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Novadaq Technologies Inc. Message Board

andersongordon 827 posts  |  Last Activity: Feb 5, 2016 4:40 PM Member since: Jul 11, 2011
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  • My closest friend feels the way market "Shorters" manipulate the market for NVDQ--is unfair at least and maybe beyond that. It looks a lot like someone is selling a few thousand shares, perhaps in the range of 50k to 100k during the recent low volume days and then comes in and purchases 100k-300k in large blocks at the end of the day. It seems to be working...at least for them. Endo's post indicated that the short position has dropped from ~7.5M to 3.5M shares in the last few weeks---after the pre-announcement of the $20M beating all 10 of the analysts estimates for Q4. If my gain in gross margins (60%-65% management estimates for 2015) from spreading fixed costs over higher revenue and the fact that 40% of the costs are in Canadian dollars yielding a special ~10% gross margin bump this quarter and another nice bump in Q1 from currency translation. I still see the loss at ($0.07) per share instead of the analysts average of ($0.15) per share. If management can up the forecaste from 30%-35% revenue growth in 2016 we should see ~$13@ to $14@ before Feb 19th.

    So all you "Longs", hold your nose for the next few days.

    GSA

  • Reply to

    Downgrade ---take II

    by andersongordon Jan 27, 2016 12:47 PM
    andersongordon@ymail.com andersongordon Jan 28, 2016 10:09 PM Flag

    Tried to send you an E-mail and it bounced back. Send me one and I will have your correct address.

    Will answer your question.

    GSA

  • andersongordon@ymail.com by andersongordon Jan 27, 2016 12:47 PM Flag

    Market Edge rates NVDQ as "Avoid with a 0 rating (the lowest) Jan 22, 2016
    The Street Ratings has a D+ "Sell" rating Jan 24, 2016
    Research Team has a "Reduce" rating Jan 27, 2016
    Ford Equity Research has a "Strong Sell" rating Jan 22, 2016
    Market Edge has "Avoid" Jan 22, 2016

    Any wonder why the price is down? When I read through the reports I realized they were all basing their recommendations on:
    1) price trends over the last year
    2) the increasing deterioration of earnings (well they just hired 110 marketing persons over the last year for a company of 351 employees and the need for training and it was stated that they would take 6-12 months to come up to speed--Revenues Q1-$11.7M, Q2-$15.1M, Q3-$17.0M, Q4-$20.0M---duh!
    3) deteriorating cash flow over the last 4 quarters

    Who pays these guys to drive looking in the rear view mirror with Stevie Wonder glasses on?

    They currently are forecasting a $0.15 loss for Q4 2015. My model has the company with a $0.07 loss and break even sometime late 2016 or early 2017.

    GSA

  • andersongordon@ymail.com andersongordon Jan 17, 2016 3:30 PM Flag

    Thank you for this post.
    GSA

  • Reply to

    Downgrade this morning?

    by bridgejumper08 Jan 14, 2016 10:32 AM
    andersongordon@ymail.com andersongordon Jan 15, 2016 7:27 AM Flag

    Excellent scenario building you guys. It is a pleasure to participate on this board. I really like the fact that you took a margin call forced sale with the market being down ~10% since the first of the year and tacked on Buzzy's "Opportunistic" Call seller's opportunity to keep his half a million shares by sacrificing a few thousand---just enough to keep it below $12.50. If I was an institution with a few million shares and I felt when this company goes positive earnings, later this year?, I would like to still have those half a million shares as NVDQ stock breaks out.

    GSA

  • Reply to

    Downgrade this morning?

    by bridgejumper08 Jan 14, 2016 10:32 AM
    andersongordon@ymail.com andersongordon Jan 14, 2016 11:09 AM Flag

    Looks like someone sold 50k shares at 09:50 and another at 10:00 and 25k shares at 10:10. With no matching buyers it caused the stock to drop $1.00 per share. This does not change the company trajectory. Look for better than expected EPS (loss though smaller than expected ~$0.07 per share) at the conference call and the stock to recover as they come to the realization that this company will most likely go positive EPS in 2016.

