplined execution of the Group’s commercial strategy. The Group’s strategy is built on reclaiming market leadership in the urine measurement segment, where the UnoMeter™ brands historically held a dominant 50- 60% market share in Europe. With the successful establishment of a proprietary manufacturing platform and the UnoMeter™ product portfolio in the market, the Group has moved from a transition phase into a phase of global commercial scaling. To further drive growth, the Group has launched an extension of its urological drainage portfolio, including a front-mounted UnoMeter and two Closed System products. These additions enable the Group to offer a comprehensive range of sterile solutions, addressing an estimated global market value of NOK 1.6 –1.8 billion, and become a comprehensive category leader.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 9 Management sees significant scalability potential in its global distribution network, which already covers the majority of the historical Convatec geographical footprint. The priority for this year is to convert this extensive market access into sustained revenue growth, supported by the UnoMeter ™ Safeti™ Max. The product’s clinical foundation was recently reinforced by a peer -reviewed article accepted for publication in Infection Prevention in Practice (authored by researchers from Karolinska Institutet), validating the UnoSafeCoat™ technology and providing a unique competitive advantage . This established network, combined with the recent clinical acceptance of the underlying UnoSafeCoat ™ technology, serves as the primary commercial vehicle and scientific foundation for Sippi®. Sippi®, the Group's proprietary automated digital urimeter, remains the most strategically important product in the portfolio. As the healthcare sector increasingly moves toward digitalization and automation to improve patient safety and clinical efficiency, Sippi® is uniquely positioned to meet these needs. The strategy is to leverage the global distribution network being established by the UnoMeter™ portfolio. By utilizing the same sales channels and hospital access, the Group aims to introduce Sippi® as the high-end, digital successor to traditional manual measurement, providing a clear path for margin expansion and technological leadership. Despite current global market uncertainties and geopolitical tensions, the demand for essential medtech products remains resilient. The Group entered 2026 with a strengthened financial position, supported by the 2025 equity issues and the NOK 15.0 million loan facility from Innovation Norway. This financial foundation, combined with a leaner cost base following the Biim deconsolidation and scientifically validated technology, provides a robust platform for operational expansion. The Board of Directors expects Observe Medical to show solid growth in the coming years. By focusing on high quality, proprietary products and a scalable distribution model, the Group is well -positioned to deliver long-term value for its shareholders. The Group will also continue to explore strategic opportunities, including partnerships and portfolio expansions, that align with its core competencies in manufacturing and global distribution. Forward-Looking Statements This interim report contains forward -looking statements regarding Observe Medical’s growth initiatives, financial performance, and strategic objectives. These statements reflect the Group’s expectations for future results, including the commercialization of the UnoMeter™ portfolio. All such statements are subject to inherent risks and uncertainties, and actual outcomes may differ materially from those expressed or implied due to various factors. These factors include risks related to the Group’s activities, as detailed in Observe Medical’s 2025 Annual Report.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 10 C O N D E N S E D C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S [ U N A U D I T E D ] Observe Medical Group C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E (Amounts in NOK thousand) Note H1 2026 H1 2025 FY 2025 Unaudited Unaudited Operating revenues 4 14 425 11 327 18 811 Cost of materials 10 172 8 365 14 112 Gross result 4 253 2 962 4 699 Other income 4 227 0 0 Gain on derecognition of trade payables 0 2167 2253 Gain on derecognition of group entities 3 18 020 0 0 Total other income 18 247 2 167 2 253 Employee benefit expenses 6 997 5 106 15 287 Other operating expenses 7 7 585 8 691 15 686 Operating expenses 14 582 13 797 30 973 Operating result before depreciation and amortisation (EBITDA) 7 918 -8 668 -24 021 Depreciation and amortisation 5,6 2 418 7 021 13 320 Impairment 6 0 4 033 41 725 Operating result (EBIT) 5 500 -19 722 -79 066 Financial income and expenses Financial income 8,9 2 975 1 846 44 158 Financial expenses 8,9 2 914 1 172 13 732 Net financial items 61 674 30 426 Result before tax 5 561 -19 048 -48 639 Income tax expense 0 0 0 Result for the period 5 561 -19 048 -48 639 Basic Earnings per share (NOK per share) 0,04 -0.99 -0.73 Diluted Earnings per share (NOK per share) 0,04 -0.99 -0.73
