Surfin, Glad your long Solta, but dude, you are missing the forest for the trees here with your estimates.
You provide Aesthetic companies.....
CUTR: $140M cap 1.8x sales, EBITDA -$1.5M -1%, $90M in cash, no debt
ELOS: $303M cap 1.1x sales, EBITDA $2.4M $1%, $83M in cash, no debt
CYNO: $544M cap 3.2x sales, EBITDA $24.5M 4.5%, $90M in cash, no debt
And then average them
AVE: $290M cap, 1.8x sales, EBITDA ave = 2% $73M in cash average
and based on that average say current value should be 3.45 and might sell for 4.75 in Aquisition.
Here are the key points you are missing with this valuation my friend.
Point #1: Solta is sitting in a position where they can drastically improve their balance sheet simply by removing aquisition waste and one time expenses that have affected every quarter in recent memory.
Point #2: Solta's revenues for the next few years will reflect a higher and higher percent of their revenue from consumables, which have margins in the 80-90% range. So their sales margins for total revenue will continue to move up significantly toward the 80-90% range over time, as consumable sales continue the trend of representing more and more of their total revenue.
Point #3: 60% of Solta's clients (and IMHO this was by design) on the books are green pasture (only one unit sold). Based on this, Solta's sales forces have focused on maximizing the green pasture sales to brand new clients. Now the sales force is going to focus on Cross Marketing to these clients, which IMHO will produce EXPLOSIVE revenue growth from unit sales.
Point #4: None of the other competitors in their space have fully adopted this recurring revenue model, and as a result, do now posess the leverage that Solta has. This will allow Solta to begin swallowing up market share and IMHO take over the Aesthetic's market.
Now Surf, as you can see, each of these points could have a significant impact on quarterly earnings, but IMHO combining them together at one time, now you begin a trend of having blow out quarter after blow out quarter with both revenues / profits exploding.
Storm, All of the points you make have some validity.
Point #1: Solta is sitting in a position ...
I agree completely. It's time for them to get to business, no more acquisitions. They are in a good position.
Point #2: Solta's revenues will reflect a higher % from consumables, margins 80-90%
Yes, but so far that's because placements are down. Look, they've been at it for years. There just won't be any hockey stick here now. They need to keep placing systems.
Point #3: 60% of Solta's clients on the books are green pasture produce EXPLOSIVE revenue growth from unit sales.
You are assuming that those sites are very happy with the other products. Sales people don't quit if there's lots of low hanging fruit. Those sites will be a tough sell for more. Show me the money on this one. I don't believe.
Point #4: None of the other competitors have adopted this recurring revenue model.. IMHO take over the Aesthetic's market.
Again, they've been at it for a while, and the docs don't like that model. Docs are happy when THEY make lots of money and have happy patients. There's a fine line that must not be crossed. If Fanning set this up so well, why is he gone? Look, they've got good stuff and a sound foundation, but Solta to take over the world? Really?