Acarix’s H1 results show steady sales with eight systems and 800 disposable patches sold to June. These generated H1 revenues of SEK465k with gross profit of SEK349k, a 75% average margin. We now expect sales of just over SEK1m for the full year 2018 before hoped-for German reimbursement in 2019. A new commercial officer, Per Persson, has joined. We do not expect a US launch before 2022 and we assume a US trial starts in 2019. The indicative value remains SEK448m (SEK19.46/share). Additional clinical studies are ongoing.
Written by
Acarix |
Sales consistent in H1 |
Interim results |
Healthcare equipment & services |
17 September 2018 |
Share price performance
Business description
Next events
Analyst
Acarix is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Acarix’s H1 results show steady sales with eight systems and 800 disposable patches sold to June. These generated H1 revenues of SEK465k with gross profit of SEK349k, a 75% average margin. We now expect sales of just over SEK1m for the full year 2018 before hoped-for German reimbursement in 2019. A new commercial officer, Per Persson, has joined. We do not expect a US launch before 2022 and we assume a US trial starts in 2019. The indicative value remains SEK448m (SEK19.46/share). Additional clinical studies are ongoing.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
0.0 |
(26.81) |
(1.83) |
0.0 |
N/A |
N/A |
12/17 |
0.64 |
(30.74) |
(1.29) |
0.0 |
N/A |
N/A |
12/18e |
1.08 |
(33.70) |
(1.46) |
0.0 |
N/A |
N/A |
12/19e |
3.82 |
(59.80) |
(2.60) |
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.
CAD-score: A clear indicator of low coronary risk
Acarix’s diagnostic device (CADScor) is used to help doctors rule out stable coronary artery disease (CAD). It uses a microphone linked to a self-contained processing module to record a patient’s diastolic heart sounds. There is a single-use consumable patch. The CADScor V3 algorithm calculates a CAD-score rating. A negative test result (no CAD) was correct in 96% of tested patients (Winther et al, 2017). The Dan-NICAD II study (NCT03481712) is enrolling 2,000 patients with suspected stable CAD to add data and evaluate the test in patients aged 30–39. The observational Seismo study with 200 patients (NCT03656354) explores the use of CADScor for the early diagnosis of heart failure.
Q2 showed strong margins but lower patch sales
Acarix sells CADScor devices and single-use patches. Acarix now sells its products in Germany, Austria, Demark and Sweden and aims to expand into other European countries. In Q2 there were four units sold, making eight in H1. Patch sales in Q2 were 320 (vs 420 sold in Q118) making 800 sales in H1. The Q2 margin was higher, with SEK349k gross profit, and a 75% H1 margin. We have fine-tuned our 2018 sales forecast to about SEK1.1m (formerly SEK1.3m) due to our reduced expectations of patch sales in H2. Gross margin is harder to forecast and we nudge down our gross profit estimate from SEK977k to SEK831k. However, it is still only a year into the initial market adoption phase. Higher sales are possible from 2019 if German public reimbursement is gained. A new, experienced chief commercial officer, Per Persson, started in July and we anticipate sales strategy changes.
Valuation: Remains SEK19.46 per share
Our valuation assumes sales develop more strongly from 2019 on German reimbursement; management has not issued any forward guidance. We assume a US trial, needed to support US sales forecasts from 2022, starts in 2019 with 2018 preparatory work. Using a discounted cash flow model, a 12.5% discount rate and a terminal valuation, the indicative value is unchanged at SEK448m as the adjustments net out; this implies a fair value of SEK19.46. The marginal change in 2018 forecast unit sales (Exhibit 1) does not affect this.