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 11 Observe Medical Group C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N ASSETS Unaudited Unaudited Amounts in NOK thousand Note At 30 Jun 2026 At 30 Jun 2025 At 31 Dec 2025 Non-current assets Goodwill 6 32 756 34 108 35 159 Intangible assets 6 43 048 87 067 44 599 Tangible assets 5 23 127 59 Total non-current assets 75 827 121 302 79 816 Current assets Trade receivables 213 2 609 0 Inventories 4 981 4 277 7 479 Other receivables and prepaid expenses 3 898 2 363 2 374 Cash and cash equivalents 7 824 2 959 11 500 Total current assets 16 916 12 208 21 353 Total assets 92 743 133 510 101 169 EQUITY AND LIABILITIES Amounts in NOK thousand Note Share capital 57 183 75 108 57 183 Share premium 3 055 288 433 3 055 Other paid in equity 1 981 14 420 1 342 Total paid-in equity 62 219 377 961 61 580 Retained earnings -32 859 -374 285 -31 622 Total equity 29 360 3 677 29 959 Non-current liabilities Contingent financial liability 9 7 589 0 6 899 Non-current interest bearing liabilities 9 19 737 62 326 19 919 Total non-current liabilities 42 422 62 326 26 818 Current liabilities Trade payables 9 6 244 25 773 12 939 VAT and other public taxes and duties payables 3 484 6 634 6 420 Interest bearing current liabilities 9 22 577 19 860 10 822 Other current liabilities 9 3 752 15 240 14 211 Total current liabilities 20 961 67 507 44 392 Total liabilities 63 383 129 833 71 210 Total equity and liabilities 92 743 133 510 101 169
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 12 Observe Medical Group C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y Amounts in NOK thousand Share capital Share premium Other paid in equity Total paid-in capital Retained earnings Translation differences Total Equity as at 1 January 2025 75 108 288 433 14 265 377 807 -354 385 -2 287 21 136 Share issue Transaction costs Share options1) 155 155 155 Result for the period -19 048 -19 048 Translation differences 1 434 1 434 Equity as at 30 June 2025 75 108 288 433 14 420 377 961 -373 433 -852 3 677 Equity as at 1 January 2025 75 108 288 433 14 265 377 807 -354 385 -2 287 21 136 Share capital reduction -67 019 -288 433 -14 265 -369 717 369 717 Share issue 49 094 9 351 58 445 58 445 Transaction costs -6 296 -6 296 -6 296 Share options1) 1 342 1 342 1 342 Result for the period -48 639 -48 639 Translation differences 3 972 3 972 Equity as at 31 December 2025 57 183 3 055 1 342 61 580 -33 307 1 685 29 959 Equity as at 1 January 2026 57 183 3 055 1 342 61 580 -33 307 1 685 29 959 Share capital reduction Share issue Transaction costs Share options1) 639 639 639 Result for the period 5 561 5 561 Translation differences -6 798 -6 798 Equity as at 30 June 2026 57 183 3 055 1 981 62 219 -27 746 -5 113 29 360
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 13 Observe Medical Group C O N D E N S E D C O N S O L I D A T E D C A S H F L O W S T A T E M E N T Amounts in NOK thousand Note H1 2026 Unaudited H1 2025 Unaudited FY 2025 Cash flow from operating activities Result before tax 5 561 -19 048 -48 639 Tax paid 0 0 0 Depreciation and amortization 2 418 7 021 13 320 Impairment of goodwill 0 4 033 41 725 Gain(-)/Loss(+) from sale of fixed assets -225 0 0 Effects from debt restructuring 0 0 -42 845 Gain from derecognition of group entities 3 -18 020 0 0 Change in net finance, no cash effect 2 731 325 9 756 Change in inventories 2 498 1 050 -2 152 Change in trade receivables and other receivables -1 921 -431 408 Change trade payables and other current liabilities -6 870 5 799 3 594 Currency translation -3 139 0 0 Net cash flow from operating activities -16 967 -1 251 -24 833 Cash flow used in investing activities Sale of tangible and intangible assets 225 0 0 Purchase of tangible and intangible assets -1 582 0 -1 139 Net cash effect from derecognition of group entities 29 0 0 Net cash flow from investing activities -1 328 0 -1 139 Cash flow from financing activities Share issues 0 0 50 445 Transaction costs 0 0 -6 296 Loans received 9 15 000 2 200 2 200 Payment of interest-bearing debt 8,9 -289 0 -10 920 Payments of lease liabilities 0 0 0 Net cash flow from financing activities 14 711 2 200 35 429 Currency translation differences -92 32 64 Changes in cash -3 676 981 9 521 Cash and cash equivalients as at beginning of period 11 500 1 978 1 978 Cash and cash equivalients end of period 7 824 2 959 11 500
