I listened to the two latest presentations by Arun. He indicated that the sales force doubled at the end of the 4th quarter and into the 1st quarter and now stands at 80. These size of sales force numbers continue to confuse me. His comments suggest that the company has experienced either voluntary or non voluntary turnover because I could have sworn that there were more then 40 salesmen aboard the company in the 3rd quarter of 2014.
A couple of years ago on this Board, we expected the company to reach break even by the end of the 4th quarter of 2014 and be profitable at the start of 2015. When Arun was asked on Tuesday if it was reasonable to expect the company to break even in 12 to 18 months, he was very noncommittal. And there folks is the reason we are sitting at a pps of around $10.
A couple of years ago, we regularly heard of a new application, like endometriosis. Now all of the focus is on pilar 3 and lymph nodes. Nothing new for the last year.
In spite of the fact that Arun says things will pick up strongly in the second half, the company needs to show some real progress when it reports 2nd quarter results at the end of July. I have said it before here and i will say it again, crossing the bridge from being primarily a R&D company to a marketing company is easier said then done.
We are right now at a critical juncture for this company. We are about 90% owned by Institutions. Just about all of the recent heavy volume is institutional activity. Some have been unquestionably been selling heavily.
That selling has been soaked up by other institutions albeit at lower and lower prices. The overall stock market has been booming and we have been slipping back. It is obvious that some of the larger investors have a great belief in the products and continue to be very patient. How long can we expect that to last. Personally I am hoping that the stock holds at this level till the 2nd quarter report and CC. At that time, Arun MUST show clear evidence that the pipeline is fulling up.
I could not agree with you more. A few months ago I made a posting here that was not very well received. As with you I too have seen companies and CEO's in particular who were great in terms of their R & D and the products that came out of that research effort. Then they have to cross a bridge from being an R&D company to a revenue generating organization with the emphasis now on marketing and less so on research. Some CEO's have a problem effectively making that transition, not from a lack of effort but from a lack of experience.
Over and over during this recent CC Arun stumbled on questions related to marketing. For example, it took repeated questions from one of the analyst to get Arun to address pipeline. His response indicated that all levels of the pipeline were improving late in the 1st quarter. This was positive information that he should have addressed himself right at the outset of his comments. Thank God, the analyst asked the question.
I continue to be confused by the issue of salesman productivity and why it is taking almost a year for a salesman to reach full productivity. I also believe Arun and his team underestimated the difficulties of taking over the Lifecell accounts ans Spy Elite. I know this is Monday morning quarterbacking but it looks like they should have waited until their own marketing effort on Pinpoint and Luna were fully established before taking over Spy Elite.
more to come
There are many reasons for a credit facility and the reason for the facility will generally determine its use. For example, when a large, usually public company begins selling commercial paper, they set up committed credit facilities to support the outstanding commercial paper. Those facilities are rarely taken down unless the company runs into serious financial difficulty.
Some companies set up credit facilities to support their acquisition of capital equipment. As the equipment is delivered the committed line is taken down. This is commonly referred to as a line of credit. Some companies have credit facilities when they are in seasonal businesses. For example, a company manufactures Christmas decorations. They borrow under the credit facility as they manufacture the merchandise. They ship before Christmas turning the inventory into receivables then pay the loan back when the receivable are collected.
Thanks for taking the time to contact Kilmer. Excellent post. It has been my opinion since this rapid decline began that it was likely to be the result of institutional selling. However, like most individual investors I tend to always climb a wall of worry. Again, thanks for such a high quality and timely post.
As with many here, I've seen biotech companies go down even more sometimes in a day. But those situations were almost always the result of really bad news like a bad decision from the FDA. Here we have no news.
These folks are well aware of the need to preannounce serious misses in financial results. They are also aware that a material negative event needs to be reported immediately. We know that a miss on revenues would not cause such a dramatic drop on such heavy volume. We already knew the first quarter revenues were going to be soft. I have sent 2 emails to Kilmer expressing my concerns. Usually I receive an immediate response. One time I actually received a phone call from Arun and we talked generally about the company for nearly an hour. This time, nothing. Not a peep. The 28th cannot get here fast enough for me.
