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Novadaq Technologies Inc. Message Board

  • andersongordon Aug 1, 2013 4:37 PM Flag

    Q2 2013 Results --GSA

    LUNA and PINPOINT sales in double digits--exceeded expectations but no quantification was given so I don't know by how much--I expected 6 PINPOINTS and 0 LUNA. I estimated 5 LUNA and 6 PINPOINTs for modeling.

    The Patient Treatments were lower than expected but only marginally.

    The sales of 175 units beat my estimate of 135 handily but the comment of "128" were placed in hospitals means to me that these units are now in stock with the vendors or were for shipment but hadn't arrived.

    There was an additional $2.5 million in new sales, research and admin personell---GREAT! There was also a ~$1.5 million added to inventory as new orders are expected for "Spy Elite" breast reconstruction is nearing the inflection point of 15-20% were it should be considered for "Standard of Care". This will cause a step jump in orders for their units.

    The new aquisition of "Trapper" for Lymph Node biopsies and Tumor margin Imaging could prove to be a very powerful addition to the technology and should drive this into a whole new cohort of hospitals that were hesitant about the limited blood profusion benefits in the operating room. This won't be realized until 2015 per Arun in CC, but this could add Hundreds of Millions of new revenue per year with existing fixed cost structure and only marginal incremental expense i.e. Margin expansion of 3-5%!

    I was baffled by the market response of share price dropping from ~$13.60 to $11.70! Why? Somebody saw what I saw and stepped in to buy 500,000 shares in the next 2 hours!
    All in all--a very encouraging report.


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    • andersongordon & tredleon
      First off thanks for the input. Tredleon, it is my recollection, that in response to a question, Arum indicated that he expected breast reconstruction to reach 20% in 2014 not 2015. If the stock price is ahead of itself the RSI keeps returning to neutral especially after that sudden stock price drop the day they reported earnings. I continue to monitor institutional exposure which currently stands at 51%. A half dozen or so have already reported 6/30/13 exposure with only 3 meaningful changes, Gagnon Securities down 265 thousand shares, Rice Hall James up 122,000, and Columbus Circle up 112,000.
      regards endo

      Sentiment: Buy

      • 1 Reply to e11ndofwar
      • endo - you are correct - I was saying 2015 would probably be the first year of exponential growth, rather than than the incremental growth that they are experiencing now. They went from an estimated 14% of the breast reconstruction market to 15% in the current quarter, so if they are targeting 20% for 2014, they aren't expecting much more than an incremental 1% per quarter for the next year or so. He has implied that once you get to that critical mass of 20% plus, they will then see exponential growth toward a standard of care status, where I assume 90%+ of the procedures would use Spy - I would think that would take at least another 3 years?

    • GSA - Nice recap, although I am not surprised by the sell-off. As positive as the story is and as much potential that exists over the next decade for this company, I'm sure some investors get squeamish holding a stock with a $0.5B market cap that is currently unprofitable and has annualized sales of less than $50M. My sense is that the price got a little ahead of itself and that while the revenue increases over the next year or so will be solid, they will not be hyperbolic enough to convince all the longs that the traction is there to support a $1B company. The real sales and profitability growth will be years 2-5 from now, when all the different markets are saturated with equipment and Spy is becoming the standard of care in numerous indications. Arun previously talked about this growth curve with respect to breast reconstruction - you have to get to the 20-30% of cases, before adoption kicks into the standard of care mode and then you start seeing dramatic growth - I think he said they would not see that in breast reconstruction until 2015.

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