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 14 E X P L A N A T O R Y N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S [ U N A U D I T E D ] N O T E 1 – G E N E R A L I N F O R M A T I O N The condensed consolidated interim financial statements comprise the parent company Observe Medical ASA and its subsidiaries (collectively, the Group) presented as a single economic entity. Observe Medical ASA is a Norwegian limited liability, public listed company located in Norway and whose shares are public traded on Euronext Expand Oslo. Its head office is located in Dronning Eufemias gate 16, 0191 Oslo, Norway. The Company and its subsidiaries (together the Group) is a growing medtech group which has developed the next generation digital urine meter, Sippi®. Observe Medical introduced in 2023 UnoMeter™, a manual Urine Measurement system and intraabdominal pressure measurement solution to a broad global distribution network. The manual system is an important step for Observe Medical to be established as a preferred supplier in this segment which will cre ate a unique market access channel for Sippi® to the market. The Group currently consists of the following companies: Observe Medical ASA (Oslo, Norway), Observe Medical AS (Oslo, Norway), Observe Medical AB (Gothenburg, Sweden), Observe Medical Nordic AB (Gothenburg, Sweden), Observe Medical ApS (Copenhagen, Denmark) The interim financial report has been prepared in accordance with IAS 34 Interim Financial Reporting. The interim financial statements are unaudited. Tables may not summarise due to rounding. The Board of Directors approved this Interim report on August 25, 2026. N O T E 2 – B A S I S O F P R E P A R A T I O N A N D A C C O U N T I N G P O L I C I E S These condensed interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU under the International Accounting Standard for Interim Financial Reporting (IAS 34). As the interim financial statements do not include the full information and disclosures required for a complete set of consolidated financial statements, they should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2025. The accounting policies adopted in the preparation of the condensed interim consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for 202 5. New standards, amendments, and interpretations that became effective on 1 January 2026 have not had a material impact on the Group's condensed interim financial statements. Preparing financial statements in accordance with IFRS requires the use of estimates. Furthermore, applying the Group’s accounting policies requires the management team to use its judgment. In preparing these condensed interim financial statements, the significant judgements and key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2025. The condensed interim financial statements have been prepared on a historical cost basis, except for certain financial instruments, such as contingent considerations and milestone-based liabilities, which are measured at fair value or adjusted amortized cost.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 15 The basis and policies are applied consistently in all the periods presented, unless the description states otherwise. Going Concern assumption The condensed interim consolidated financial statements have been prepared on a going concern basis. During 2025, the Group significantly strengthened its financial position through debt restructuring and equity issues, and this was further supported in early 2026 by the formal signing and drawdown of a NOK 15 .0 million loan facility from Innovation Norway. Management’s cash flow forecasts cover at least twelve months from the reporting date. These forecasts are based on continued revenue growth and assume that the Group achieves positive cash flow from operating activities during the fourth quarter of 2026, which is necessary to support the Group’s continued liquidity beyond this period. The ability to achieve this development is dependent on continued growth in sales and order intake and prevailing market condit ions. While management considers its assumptions to be reasonable and notes that the Group has some flexibility to adjust its cost base, a failure to achieve the forecasted revenue growth and operating cash flow would require the Group to obtain additional financing or implement other measures in order to meet its obligations as t hey fall due. There is a risk that the Group's achievement of positive cash flow from operating activities will be delayed. Accordingly, there is material uncertainty with regard to the going concern assumption, should the Group be unable to reach its forecasted cash flows and is unable to obtain financing from other sources. Having reviewed the forecasts and the available mitigation strategies, the Board considers the going concern basis to be appropriate. Events after the balance sheet date Information on the Group’s positions at the balance sheet date is considered in the interim financial statements. Events after the balance