Currency in GBP
Last close As at 17/03/2023
GBP0.27
▲ 3.00 (12.63%)
Market capitalisation
GBP83m
Research: Healthcare
Creo Medical has announced its FY22 trading update and outlook for the year ahead. FY22 was a busy period marked by several commercial developments for Creo, including increased adoption of its Speedboat Inject device, new robotic deals with Intuitive and CMR Surgical, and multiple heads of terms agreements signed. Group revenue increased 7% y-o-y to c £27m and this growth was fully attributed to the core portfolio, which recorded an 8x increase in revenue over FY21 (£2.3m vs £0.3m in FY21). Looking ahead, commercialisation of the core technology portfolio will remain a key strategic priority for the company in 2023, along with leveraging cross-selling opportunities from the mature consumables business. Management expects the strong revenue growth from core products and lower (post-launch) opex to support cash flows and help achieve the goal of turning EBITDA-positive by FY25. Cash balance at end-FY22 stood at £13.1m, which, based on current burn rates, should fund operations to end-H123, with management actively seeking options to raise more capital. Our estimates and valuation are under review.
Creo Medical |
A rewarding FY22 for core technology arsenal |
FY22 trading update |
Healthcare equipment & services |
18 January 2023 |
Share price performance Business description
Analysts
Creo Medical is a research client of Edison Investment Research Limited |
Creo Medical has announced its FY22 trading update and outlook for the year ahead. FY22 was a busy period marked by several commercial developments for Creo, including increased adoption of its Speedboat Inject device, new robotic deals with Intuitive and CMR Surgical, and multiple heads of terms agreements signed. Group revenue increased 7% y-o-y to c £27m and this growth was fully attributed to the core portfolio, which recorded an 8x increase in revenue over FY21 (£2.3m vs £0.3m in FY21). Looking ahead, commercialisation of the core technology portfolio will remain a key strategic priority for the company in 2023, along with leveraging cross-selling opportunities from the mature consumables business. Management expects the strong revenue growth from core products and lower (post-launch) opex to support cash flows and help achieve the goal of turning EBITDA-positive by FY25. Cash balance at end-FY22 stood at £13.1m, which, based on current burn rates, should fund operations to end-H123, with management actively seeking options to raise more capital. Our estimates and valuation are under review.
Year end |
Revenue (£m) |
PBT* (£m) |
EPS* |
DPS |
P/E |
Yield |
12/20 |
9.4 |
(23.0) |
(12.8) |
0.0 |
N/A |
N/A |
12/21 |
25.2 |
(29.7) |
(14.6) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Creo’s flagship product, Speedboat Inject, and the CROMA platform continued to show strong growth momentum in FY22, with sales growing threefold y-o-y (45% over H122) to c £0.9m. We assume therefore that the remaining £1.4m revenue growth was primarily recorded as licensing income from Intuitive Surgical. We also estimate that revenue from the European consumables business stood at £24.7m in FY22, broadly in line with the £24.8m reported in FY21. While profitability figures have not been disclosed, management has indicated that the underlying EBITDA loss has reduced in FY22 and is in line with market expectations. The improved operating performance was driven by lower costs (both R&D and marketing costs) following the conclusion of product development and launch-related activities seen in past years.
Importantly, the company’s clinical training programme, Pioneer, saw a doubling of clinicians in the training programme (450 in FY22), which resulted in 80 confirmed users out of 150 trained during the year. This is a 4x increase over the 20 users at the end of FY21 and is a leading indicator of future sales potential.
Commercialisation efforts for the remaining pipeline also accelerated in FY22, with Speedboat Slim (designed to be compatible with 3.2mm scopes vs. 3.7mm for Speedboat Inject) launched in November 2022 (positive initial user feedback) and Microblade Fine gaining market traction (used in over 25 cases of pancreatic ablation and initial use for liver tumour ablation). We expect the broader pipeline to support the core portfolio sales uptake in FY23. With the first anticipated in‐human robotic procedure using Creo’s Kamaptive technology expected in 2023, Creo intends to further expand its existing partnerships with Intuitive and CMR Surgical, along with exploring other such partnership opportunities.
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Research: Healthcare
While pets are increasingly being ‘humanized’, their healthcare has lagged advancements seen on the human side. With the COVID-19 pandemic accelerating the trend of pet ownership, demand for improved care in a market with limited alternatives has triggered the need for newer-generation pet diagnostics. VolitionRx, a diagnostics company focused on sepsis and cancer detection, has pioneered a low-cost, quick-turnaround, cancer screening and monitoring tool for companion animals (Nu.Q Vet), an adaption of its core nucleosome quantification (Nu.Q) platform on the human side. With supply and distribution deals with leading veterinary diagnostics players IDEXX and Heska already signed, Nu.Q Vet has the building blocks in place to evolve into a potential disrupter in the space.
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