    GSA

  • Reply to

    short interest

    by e11ndofwar Jan 12, 2016 7:14 PM
    andersongordon@ymail.com andersongordon Jan 14, 2016 6:17 AM Flag

    Thanks Endo, I was going to ask you how the levels of short interest were doing when you posted...

    The 1.2 million shares on Tuesday...how many of them were unwinding shorts? I wait for your next update.

    GSA

  • Reply to

    J.P. Morgan Healthcare Conference 2016

    by buzzybob Jan 12, 2016 6:57 PM
    andersongordon@ymail.com andersongordon Jan 14, 2016 6:13 AM Flag

    Good summary Buzzy. The 30 hospitals in Germany was new to me and one other slide. The new cancer molecule image of the persons throat was...a game changer if this molecule can be used to identify not only where the cancer is and ....is not, but stages of the cancer...mild, aggressive, migrating etc.

    This molecule is an add on to the existing machines. Only software and the chemical kits would be new so this could be viewed as a hybrid "recurring revenue" stream but the potential for driving the "Novadaq" ecosphere is huge.

    GSA

  • andersongordon@ymail.com andersongordon Jan 12, 2016 7:49 AM Flag

    Q4 2015---not Q4 2016...where is my proofer when I need her.

    GSA

  • I had taken the very strong "placement" number of machines announced at the Investors day conference and multiplied the estimated full quarter placement # to come up with 62 machines sold. This gave my model the $22MM number. If I modify that to 58 instead of 62 I get $20.00 MM. From my blog on the impact of the ACA surcharge suspension starting on Jan 1, 2016 I projected ~2 of the 62 sales could be pushed into the next quarter. This brings my 62 estimate to 60---close to the now projected number. Remember there was a "placement" to "sales" factor that I estimated based on Q2 and Q3 results. That being said now lets step back and look at the big picture.
    Q1 2015 ~20 machine sales;
    Q2 2015 36 machine sales;
    Q3 2015 47 machine sales;
    Q4 2015 58 est. machine sales!!!!

    I like the trend. Another tailwind not mentioned in the announcement is the Canadian $/ US $ translation impact on gross margins. See my previous blog on this. The ratio has increased and now continues as oil has tanked further and the US Fed is raising interest rates both pushing the ratio higher (good for gross margins)
    Q1 2015 1.23 C$/US$;
    Q2 2015 1.23 C$/US$;
    Q3 2015 1.31 C$/US$;
    Q4 2015 1.34 C$/US$!!!!

    The trend is our friend as it adds about 7.5% Q1 to 10.1% Q4 to the base Gross Margins number. At the current ratio 1.42 C$/US$ it would add 11.8% to the base (67.3% est) Gross Margin.

    I agree with Glasgow Dad, NVDQ is being conservative in their revenue estimates. Tack on lower costs to higher revenues and it should be an interesting 2016.

    I have no confidence in how the stock price will respond to the pre-announcement. The company is doing just fine.

    GSA

  • Although there will be a real benefit of 2.3% of revenue coming back to the company instead of the US tax coffers starting today, Jan 1, 2016, will this cause hospitals to postpone purchases normally occurring in the end of the budgeted 2015 calendar year?

    Lets take a hypothetical scenario.
    Hospital Alpha has been using on a trial or rental basis the SpyElite or PINPoint systems during 2015 and have decided due to usage and for clinical reasons it is to their advantage to purchase the device(s) and get the lower cost for consumables (kits) {$1000/kit under rental mode to ~$450/kit under purchase mode}.
    a) Purchase $163k per device with a savings of $3750 for postponing until Jan 1.
    b) Kit sales per quarter per device Q4 2015 (model estimate) 16.7 times rental/purchase savings per kit of $1000-$450= $550@ times 16.7 equals $9185 savings
    c) Capital cost of ~12% or 1%/month. $163k*3%=$4890 interest on capital spending.
    Net for Hospital Alpha= Capital ACA savings $3750 + Capital Cost Interest savings $4890 -Kit Cost Savings $9185 yields a net loss of $545.