sheet date that do not affect the Group's position at the balance sheet date, but which will affect the Group's position in the future, are stated if significant. Please refer to note 12. N O T E 3 – C H A N G E S I N T H E C O M P O S I T I O N O F T H E G R O U P Derecognition of group entities As of March 2026, the subsidiary Biim Ultrasound AS was declared bankrupt. As a result, Biim Ultrasound AS and its two subsidiaries (“Biim Group”) was deconsolidated from March onwards and is therefore no longer included in the consolidated financial statements. At the date of deconsolidation, Biim Group had accumulated significant losses. Consequently, the deconsolidation resulted in a net positive profit and loss effect of NOK 18 million.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 16 At the date of deconsolidated net assets in Biim Group was as follows: Amounts in NOK thousand Assets Cash and cash equivalents -29 Trade accounts receivable 33 Total assets 3 Liabilities Non-current interest bearing liabilities 3 573 Trade creditors 6 418 Interest bearing current liabilities 893 Other current liabilities 6 135 Total liabilities 17 018 Net liabilities 17 015 The net profit effect of NOK 18 million, is calculated as follows: Net liabilities 17 015 Reclassificed cumulative foreign currency translation differences to profit or loss Net profit 17 015 The bank overdraft of 29, represents the net cash flow effect of the derecognition. N O T E 4 – O P E R A T I N G R E V E N U ES A N D O T H E R I N C O M E Amounts in NOK thousand Revenue per product group H1 2025 Urine Measurement 11 327 Other 0 Operating revenues 5 249 Gain on derecognition of financial liabilities 1) 0 2 167 Gain on derecognition of group entities 2) 17 015 0 Gain on sales of fixed assets 227 0 17 242 2 167Other income 7 484 0 14 425 H1 2026 1) Gain related to debt settlements with creditors recognised as other income in H1 2025 2 Effect from deconsolidation of Biim, refer to note 3. The Group’s revenue is primarily derived from international markets. The Group's operating revenues are generated by the Swedish operations, and all sales are made from Sweden to the geographical regions specified in the table below. For management and reporting purposes, revenue is categorized into the following geographical regions:
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 17 Geographic revenue H1 2025 Europe 12 524 10 200 Asia 1 853 1 082 Americas 48 45 14 425 11 327Total H1 2026 The Group’s market strategy for its proprietary products relies on a network of regional distributors. In first half of 2026, two of these partners each accounted for more than 10% of the Group’s total revenue, representing a combined total of approximately NOK 4.0 million. N O T E 5 - T A N G I B L E A S S E T S A N D L E A S E Amounts in NOK thousand Right-of- use Other Sum Carrying value as of 1 January 2026 0 59 59 Depreciation -32 -32 Translation differences -4 -4 Carrying value as at 30 June 2026 0 23 23 Useful life 3-5 year 3 year No additions of tangible assets have been recognized as for the first half year of 2026 N O T E 6 – I N T A N G I B L E A S S E T S Amounts in NOK thousand Goodwill Trade- mark Customer relations Technology assets / Patent Technology development Sum Carrying value as at 1 January 2026 35 159 27 976 605 10 823 5 195 79 757 Additions 0 1 582 1 582 Amortization 0 0 -40 -1 122 -1 224 -2 387 Translation differences -2 403 -505 -241 -3 149 Carrying value as at 30 June 2026 32 756 27 975 565 9 196 5 312 75 804 Useful life Indefinite Indefinite 10 year 10 year 5 year Accounting policies and useful life Intangible assets are recogni sed and amorti sed in accordance with the accounting policies described in the Annual Financial Statements for 2025. Goodwill and trademarks with indefinite useful lives are not amortized, but are tested for impairment annually, or more frequently if impairment indicators are identified. Impairment assessment as of 30 June 2026 Management continuously monitors whether internal or external indicators of impairment exist under IAS 36 for the Group's Cash -Generating Units (CGUs). Full impairment tests performed at 31 December 2025 confirmed sufficient headroom. As of 30 June 2026, management assessed commercial progress, market conditions, and operational forecasts for UnoMeter ™ and Sippi®, alongside the financial developments disclosed in Note 2 and Note 9. Management concluded that no impairment triggers were identified that would require a n impairment test as of 30 June 2026. Consequently, no impairment losses have been recognised in H1 2026.