CADScor H1 unit sales were to Germany (six), Sweden (three) and Denmark (one). Interestingly, Q219 patch sales were very strong at 1,690 up from 640 in Q119. These 1000 ‘extra’ sales could be an indication that users are starting to run more tests from the installed CADScor base. The process for German public reimbursement is underway. In the UK, NICE has done a technical assessment enabling a dialogue to start. Acarix is now developing a US market entry strategy and the likely FDA trial needs.
Written by
Acarix |
Patch reordering and an emerging US strategy |
H119 results |
Healthcare equipment |
27 August 2019 |
Share price performance
Business description
Next events
Analyst
Acarix is a research client of Edison Investment Research Limited |
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CADScor H1 unit sales were to Germany (six), Sweden (three) and Denmark (one). Interestingly, Q219 patch sales were very strong at 1,690 up from 640 in Q119. These 1000 ‘extra’ sales could be an indication that users are starting to run more tests from the installed CADScor base. The process for German public reimbursement is underway. In the UK, NICE has done a technical assessment enabling a dialogue to start. Acarix is now developing a US market entry strategy and the likely FDA trial needs.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17 |
0.64 |
(30.74) |
(1.29) |
0.0 |
N/A |
N/A |
12/18 |
1.02 |
(42.25) |
(1.83) |
0.0 |
N/A |
N/A |
12/19e |
2.62 |
(43.33) |
(1.88) |
0.0 |
N/A |
N/A |
12/20e |
4.11 |
(44.75) |
(1.94) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. The 2016 IPO increased shares in issue.
Q219 higher patch sales; CADScor sales steady
Getting a wide base of CADScor units being routinely used is key to high-margin patch sales and the key to profit. In Q219, there were five CADScor systems sold worth SEK135k (average SEK27k), but an impressive 1,690 patch sales worth SEK539k, possibly indicating 1,000 repeat sales. If this trend continues, sales could reach over 5,000–6,000 patches in 2019. Despite this upturn, our current sales target of SEK2.6m is starting to look slightly ambitious against SEK963k in H119 (vs SEK465 in H118) but we will wait for Q3 data before reviewing our forecast. In H1, margins varied between 70% and 81% depending on deals offered on CADScor units. Sourcing costs in Q2 for CADScor units may have risen.
Developing the market
Acarix has stated that a new randomised 2,000-patient clinical trial (FILTER-SCAD) will run in four centres to look at prospective outcomes. The trial is planned by Acarix to formally enrol patients soon; it may end in 2021 or 2022. The study will compare CADScor to standard evaluation over 12 months. A meta-analysis using 2,245 patients was published in July. However, Acarix needs further clinical and economic data to drive growth in CADScor adoption. The UK health service has published an innovation review of CADScor, which is a good basis to enter sales discussions. Acarix has also indicated that it plans to discuss with the US FDA what trials will be required for a US approval. It will also look to recruit US marketing partners to support a future market entry.
Valuation: Still at SEK16.00 per share
Acarix had SEK39m cash on 30 June 2019, with an H119 cash outflow of SEK18.7m indicating cash till about mid-2020 depending on sales and investment in clinical trials so we assume SEK22m of debt in H220. Our valuation assumes 2020 German reimbursement with strong sales from 2021; no update on German reimbursement was available. Sales could develop in other European countries. We also assume US sales from 2023 so initial development of a US strategy is very encouraging. Our indicative value before any new funding remains SEK369m (SEK16.00 per share). Our forecasts will be reviewed after Q3 sales are reported.
