At the last conference call so much time was devoted to Lifecell and second half revenue growth, that a critically important and positive development received only minimal attention. it has also eceived minimal attention on this message board, particularly from the detractors.
We all follow closely the growth in the percentage of breast reconstruction surgeries that utilize our equipment. We do this because we know what a positive impact it would have on the company's revenues if our equipment became standard of care for that surgical procedure.
Now we have the CEO indicating that the clinical studies in using our equipment for G.I. surgeries and lymph node surgeries is so positive that two comprehensive further studies are commencing shortly. The objective of these studies is NOT to simply further verify the benefit of using our equipment for these procedures. The objective is to make a case that the benefits of this equipment warrant it receiving a standard of care designation. Think about the long term implications of that realistic possibility.
Endo,,,Thank you for your posts and positive input to this board. How is it actually determined that NVDQ's equipment would warrant a standard of care designation. Who does this, and what triggers the determination? Do you know the process? TIA
The real question to ask yourself 'would I feel more confident on the Operating Table knowing that my surgeon is using this technology' ? It is the same question you would ask of Intuitive with DaVInci !!!
The answer is obvious.....
endo - nobody on this board is arguing against the obvious clinical benefit that the various Spy equipment provides - there is no doubt in my mind that over the next 10 years, Spy will become SOC in numerous indications. The issue is how long it takes to get there - having a clinical study that demonstrates irrefutable clinical benefit is not enough - if it was, they would already have captured the markets in colectomy and breast reconstruction. Clinical studies are fine, but you need to get equipment placed and doctors trained and Arun isn't moving aggressively enough to make that happen - if he was, we wouldn't be wringing our hands over whether Q3 revenue growth is going to be 30% or 40%.
I was naive enough when I first invested in this company 5+ years ago that they could operate with the "field of dreams" strategy - build it and they will come. I thought the technology was so compelling that getting a few pieces of equipment into the leading hospitals and having the "thought leaders" talk it up a bit was all you needed for the rest of the medical system to beat a path to your door. That is obviously not the case and the breadth of indications available to be handled by Spy requires a huge marketing organization to make SOC happen - if you believe Arun can build it from the ground up, you are kidding yourself.
Tred, the results we all see, i.e. a slower adoption than theory would have indicated was largely influenced if not responsible to the "Affordable Care Act". In the US hospitals....the marginal ones and many of those in remote regions are under so much stress that they are closing. The rest are trying to cope with the ~40% of "discretionary" patients that have weighed the new "deductible", real out of the pocket cash expense that are now in the thousands instead of the hundreds, that are not now in the revenue stream. When there is a cash flow transient like the one hospitals are living through, there are two main responses. One, lay off employees....very painful and not easily repaired if the revenue stream recovers. Two, reduce, even eliminate capital equipment purchases.
These "discretionary" patients will eventually either become non-discretionary--when the benign tumor becomes cancerous...or they will decide to pay the new increased deductible...or they will be removed from the market for health treatment...death.
The big picture seems to be a marked increase of GDP percent going to the health segment in higher insurance and deductible and tax (government subsidies) payments. Yes, our president bent the cost curve, just not the way it was advertised. So where is all that money going? Insurance companies seem to be doing better. The government initially is doing better with justification for higher taxes...individual penalties (taxes according to the Supreme Court) and the new plethora of medical taxes...Capital Equipment Revenue tax, insurance "Surcharge" ....etc. This money will eventually work its way through the pipeline or else new pipelines will be created to meet the demand for health care. Else we will all suffer higher costs and less health care...rationing is what we use to call it.
If you put one more intermediary (new ACA regulatory bureaucracy) between the patient (consumer) and the doctor (provider) there will be a delay.
You put your finger right on the key takeaway again Endo. First Breast Reconstruction, then G.I., then Lymph Node, then Endometriosis, then....Standard of Care. This company's suite of equipment and applications will be in 80% of all hospitals in the US one day. ISRG is in 20%. Internationally the ratio of NVDQ to ISRG's presence will be even higher due to the cost effectiveness of it's technologies. It pays for itself even in a low cost environment. Currently the company sees about $1 to $2 Billion in annual revenue, I see $4-$8 Billion eventually counting all the clinics that will use it for wound care and diagnostics.
I think that have tapped out on the breast surgery. Hospitals don't get reimbursement for SPY so it makes it challenging to grown. Not to mention competition in the open SPY and wound care is coming. A French company will soon be ready to go after these. If it does what SPY is and is less expensive boom the knife will fall. SInce most of LifeCell's business is placements not capital. I think this company has a lot of smoke and mirrors. By the time they get approval on Lymphnode mapping Olympus/Storz will have the same technology. Its time to call a spade a spade. For years the CEO has told us standard of care or x number of operations and has it come true? NOPE. Time to quit letting wallstreet say buy buy buy, before they dump there shares on you. Take my read with a grain of salt if you want, but this CEO has poor direct sales leadership in the US and with that is a recipe for disaster.