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 18 CGU Ultrasound: As disclosed in the 2025 Annual Report, the carrying value of CGU Ultrasound was fully impaired in 2025 , and d uring H1 2026, assets within CGU Ultrasound (carrying value NOK 0) were derecognized/disposed of from the balance sheet. This derecognition had no impact on the consolidated statement of profit or loss or financial position. As of H1 2026, the Group has only one CGU, Urine Measurement. Goodwill arises from the acquisition of Observe Medical International AB in 2015 and is denominated in SEK and translated into NOK at the exchange rate at the reporting date. N O T E 7 – O P E R A T I N G E X P E N S E S Amounts in NOK thousand H1 2026 H1 2025 FY 2025 Employee benefit expenses 6 084 5 106 15 287 Consultants 1 138 1 438 2 347 Audit Services 1 195 2 333 3 063 Legal and professional fees 358 465 2 163 Expense relating to short-term leases 294 321 584 Accounting and financial services 862 953 1 953 IT expenses 442 495 730 Travel expenses 216 162 431 Advertising expenses 117 4 23 IR Expenses 384 913 1 161 Patent, trademark, certification etc. 1 122 883 1 763 Other operating expenses 360 724 1 468 Sum 12 573 13 797 30 973 Restructuring costs (non-recurring) 2 010 Total 14 582 13 797 30 973 N O T E 8 – F I N A N C I A L I T E M S Amounts in NOK thousand Financial income H1 2026 H1 2025 FY 2025 Interest income 7 2 Currency gain 2 968 1 846 5 121 Other financial income 0 39 035 Total 2 975 1 846 44 158 Financial expenses H1 2026 H1 2025 FY 2025 Interest expenses 2 217 3 942 5 169 Currency loss 7 -2 776 1 664 Contingent milestone payments to Navamedic 1) 690 0 6 899 Other financial expenses 0 6 0 Total 2 914 1 172 13 732 Net financial items 61 674 30 426 1) Contingent milestone payments to Navamedic recognized as financial liability (IAS32), probability-weighted and discounted to present value, and will be amortised by effective interest. No cash obligations exist until revenue thresholds have been achieved.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 19 N O T E 9 – F I N A N C I A L I N S T R U M E N T S Maturity structure of liabilities as at 30 June 2026 Amounts in NOK million 0-3 months 3-12 months 1-2 years 2-3 years 3-4 years 4+ years Undiscounted amount Carrying amount Payables loan to Navamedic group 21,1 21,1 16,7 Loan Innovation Norway 0,4 1,8 4,8 4,5 4,2 2,9 18,6 15,1 Trade account payables 4,7 1,5 6,2 6,2 Other current liabilities 0,4 0,4 0,4 Payables debt to Convatec 5,0 5,0 9,9 8,6 Other current interest bearing liabilities 1,9 1,9 1,9 Contingent milestone payments to Navamedic 20,0 20,0 7,6 Total 7,1 8,7 9,8 4,5 24,2 24,0 78,3 56,6 Expected cash flows 1. Innovation Norway Loan In H1 2026, the Group secured a NOK 15.0 million innovation loan facility from Innovation Norway to finance the commercialisation of the UnoMeter ™ portfolio. The loan is structured as a serial loan with a 5-year tenure, including a 12 -month principal grace period (4 quarterly terms) and an initial interest rate of 7.70% p.a. (from July 2026 7.95%). The loan facility is secured by first -priority pledges totaling NOK 15.0 million each over: - Trade receivables / factoring of Observe Medical ASA - Inventory and operating equipment (machinery/movables) of Observe Medical ASA - Operating equipment of Observe Medical AS - 100% of the shares in subsidiaries Observe Medical AS and Observe Medical ApS Under the terms stipulated by Innovation Norway, no principal, interest or payments can be made on the subordinated loans from Navamedic ASA without prior written consent from Innovation Norway until the Innovation Norway loan is fully repaid. The agreement is subject to half -yearly reporting (within 45 days post period -end) and the following continuous financial covenants: a) Equity Ratio: Minimum 30.0% (including qualifying subordinated loans). As of 30 June 2026, the adjusted equity ratio was 49.6% (and 31.7% on a standalone booked equity basis). b). Free Liquidity: Minimum NOK 10.0 million (bank deposits plus available undrawn credit facilities). As of 30 June 2026, the Group’s free liquidity was NOK 7.8 million. Under the terms of the agreement, a 30 -day remedy period applies for covenant cure. As a formal waiver or modification was finalised after the reporting date, and the carrying amount of the Innovation Norway facility is classified under short -term interest -bearing liabilities as of 30 June 2026 in accordance with IFRS (IAS 1 / IAS 34). Subsequent to the reporting date, the Group obtained a waiver from Innovation Norway and is in constructive dialogue to establish an alternative financial covenant that better aligns with the Group’s operational model. 