Yes, I would agree that it was a very upbeat presentation. Arun placed a great deal of emphasis on how much the recent Mayo clinic paper will help in presentations to Administrators. I remain baffled that such a profoundly important analysis by such a prestigious hospital was never put out in a press release. I wish Arun would have mentioned receiving Japanese regulatory approval.
His strong comments on performance lead me to believe they are having a solid 3rd quarter so far.
It is interesting that the only audience question dealt with competition. Arun's bottom line response was....What competition??? He was asked by the moderator about what was called "fast followers" into the market. Again, Arun responded that he could not answer the question because they have not seen any fast followers. He also indicated that in Germany, they have won 100% of the business in which there was some kind of competition.
All this makes you wonder why the short interest remains at these levels. It seems the root cause of the problem over the past 18 months was Spy Elite and Arun was very emphatic today that that problem was now completely behind them.
Von this is the first real positive presentation Arun has done for...well all the way back to the time ISRG was sued and NVDQ fell in concert. $24 all the way to $9.60. All cylinders as the new "Marketing/Operations" driven company!!
Yes, Arun nailed it!
The company is finally firing on all cylinders.
Especially liked that our guys are ready to announce new upgrades/products, just waiting on the Stryker announcment. Already in the top German hospitals...that was news to me.
My thoughts concur Mr. B. Very encouraging. Now to nail it they have to have the numbers this coming quarter validify their claims. When they do that, the short flows will reverse in strength.
It will be interesting to watch this mornings Canacord conference for any new or reassuring confirmations of NVDQ's progress on the marketing front. If the case is made the shorts will most likely reverse their flows and try to back out before the October Q3 conference call. I like what I saw yesterday as it would support this hypothesis, though the volume were too small to be a confirmation.
The latest reporting period (as of July 31) shows an additional 1 % increase, or 68K shares, bringing the grand total to 6,709,590 shares or roughly 13% of the float (expressed another way, this represents about 12% of the outstanding shares.. Either way, this pile is beginning to look like serious money.
The steady selling of late does support the hypothesis that one or more institutions are selling out or reducing their holdings. The pattern seem to be there is low selling pressure for a period (2-15 minutes) then as the price drifts up due to the mismatch in Bid/Ask spread...wham! Someone comes in and sells 500-2000 shares and drives the price back down to the range it had before or even a tad lower. Unless there is a compelling story told at Wednesday's Canacord Growth conference, this pattern may hold and the price of NVDQ hover at these levels until the institution selling ceases or the next earnings are released.
This is how I see it Endo. Your blog fits this scenario.
Pressure on the stock in the second quarter was not just from short sellers. While most institutions have not as yet reported their exposure as of 6/30/15, early reports already show a decline in institutional exposure of 1.7 million shares.
Revisiting this post I made on June-02-2014....boy did I bet on the wrong horse!
NVDQ down 24%
DXCM up 187%
I still strongly believe in the NVDQ story...just taking a while to play out.
In a number of the CC's and Investor Presentations Arun talked about the cost effectiveness of their technology being able to cut costs and add clinical value. Since the price for the NVDQ Systems is around $250k vs ISRG Da Vinci at $1.5-$2.5M including initial stocking, he felt there would be many more "cost sensitive" hospitals and national health programs that would adopt their technology. It is very early in the game and he certainly would not put any quantitative projection forward but he has said repeatedly that the International market is as big or bigger than the domestic (US) market. I haven't sighted a specific reference but they do exist if your willing to go back into the archives.
It would be a good question to pose at the upcoming Canacord Growth conference. Drop them an e-mail and they just might do it.
" Arun is leaning towards the International being as big or bigger than the US market".
This is news to me...is this just a hunch, or if not, what exactly are you referencing?
I thank you for your reply.
Bob I was a little leery about setting it higher due to the disappointment of the domestic marketing performance. Once I see evidence that the foreign vendors are doing better I will up the growth rate. To put this in perspective at 3%QOQ the P/I rev is $3.0M out of $17.0M total for Q3 2015 and $4.3M out of $45.3M for Q3 2018. If change the P/I rev growth to 9% QOQ Q3 2015 becomes $3.2M out of $17.2 and Q3 2018 becomes $8.9M out of $49.9M. The eventual # will probably be closer to the 9% than the 3%...to this we agree. In the long run, Arun is leaning towards the International being as big or bigger than the US market....we will see.
I am curious how you assigned a number to one of the variables in your model. You expect Partnered / International Revenue will grow 3% q-o-q (~12.5% annualized). This sounds about right for the Intuitive piece of it and consequently a good number short term, but a little light for the remainder of the partnered capital items (SPY, Pinpoint, Luna) later on. Comments?
Endo, what I heard from Arun on the "removing the least productive salespersons" issue was that he was not considering this but saw an ever increasing market that needed to be covered and even these "less productive" persons would be used. Later (my thoughts) much later when we have 50% or greater market penetration ($1-2 Billion in sales) he would then as any company does consider replacing the weaker sales persons through attrition or market territory restructuring.
For my modeling, this is what I would deem a "secondary (15%)" model force. Currently I am trying to get the "primary (85%)" forces properly identified and interdependencies qualified, with initial quantified relationships estimated and later calibrated as data comes in.
Thanks for the reply. Vince and Endo , keep me on my toes.
Endo, You raise a very important factor that Andersongordon's fiscal projections will have a difficult time incorporating. I agree with you that the question put to Arun, (Will you be firing the least productive salespersons?) is central. Arun's response was not crisp but he seemed to say "yes." So where are the sales coming from and which sales are we talking about? I believe Roger told us the sales in DermaCell were very minor and Arun countered that they were increasing. Arun's projected sales and increased productivity for its DermaCell sales team is questionable. Repeatedly firing that sales force prevents the team from building relationships with surgeons and medical institutions and is counter productive, not to say brutal. The sale of the SPY system and related technology is the future of NVDQ's revenue. Arun mentioned that Rick just returned from a sales/training tour of Japan. That points to an additional and expanding market, as well as a focus for Novadaq.
During the Q & A, a very astute question was asked of Arun that I believe he did not clearly understand. The question will have an impact on your numbers. It related to the fact that at some point a bell curve will need to be applied to the overall performance of the sales force. For example, there is sure to be about 10% of the sales force that substantially outperforms the rest and 10% that substantially under performs. Where the analyst was going I believe is that at some point, productivity will be enhanced through the simple act of separating the chaff from the wheat. Also, salesmen territories will be reconfigured to be more productive. Net, net we could see increasing revenues with a decreasing sales force.
Novadaq gittin jiggy on its way to $6. I have been saying this for over a year.. I say it will happen. Arun says NVDQ is the next ISRG. Who do you think is right?
Sentiment: Strong Sell