So, guidance still stands at $65M in revenue in 2015, for year-over-year 40% revenue growth. I think this is possible, but they missed badly in Q1 2015 and had no idea about what was going on with LifeCell in Q4 2014, so I doubt the $65M forecast.
Q1 2015 revenue was $11.9M, while the projections given to us by Arun at the end of 2014 were in the range of 25-35% revenue growth ($12.9-13.9M). In yesterday's call it was mentioned that the growth so far in April has accelerated to around 35%, but that they thought it would end up a little lower than that for the quarter.
Let's say that would get us to $26.5M in the first half of 2015, assuming around 30% revenue growth in Q2. Could Novadaq bring in $38.5M in revenue in the second half of the year? I'm sceptical. I understand that more sales staff will become productive as the year progresses, but we would have to see numbers in the 50% revenue growth range in Q3 and nearly 60% in Q4 to hit $65M. With 10% of SPY Elite accounts now "dead", I doubt their ability to regenerate sales momentum to hit $65M.
I now question the decision to create a direct sales team. Arun has said he thought a salesperson could generate $1M in revenue annually after a year or so of experience. It is clear that this is not happening. The question becomes whether the leadership of direct sales is not qualified for building out the team.
Looking back at it, from a technology perspective rather than as a Novadaq investor, I think it would have been better if they would have been purchased. Investors may not have captured the true potential of Novadaq's technology, but the products would have been assimilated into an existing sales force rather than a new group that is not penetrating the market well. While we may eventually recapture the potential Novadaq once had I feel that current management is not qualified or experienced enough to capitalize on the products' potential market and we are letting the first mover advantage slip away.
You always present great info, but your projections are always far too high in the time frame you mention. They will not have revenues of $2B by 2022, not with Stryker entering the market by the end of 2015. The question is what percentage of that possible $2B market will they have.
My greatest fears with Novadaq are 1.) the fact that it appears management is possibly not doing any better than average in managing their growth; 2.) Stryker already has distribution networks in place so could see greater growth than Novadaq at some point in the not-to-distant future; 3.) and most worrisome to me, I'm concerned about whether Novadaq will be able to protect all of their IP from Stryker and other future competitors. I absolutely do not want to see any long-term, expensive legal battles with Stryker over IP, and this is definitely on my radar.
Novadaq is still very promising, but I think we'll have to wait until Q4 2015 results to see if management has been able to get us back on track. I fear that the slow build out of the direct sales team may have cost us a lot of market share.
While it wouldn't be in the best interest of Novadaq or its shareholders to sell, if they would have done so already they would likely have not lost as much market share as they inevitably will to Stryker.