Exhibit 1: Financial summary
SEK 000s |
2017 |
2018 |
2019e |
2020e |
||
Year end 31 Dec |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
638 |
1,024 |
2,623 |
4,105 |
Cost of Sales |
(208) |
(316) |
(577) |
(874) |
||
Gross Profit |
430 |
708 |
2,046 |
3,232 |
||
EBITDA |
|
|
(29,499) |
(41,028) |
(41,959) |
(43,273) |
Operating Profit (before amort. and except.) |
|
|
(30,743) |
(42,523) |
(43,454) |
(44,768) |
Intangible Amortisation |
(1,261) |
(1,430) |
(1,430) |
(1,430) |
||
Exceptionals |
- |
- |
- |
- |
||
Operating Profit |
(32,004) |
(43,953) |
(44,884) |
(46,198) |
||
Other |
- |
- |
- |
- |
||
Net Interest |
7 |
273 |
120 |
20 |
||
Profit Before Tax (norm) |
|
|
(30,736) |
(42,250) |
(43,334) |
(44,748) |
Profit Before Tax (FRS 3) |
|
|
(30,736) |
(42,250) |
(43,334) |
(44,748) |
Tax |
960 |
- |
- |
- |
||
Profit After Tax (norm) |
(29,776) |
(42,250) |
(43,334) |
(44,748) |
||
Profit After Tax (FRS 3) |
(29,776) |
(42,250) |
(43,334) |
(44,748) |
||
Average Number of Shares Outstanding (m) |
23.0 |
23.0 |
23.0 |
23.0 |
||
EPS - normalised (ore) |
|
|
(129.31) |
(183.48) |
(188.18) |
(194.33) |
EPS - FRS 3 (ore) |
|
|
(129.31) |
(183.48) |
(188.18) |
(194.33) |
Dividend per share (ore) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
67.4 |
69.1 |
78.0 |
78.7 |
||
EBITDA Margin (%) |
(4,624) |
(4,007) |
(1,600) |
(1,054) |
||
Operating Margin (before GW and except.) (%) |
(4,819) |
(4,153) |
(1,657) |
(1,091) |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
25,191 |
23,696 |
22,201 |
20,706 |
Intangible Assets |
20,351 |
18,921 |
17,491 |
16,061 |
||
Tangible Assets |
0 |
0 |
0 |
0 |
||
Acquired rights |
4,840 |
4,775 |
4,710 |
4,645 |
||
Current Assets |
|
|
108,865 |
71,501 |
29,662 |
8,409 |
Stocks |
1,945 |
2,625 |
2,625 |
2,625 |
||
Debtors |
2,468 |
3,857 |
3,857 |
3,857 |
||
Cash |
103,457 |
65,019 |
23,180 |
1,927 |
||
Other |
995 |
0 |
0 |
0 |
||
Current Liabilities |
|
|
(5,118) |
(7,321) |
(7,321) |
(7,321) |
Creditors |
(1,464) |
(2,504) |
(2,504) |
(2,504) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Short term leases |
0 |
0 |
0 |
0 |
||
Other |
(3,653) |
(4,816) |
(4,816) |
(4,816) |
||
Long Term Liabilities |
|
|
0 |
0 |
0 |
(22,000) |
Long term borrowings |
0 |
0 |
0 |
(22,000) |
||
Long term leases |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
128,939 |
87,876 |
44,542 |
(206) |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(41,506) |
(39,586) |
(41,959) |
(43,273) |
Net Interest |
7 |
273 |
120 |
20 |
||
Tax |
960 |
977 |
0 |
0 |
||
Capex |
(2,984) |
0 |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
1,203 |
0 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
0 |
0 |
0 |
22,000 |
||
Net Cash Flow |
(42,320) |
(38,336) |
(41,839) |
(21,253) |
||
Opening net debt/(cash) |
|
|
(145,895) |
(103,457) |
(65,019) |
(23,181) |
HP finance leases initiated |
- |
- |
- |
- |
||
Other |
(118) |
(102) |
- |
(22,000) |
||
Closing net debt/(cash) |
|
|
(103,457) |
(65,019) |
(23,181) |
20,073 |
Source: Acarix accounts, Edison Investment Research forecasts
|
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Research: Financials
FinLab is a self-managed German venture capital (VC) investor and start-up incubator specialising in fintech companies. It holds a portfolio of 10 active fintech investments across several subsectors, including its main success story Deposit Solutions. The company also owns three asset management businesses generating steady cash flow from management fees, which fully cover FinLab’s ongoing expenses. Moreover, it holds a 45.3% stake in listed investment vehicle Heliad Equity Partners (HEP), which is currently undergoing restructuring. Since the beginning of 2015, when it started operating under the current investment mandate, it has delivered an NAV total return (TR) of around 20% pa.