    If Alpha has spare kits already purchased and can wait for a month or two, the Alpha hospital can benefit by waiting to the tune of about $9000. If they order the kits and have the machine transferred on Jan 1 they may see no clinical difference but Novadaq by the way they count revenue as delivered and reasonable expectation of cash receipt, will not see the revenue until Q1 2016. Since the ACA suspension didn't happen until Dec 16 though the Congress had a serious proposal linked to the budget on Dec 11, and little shipping and transactions occur during the week of Dec 24-31, I suspect only a few sales out of the ~62 (models Base Case) will happen if at all. For two sale postponements that would be ~$300k out of the projected $20,700k or 1.4% loss of revenue. Almost immaterial.
    If there are any postponements they would be added to Q1 2016.
    It would be a good question to ask at the CC.

    GSA

  • Reply to

    Pezel and AG

    by e11ndofwar Dec 31, 2015 10:44 AM
    andersongordon@ymail.com andersongordon Dec 31, 2015 11:55 AM Flag

    From Arun and his VP's 8 or 9
    "We have completely put the LifeCell transition behind us and have returned to our previous ramp of it's (SpyElite) adoption".

    From talks with the analysts (various) 4 or 5
    Nothing specific, just things they talked about and their interested though un-excited tone.

    GSA

  • andersongordon@ymail.com by andersongordon Dec 26, 2015 11:59 AM Flag

    This is from my model. Updates since June 2015 include the impacts of:

    1) USD/CanD translation benefits--~10% increase in Gross Margins over 60-65% given by NVDQ
    2) The addition of 20 new sales reps during Q4 2015 and the anticipated 15-20 additional sales reps in 2016 dedicated to LUNA
    3) Increased effectiveness of sales reps from $400k/yr/rep Q1 2015, $600k/yr/rep Q2 2015, $700k/yr/rep Q3 2015, continued effectiveness of the 80 existing sales reps combined with near $0 contributions of the 20 new hires actually brings the average down to $680k/yr/rep in Q4 but then begins a rapid ramp in Q2 2016
    (Med Dev Sales, Revenue, EPS)
    Base Case: $1.5M/yr/rep in 2.00 years
    Q4 2015 62, $20.7, ($.07)
    Q1 2016 65, $23.4, ($.04)
    Q2 2016 68, $26.3, ($.01)
    Q3 2016 72, $29.7, $.02
    Q4 2016 75, $33.4, $.06
    Worst Case: $1.0M/yr/rep in 1.00 years
    Q4 2015 60, $20.4, ($.07)
    Q1 2016 61, $22.7, ($.05)
    Q2 2016 63, $25.2, ($.02)
    Q3 2016 64, $27.9, $.00
    Q4 2016 65, $31.0, $.03
    Best Case: $2.0M/yr/rep in 1.50 years
    Q4 2015 68, $21.8, ($.05)
    Q1 2016 78, $25.8, ($.01)
    Q2 2016 90, $30.6, $.04
    Q3 2016 103, $36.5, $.11
    Q4 2016 119, $43.6, $.18

    There are too many moving parts to forecast beyond 2016 with any confidence so I did not include them. More insight and definition will be gotten when NVDQ gives their 2016 forecasts in early 2016 and we get the actuals from Q4 2015. I am encouraged and there are many potential upside forces for NVDQ in 2016 and 2017.

    GSA

  • Reply to

    Will 4 be the charm

    by e11ndofwar Dec 22, 2015 11:57 AM
    andersongordon@ymail.com andersongordon Dec 26, 2015 10:17 AM Flag

    I have a very optimistic view of NVDQ (see the end of year post I will enter shortly) but just in case, I take my wife out only on Wednesday and then only because there is a special at Burger King---"Whopper Wednesday". I have for the last year told her we must "Go Small...No Cheese...No Sundae for desert" but that should all change this year...We should be able to "Go Large" (:-)

    GSA

  • Reply to

    Will 4 be the charm

    by e11ndofwar Dec 22, 2015 11:57 AM
    andersongordon@ymail.com andersongordon Dec 25, 2015 9:58 AM Flag

    Do not fret. The total volume for the day was only 51k when the average daily volume is 334k. There were ~10k shares traded in the last half hour with no buyers to match so the price dropped $0.35. On a normal day this would have been responded to by matching bids and the price would have dropped a few cents if at all. The real results and the catalyst to break out of #4 will be the earnings report in late Jan or early Feb 2016. ISRG reports on Jan 21 and will be a harbinger of how things could turn. I feel the medical capital spending typical of the 4th quarter and the mitigation of the Obamacare "fear" that has pervaded hospital board rooms over the last few years has and will lead to better performance both for ISRG and even more so for NVDQ.