One more point on that last posting. I have been monitoring institutional activity on a quarterly basis. nearly every quarter there is at least one institution, for whatever reason, selling out a large position of up to 2 million shares. In the past, those sales were scooped up by other institutions. Net,net, every quarter for the past two years institutional exposure has grown to a new high. Even last year, when we dropped from a high of $24pps to $12.
Maybe now, for the first time, becuase of uncertainties surrounding the overall market many institutions are rebalancing or increasing their cash position. So these shares being sold are being sold into a market with less big buyers. Another poster here made that point and I believe he is right.
Sorry, but I take exception with your wife's position. It is a kind of conspiracy concept that usually proves to be not true. Again, 87% of the stock is owned by institutions. The volume has been substantial the last few business days. Very substantial. Logic would say it is primarily institutional activity with a sprinkle of shorting.
So the real question is do one or more institutions know something we don't know and are running for the exits. So I ask myself, what really bad thing can be happening that we don't know about. The only legitimate answer that comes to my mind is that the sales effort is doing very badly. It would have to be doing terribly because the price was up at $17/share at a time we were advised by the company that 1st quarter sales were expected to grow only 25%, which is very low when compared to past growth.
I remain convinced that one or more instiitutions have become disenchanted with both the company and the overall market and are selling. If Fidelity, for example, decided to reduce their position by 20%, that's about 1.6 million shares. That's a lot of selling pressure. We shall see soon enough.
1.4 million shares already traded. Not good. Down 14%. Not good. No news other then announcing 1st quarter earnings to be released early. Usually a good sign, usually. The only bad thing that could come out of the 1st quarter report is poor sales numbers. If, somehow, word on that has gotten out, would the stock drop this much? After all, the market cap on this stock has declined by $157 million in the last two days.
Mt conclusion remains that one or more institutions have become disenchanted with the market and particularly what they would define as speculative stocks. There are some very significant institutional exposures on this stock. All it would take is for some of these institutions to decide to reduce their across the board by a5% to 20% and you get the kind of train wreck we are having today. The market is down big time today.
Just a thought.
You asked if anyone can explain the last couple of days of trading. Hocum's Razor states that most often the simplest explanation is oftentimes the right explanation. Given that, i would state that much of this action, like today, has very little to do with day to day activities of the company. Instead, since the institutions own over 80% of the stock, what is going on is some institutions selling large blocks, some buying large blocks. This is a speculative stock. In uncertain times, it is the speculative stocks that have the most dramatic movements.
At times like this i remind myself of the old stock market saying......" In the stock market, money flows from the impatient to the patient."
You write that earnings came in. I do not expect earnings for the first quarter to be reported until early May.
At the same time, maybe news of a better then expected quarter of revenue growth has become known to some players. I cannot think of anything else that would explain such a strong move that was supported by solid volume.
It would be nice to see combined revenues of $8.1 million for Pinpoint and luna for the 1st quarter. That would represent a 40% increase in revenues over the 4th quarter for these products. That would certainly indicate, at least to me, improving salesmen productivity in the most important arena for this company.
just back from overseas.
Listened to the recent presentation and would agree that when Arun was speaking of
50%,25% and 25%, he was discussing the state of affairs of the old lifecell customers.
Over the too many decades i have been investing in the medical industry, I have seen so many
companies in the current situation of Novadaq. They all reached a bridge they had to cross; namely, crossing over from a medical device developer to a medical device marketeer. It is oftentimes a difficult passage, particularly for the CEO, who's background is science and not business development.
I love this company's products from every perspective. Given the current size of the sales force, I am somewhat disappointed in revenue growth.
One last point for now. I have never owned another company like this where the institutional ownership has grown to such a level, while at the same time, so has the short interest. Both at record levels for the company.