I just finished digesting the CC. I’d like to hear what everyone else’s views are.
I guess I initially had hoped they’d become cash-flow positive by the end of the year, but it seems like the PINPOINT ramp-up will push that back, probably into late 2013? However, with the investment they’re making in PINPOINT, and their strategy of expanding their base, I see PINPOINT as being an expensive introduction of a product that will start generating “significant revenue” in 2013. Dr. Menawat said I he’d have to guess, he’d say the burn rate through 2012 would be in the $5-10M range, with the majority of that being for PINPOINT, and some of it going into the nerve imaging R&D. They should begin issuing guidance starting in 2013.
He finished with this, which I’ve paraphrased a little to (slightly) clean up:
“You can see that this has the potential of becoming a very big business and a very cash-flow business at some point, and as we get predictability my hope is, and I’m not necessarily committing to it, that starting in 2013 we will be able to provide revenue guidance. But my bigger message really is that we are a big agenda company. We have spent our time essentially creating a market describing the value to surgeons. We think we are over that hump. We think that the surgeons get it now. We think that there is a lot of clinical data that says that this technology is really valuable, and thereby I think it’s a matter of time. We have multiple partners, everyone is a leader, and we have our own product, I think that we (have) really positioned ourselves to be the leader in the space, and that is really our current message”.
Anyone who owns this stock and has not listened to the CC is doing themself a tremendous disservice,particularly as it relates to the Q&A. The company has a very clear, very comprehensive strategic plan in place and it is very obvious that the CEO has a very indepth perception of where this company is and where it is going. I was particularly impressed with the fact that the 50 most presigious hospitals in this country all have our equipment on site. With the not to distant addition of Pinpoint the company will have products in robotic surgery, open surgery, and out patient surgery. It is also impressive that with each passing quarter the percentage of hospitals acquiring DaVinci with Firefly is increasing and is now up to 50%, with an expectation this percentage will continue to increase. When Pinpoint is taken to the market as early as 2013, the company expects that marketing the product will be greatly aided by the growing reputations of Spy and Firefly.
This is a terrific little company that continues to pretty much fly under the radar. I continue to accumulate. regards endo regards endo
One thing I would point out, and I would preface this by repeating that I think their execution has been great, is that building and managing a salesforce is not something they have already done.
Hopefully they will do this well but it is a completely new arena for them and there is no guarantee that they will do it well or in a cost efficient manner. In some ways I wish they were partnering for Pinpoint as well. Yes the payoff could be greater but so is the uncertainty.
Hopefully by the time they are ramping up their sales effort, the data will be so compelling that Pinpoint will pretty much sell itself. Selling and supporting a product like this requires a surprising amount of hand-holding. ISRG does this very well but it can be expensive and requires exceptional execution. ISRG has the benefit of supporting firefly within the context of their existing field force. In other words they are already calling on these hospital/surgeons and already have the relationships. NVDQ will have to do this and justify the cost based solely on the Pinpoint.
I think they can do it, but it's a significant challenge and smooth sailing is far from assured.
I remain very bullish on NVDQ and I think that CEO Arun's comment that "the company expects that marketing the product will be greatly aided by the growing reputations of Spy and Firefly."
I think they have executed extremely well so far and this comment highlights the strategic brilliance of the ISRG deal.
ISRG has seen simialr success from their own efforts in that they have had a MUCH easier time expanding daVinci's use to new specialties when the hospital already had a system in use. Similarly it was a much easier sale when neighboring hospitals already had a system.
The best part of all of this is that the clinical and cost savings data is already compelling and accumulating.