"[C]learly removed any hierarchy of test modalities."
What does that mean in plain English? It means that Cologuard is no better than any other test. Or put another way, they're all special. And remember the "Incredibles" rule: if everyone is special, than nobody is."
Even if the insurance companies get on board, it still requires a GI doc to recommend the test, which effectively delays doing a colonoscopy, something GI docs are famously loathe to do.
Read the IBD story carefully. I'll save you the trouble though with the 'money quote:'
"“The [JAMA] article states the USPSTF highly recommends colon cancer screening from age 50 to 75 but will no longer rank tests; instead, it is providing a list of acceptable ones that includes FITDNA (Cologuard),” Lavin wrote in a research note. "
That's right: not only will Cologuard not be getting an "A" it will only be considered "acceptable" next to the gold standard of a colonoscopy. Not "recommended." Just "accepteable." Which means it will be down to EXAS's crack salesforce to convince GI docs to waste precious time on a pre-lim test like Cologuard rather than schedule and do a 'scope.' Even if this changes Cologuard's re-imbursement profile, it still takes a doc to order the test and being "acceptable" isn't going to change any doc's mind.
So let the cash burning continue!
SSNI didn't lower guidance; they simply initiated Q2 guidance that is basically level with Q1. It looks "bad" only because their analyst coverage was way optimistic. Perhaps that's understandable given the huge backlog building at the company with a lot of new, mostly international business coming in the door. These guys have a high-class problem: too many clients. And yet they're controlling operating expenses and there's no competition to speak off: gross margins are going up indicating no pricing pressure. Plus cash flow is still positive, even in a seasonally weak quarter. Back up the truck if it goes down on the mis-understanding.
Hey Shorty - I'm talking to you, Howie Man.
No lube for you today. Just straight prison-style sodomy.
I guess wishing something will go down doesn't work. Next time, try the facts. Like, say
24% organic growth
34% total revenue growth with Pakedge
51% gross margins - holding steady.
Full year guidance well above consensus.
OK, Nurse Diesel will see you now in the prison infirmary.
Why didn't I cover at $22? Because nothing about the story had changed except they'd burned through another six months of cash and were saying that even if certain things went well in 2016, they expected to to burn cash all year. Covering would have been like punishing myself for being right. This is the rare stock that could truly go to $0. And yes, the stock then went up into the low 40s but again, nothing had really changed, except for some conveniently timed press releases hinting at big things, which of course haven't materialized.
If I thought DMRC had the goods, I'd close my short right away. But I wouldn't go long until I saw actual, sustained, operating cash flow. After all, what if your fantasy came true and DMRC earned $0.10 in 2017? Then you'd have a barely profitable stock trading at a forward P:E of 300. Hmmm....can you say, "valuation compression?" But wait, what if Wal-Mart gets on board? Answer: Wal-Mart suppliers don't get rich via margins; they get rich via sales volumes. But DMRC doesn't license its tech that way; it licenses it on a per SKU basis to product vendors. And since those vendors sell most of their product through high-volume retailers like WMT and TGT and AMZN, those vendors aren't going to have much, if any, margin to share with some tech vendor they're being forced to deal with.
C'mon people...do I have to explain this again?
Digimarc was founded in 1995 and went public in December 1999. I first met Bruce Davis in the year 2000 when he was out marketing the company on an investor road show. He's been telling the same story in the 16 years since: mainstream adoption and great riches are just around the corner.
You have vastly overestimated my ability to influence the stock price or convince you and your fellow True Believers to do anything. The stock will do what it wants, which in the absence of fundamentals like positive cash flow or tangible book value, is to fluctuate wildly on very little volume.
I occasionally wander over to this message board to get a check on the sentiment surrounding the company. It cracks me up that otherwise sensible people will continuously rationalize and justify self-defeating behavior when the facts so obviously point in the other direction. Pretty much the definition of a cult.
But my short position isn't based on some sort of special information or insight; it's based only on the fact that DMRC continues to bleed cash while trying but never succeeding at landing major (non-Governmental) customers for its tech. I bear no grudge against you, Davis or anyone else in DMRC's orbit. It's strictly business. So far it has worked out for me. Maybe you bought in much lower and it's working out for you. If so, congrats.
But the fact that you would write, "We are True Believers and are very very patient." speaks to a certain, shall we say, naivete about investing. You're personalizing an investment decision, something pros never do. It makes you too invested in the outcome. I respectfully suggest that you find a copy of "The Money Game" by Adam Smith. You may benefit both w/r/t Digimarc and with your other investments.
Just checking in to see if the same true believers are, well, believing.
- Willingness to ignore lack of progress in landing paying customers? Check.
- Eagerness to re-cast cash burn as being merely "light" and therefore somehow a good thing? Check.
- Endless patience for Bruce to actually lead the company forward? Check.
- Delusional assumptions about how the stock could be over $100/share in the near future? Check
- Chicken-and-egg problem of retailers and CPG vendors each waiting for the other to go first and neither one doing so? Check.
- Continued denial that Digimarc has been making the same claims and promises for 15 years? Check.
Yup, it's business as usual for DMRC and the folks on this board. I've been short since late last June at around $40 and this continues to pay off. You guys keep up the good work here.
More from the announcement and conference call:
2015 Actual (FORM alone) vs. 2015 Pro-Forma (FORM + CSCD) guidance:
Revenue $282m $486m
Non-GAAP GMar 35% 42%
Non-GAAP OMar 8% 12%
Non-GAAP EPS $0.37 $0.65
EBITDA Margin 11% 15%
That's right: just putting the two companies together would mean FORM having $0.65 in 2015 EPS instead of the $0.37 they reported. And that's just financial synergies, never mind product and sales synergies in years 2, 3, 4, etc. Pre-Deal, FORM's 2016 EPS estimate is $0.48. That means post deal it's more likely to be around $0.80...for a $6.75 stock for a company that will dominate this space.
It's bizarre that FORM is down, given that just completing the merger alone yields so much cost and tax synergy. Stupid algo traders reacting to the news and not even bothering to see the accretion.