    On another issue, I was not aware of the 7 fishes custom. I looked it up ...Endo what is the origins and story behind the 7 fishes? If it's too much for this MB you can tell me in person at the next years Investors Day Conference.

    GSA

  • Reply to

    radiology

    by nisku98 Nov 27, 2015 9:29 AM
    andersongordon@ymail.com andersongordon Dec 22, 2015 10:38 AM Flag

    Your point is correct Buzzy. Be polite in your responses. I value your MB input.

    GSA

  • andersongordon@ymail.com andersongordon Dec 22, 2015 7:01 AM Flag

    No. It "Suspended" it for two years from Jan1, 2016 thru Dec 31, 2017. If the new president and His/Her congress are so disposed they could 1) let the suspention run out and it would be reinstated; 2) extend the suspention; 3) eliminate it all together permanently.

    See my discussion on the impact of the ACA Medical Device Surcharge over on the Novadaq board. I specifically modeled the impact on ISRG and since then the price of the stock had moved almost to the dollar the value I suggested it would were there no ACA Surcharge--$35 to$40.

    GSA

  • I went back and modeled the impact of the US$ to Canandian $ impacts on Gross Margins.
    Assumptions: (taken from graph of C$/US$ exchange rates over 2015 and est for 2016)
    Q1 1.23, Q2 1.23, Q3 1.31, Q4 1.33, Q1-Q4 2016 1.38 est.
    From conversations with the CFO and mentioned in various presentations, ~40% of the costs of NVDQ are in Canadian $s. Applying the exchange rate to the 40% COGS it comes out the saving or better yet the addition to Gross Margins in % were Q1 7.5%, Q2 7.5%, Q3 9.5%, Q4 9.9% and Q1-Q4 2016 Est 11.0%. The 2.3 % ACA suspension on medical equipment revenue adds in Q1 2016.

    In modeling this and subtracting out the currency translation benefits, the COGS show an improving pattern as volumes increase and manufacturing efficiencies are developed. Q1 56.4%, Q2 63.4%, Q3 64.3%, Q4 2015 est. 65.0%, Q1-Q4 2016 will continue to benefit from increased volumes and further efficiencies in manufacturing processes. This stripping out of the currency translation benefit actually agrees very well with the stated 60%-65% gross margins spoken about in the conference calls. As long as oil is held low (current OPEC strategy) and US interest rates are increasing (FED tightening), I expect the bump to Gross Margins should be around 10% for 2016. Add to this the 2.3% from the suspended ACA Medical Device Surcharge and we are probably going to see some very nice upside surprises in 2016.

    Using a conservative estimate for the Q4 2015 results of $21.22M Revenue yields a loss of $3.31M or ($0.06) per share loss. Q1 2016 yields a loss of $0.80M or ($0.01) per share. Q2 2016 has revenue of $29.88 and net income of $2.07M or $0.04 per share!!!!

    GSA

  • andersongordon@ymail.com andersongordon Dec 19, 2015 12:23 AM Flag

    To quote a favorite movie...."Wish I had a million dollars..."HOT DOG!!"

    Good question flamfurter. I will write a blog on that for you. It was a topic I talked to NVDQ CFO about at the Investors Day Conference. I'll check my model, and put in what would be the cone around estimates to see what impact this should have had in Q4 and going forward.

    GSA

  • Reply to

    ISRG has a ton of cash and no debt

    by johnrobert1964 Dec 16, 2015 2:29 PM
    andersongordon@ymail.com andersongordon Dec 16, 2015 4:07 PM Flag

    Better to buy back stock at strategic times and consistently though the year. Tax benefits for all stockholders that are not selling their shares means they get tax free capital gains instead of taxable dividends.

    GSA

NVDQ
10.66+0.40(+3.90%)Jul 29 4:00 PMEDT