Exhibit 1: Financial summary
SEK 000s |
2016 |
2017 |
2018e |
2019e |
||
Year end 31 Dec |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
- |
638 |
1,081 |
3,816 |
Cost of Sales |
- |
(208) |
(250) |
(1,164) |
||
Gross Profit |
- |
430 |
831 |
2,652 |
||
EBITDA |
|
|
(26,790) |
(29,211) |
(31,393) |
(57,348) |
Operating Profit (before amort. and except.) |
|
(26,790) |
(30,743) |
(33,793) |
(59,748) |
|
Intangible Amortisation |
- |
(1,261) |
(2,400) |
(2,400) |
||
Exceptionals |
- |
- |
- |
- |
||
Operating Profit |
(26,790) |
(32,004) |
(36,193) |
(62,148) |
||
Other |
(24,250) |
- |
- |
- |
||
Net Interest |
(15) |
7 |
114 |
(50) |
||
Profit Before Tax (norm) |
|
|
(26,805) |
(30,736) |
(33,679) |
(59,798) |
Profit Before Tax (FRS 3) |
|
|
(51,055) |
(30,736) |
(33,679) |
(59,798) |
Tax |
2,815 |
960 |
- |
- |
||
Profit After Tax (norm) |
(23,990) |
(29,776) |
(33,679) |
(59,798) |
||
Profit After Tax (FRS 3) |
(48,240) |
(29,776) |
(33,679) |
(59,798) |
||
Average Number of Shares Outstanding (m) |
13.1 |
23.0 |
23.0 |
23.0 |
||
EPS - normalised (ore) |
|
|
(183.01) |
(129.31) |
(146.26) |
(259.68) |
EPS - FRS 3 (ore) |
|
|
(368.00) |
(129.31) |
(146.26) |
(259.68) |
Dividend per share (ore) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
N/A |
67.4 |
76.9 |
69.5 |
||
EBITDA Margin (%) |
N/A |
(4,581) |
(2,904) |
(1,503) |
||
Operating Margin (before GW and except.) (%) |
N/A |
(4,822) |
(3,127) |
(1,566) |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
23,123 |
25,191 |
22,791 |
20,391 |
Intangible Assets |
18,179 |
20,351 |
17,951 |
15,551 |
||
Tangible Assets |
0 |
0 |
0 |
0 |
||
Acquired rights |
4,944 |
4,840 |
4,840 |
4,840 |
||
Current Assets |
|
|
150,163 |
108,865 |
77,585 |
20,187 |
Stocks |
0 |
1,945 |
1,945 |
1,945 |
||
Debtors |
1,643 |
2,468 |
2,468 |
2,468 |
||
Cash |
145,895 |
103,457 |
73,172 |
15,774 |
||
Other |
2,625 |
995 |
0 |
0 |
||
Current Liabilities |
|
|
(17,771) |
(5,118) |
(5,118) |
(5,118) |
Creditors |
(4,404) |
(1,464) |
(1,464) |
(1,464) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Short term leases |
0 |
0 |
0 |
0 |
||
Other |
(13,365) |
(3,653) |
(3,653) |
(3,653) |
||
Long Term Liabilities |
|
|
0 |
0 |
0 |
0 |
Long term borrowings |
0 |
0 |
0 |
0 |
||
Long term leases |
0 |
0 |
0 |
0 |
||
Other long term liabilities |
0 |
0 |
0 |
0 |
||
Net Assets |
|
|
155,515 |
128,939 |
95,258 |
35,460 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(11,856) |
(41,506) |
(30,398) |
(57,348) |
Net Interest |
(15) |
7 |
114 |
(50) |
||
Tax |
2,815 |
960 |
0 |
0 |
||
Capex |
(12,201) |
(2,984) |
0 |
0 |
||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
||
Financing |
176,698 |
1,203 |
0 |
0 |
||
Dividends |
0 |
0 |
0 |
0 |
||
Other |
(11,046) |
0 |
0 |
0 |
||
Net Cash Flow |
144,395 |
(42,320) |
(30,284) |
(57,398) |
||
Opening net debt/(cash) |
|
|
2,121 |
(145,895) |
(103,457) |
(73,173) |
HP finance leases initiated |
- |
- |
- |
- |
||
Other |
(620) |
(118) |
- |
- |
||
Closing net debt/(cash) |
|
|
(145,895) |
(103,457) |
(73,173) |
(15,775) |
Source: Acarix reports, Edison Investment Research
[Grab your reader’s attention with a great quote from the document or use this space to emphasize a key point. To place this text box anywhere on the page, just drag it.] |
[Grab your reader’s attention with a great quote from the document or use this space to emphasize a key point. To place this text box anywhere on the page, just drag it.] |
Entertainment One’s (eOne’s) capital markets day (CMD) presentation highlighted its strong content and depth of management, with its independence allowing the luxury of platform agnosticism. With the major tech platforms building audience engagement to drive their broader business models, high-quality content remains a key differentiator that plays to eOne’s strengths. The strategy for Family & Brands is to focus on a tight portfolio, maximising merchandising and licensing opportunities. Recent strong share price performance has narrowed the discount to peers, but further positive newsflow would allow additional upside. Our forecasts are unchanged.