2. Navamedic loans In connection with the financing, an addendum to the Navamedic loan agreements was executed. Under the agreed terms, the Navamedic loans (aggregate carrying amount NOK 16.7 million incl. accrued interest) constitute a subordinated loan (Norwegian: ansvarlig lån) pursuant to Section 9-7 of the Norwegian Debt Settlement Act (dekningsloven). Pursuant to the addendum: - Navamedic's claims rank subordinated to all present and future claims from Innovation Norway. - No reduction, principal repayment, interest payment, or contingent milestone payments may be made to Navamedic until all loans granted by Innovation Norway have been fully and irrevocably repaid, unless prior written consent is obtained from Innovation Norway. - Interest continues to accrue in accordance with the underlying loan agreements, but cash payment is restricted until the Innovation Norway facility is settled. Consequently, in the maturity analysis, expected cash outflows to Navamedic are presented in line with the repayment restrictions under the Innovation Norway facility. 2. Contingent Milestone Payments The contingent milestone liability to Navamedic (maximum NOK 20 million based on Sippi® sales thresholds) continues to be measured at amortised cost using the effective interest method. Management evaluated the commercial targets as of 30 June 2026
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 20 and concluded that probability estimates remain unchanged from 31 December 2025. The change in carrying value during H1 2026 relates solely to effective interest unwinding. 4. Convatec debt There have been no material modifications to the terms of the Convatec deferred consideration (USD 0.5 million due 31 Dec 2026 and USD 0.5 million due 31 Dec 2027) . Changes in carrying amounts reflect accrued interest and foreign exchange translation adjustments. 5. Other interest-bearing liabilities During the first half of 2025, the Group entered into shareholder loan agreements with certain existing shareholders (ELI AS, JPB AS, and R Investment Company) to secure short -term working capital financing. The total loan amount outstanding under these agreements was NOK 1.9 million at the reporting date. The loans carried an annual interest rate of 15% until the initial maturity date 30.06.2025. Following this date, the loan is extended at an interest rate of +10% from the maturity date. The agreements include customary terms for this type of financing, including a right for the lenders to convert outstanding amounts into equity either in connection with a future equity raise on the same terms as other investors, or at an agreed price not exceeding the prevailing market price at the time of conversion . The loans are classified as financial liabilities measured at amortised cost. N O T E 1 0 – R E L A T E D P A R T I E S Transactions and balances with related parties Amounts in NOK thousand As at 30.06.2026 As at 31.12.2025 Operational Expenses Reiten&Co AS 0 75 Financial expenses Navamedic ASA 0 2 381 Interest bearing debt Navamedic ASA 0 15 894 Financial expenses RIC 187 99 Interest bearing debt RIC 1 136 949 Financial expenses ELI AS 18 39 Interest bearing debt ELI AS 57 39 Financial expenses JPB AS 119 59 Interest bearing debt JPB AS 728 609 Loan balances presented above represent the principal outstanding amount inclusive of accrued interest as of the reporting date. The associated interest expense reflects the accrued interest for the reporting period. Historically, Navamedic ASA was a major shareholder and related party of the Group. On 4 June 2026, Navamedic ASA sold its entire shareholding (7,214,974 shares) in Observe Medical ASA and held zero shares as of 30 June 2026. Consequently, Navamedic ASA ceased to be a related party on that date. Remaining contractual balances with Navamedic ASA at 30 June 2026 are disclosed in Note 9. At the Annual general meeting 29 May 2026, the Chairman of The Board was granted a right to receive a remuneration of NOK NOK 1,000,000 for extraordinary work performed related to capital raises and financing processes during the 2025–2026 period. The remuneration shall be paid in two installments: NOK 500,000 payable no earlier than 1 July 2026. NOK 500,000 payable on 1 Janu ary 2027. The payments shall be payable if the Company’s liquidity is deemed sufficient and structured in the Company’s best interest. N O T E 1 1 – S H A R E O P T I O N S During the first half of 2026, the Board of Directors granted 250,000 share options to CEO Jørgen Mann, expiring on 22 July 2028. The options carry an exercise price equal to the 10-day volume-weighted average price (VWAP) of the Company's shares on Euronext Expand commencing 26 March 2026. Vesting is subject to the performance condition that the Board documents the Group achieving a "cash positive" position during the financial year 2026. The options may be settled in shares or cash at the Board’s sole discretion, and any shares acquired upon exercise are subject to a 12-month lock-up period. Following this grant, Jørgen Mann holds 920,000 shares and 2,316,666 options in the Company.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 21 N O T E 1 2 – E V E N T S A F T E R T H E R E P O R T I N G D A T E Subsequent to the reporting date, the Group has received a formal waiver from Innovation Norway regarding the financial covenant as of 30 June 2026. Because the waiver was granted after the balance sheet date, the Innovation Norway facility of NOK 15.0 million remains classified as short-term interest-bearing debt as of 30 June 2026 in accordance with IFRS. Furthermore, the Group is in constructive dialogue with Innovation Norway to establish an alternative financial covenant that better aligns with the Group’s operational model.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 22 A L T E R N A T I V E P E R F O R M A N C E M E A S U R E S ( A P M S ) The condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). In addition to IFRS measures, the Group presents certain alternative performance measures (APMs) that are used by management to monitor and evaluate operating performance and financial position. The APMs are intended to provide additional information to investors and should not be considered as a substitute for, or superior to, measures prepared in accordance with IFRS. The APMs are defined and calculated consistently over time and are based on financial information derived from the Group’s IF RS financial statements. As APMs are not defined under IFRS, the measures presented may not be comparable with similarly titled measures used by other companies. Reconciliations between IFRS measures and APMs are presented below. Gross result Operating revenues less direct cost of materials, including cost price, transportation and warehouse-related costs of goods sold. Gross result is presented as a subtotal in the condensed consolidated statement of income. Gross result adjusted Gross result adjusted for specific items that management considers not reflective of underlying operating performance. Adjustments are described in the reconciliation tables below. EBIT Earnings before net financial items, results from associates and joint ventures and income tax. EBIT is presented as a subtotal in the condensed consolidated statement of income. EBITDA adjusted EBITDA adjusted for items that management considers non -recurring or not indicative of underlying operating performance. Adjustments are specified in the reconciliation tables below. EBITDA Earnings before interest, tax, depreciation and amortisation. EBITDA is presented as a subtotal in the condensed consolidated statement of comprehensive income. Net interest-bearing debt Interest-bearing liabilities less cash and cash equivalents Equity ratio Total equity divided by total assets Adjusted gross result H1 2026 H1 2025 FY 2025 Gross result (IFRS) 4 253 2 962 4 700 Inventory write-down 0 0 639 Gross result (adjusted) 4 253 2 962 4 905 Adjusted EBITDA EBITDA (IFRS) 7 918 -8 668 -24 020 Inventory write-down 0 0 639 Other income -18 247 -2 167 -2 253 Operatioal expenses (non-recurring) 2 010 0 0 EBITDA (adjusted) -8 319 -10 835 -25 635
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 23 C O P Y R I G H T A N D D I S C L A I M E R C O P Y R I G H T Copyright of all published material including photographs, drawings and images in this document remains vested in Observe Medical and third-party contributors as appropriate. Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction. D I S C L A I M E R This report includes, among other things, forward -looking information and statements that are subject to risks and uncertainties, which may cause actual results to differ from expectations. These statements and this report are based on current expectations , estimates, and projections regarding economic conditions. While Observe Medical ASA believes its expectations and assumptions are reasonable, there is no guarantee that they will be achieved or that actual results will align with those outlined in the report. Observe Medical ASA makes no representation or warranty, express or implied, regarding the accuracy, reliability, or completeness of this report. Neither Observe Medical ASA nor any of its directors, officers, or employees shall be liable for any use of the information contained herein. Observe Medical ASA comprises several legally independent entities, each with its own distinct identity. "Observe Medical" is used as a common brand or trademark for most of these entities. In this report, the terms "Observe Medical," "we," or "us" may be used to refer collectively to Observe Medical companies where appropriate, without specifying any particular entity.
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OBSERVE MEDICAL ASA | INTERIM REPORT H1 2026 24 IR Contacts Jørgen Mann, CEO Johan M. Fagerli, CFO +45 40 86 75 58 jorgen.mann@observemedical.com johan.fagerli@observemedical.com Address Observe Medical ASA Dronning Eufemias gate 16 Oslo, Norway C R I T I C A L C A R E U R I N E M E A S U R E M E N T . D I G I T I S E D .