Acarix’s Q1 update shows sales of four systems to March. Revenues were SEK230k with gross profit of SEK158k; a gross margin of 69%. We do not expect any major sales upturn in 2018, as the key factor is German government reimbursement, which is not expected before 2019. There is additional sales potential in other European territories. We do not expect a US launch before 2022, but we have assumed a US trial starts in 2019. The indicative value remains at SEK448m (SEK19.46/share). Additional clinical studies are ongoing.
Written by
Acarix |
Sales steady in Q1 |
Q1 update |
Healthcare equipment & services |
30 May 2018 |
Share price performance
Business description
Next events
Analyst
Acarix is a research client of Edison Investment Research Limited |
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Acarix’s Q1 update shows sales of four systems to March. Revenues were SEK230k with gross profit of SEK158k; a gross margin of 69%. We do not expect any major sales upturn in 2018, as the key factor is German government reimbursement, which is not expected before 2019. There is additional sales potential in other European territories. We do not expect a US launch before 2022, but we have assumed a US trial starts in 2019. The indicative value remains at 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 |
1.34 |
(39.20) |
(1.70) |
0.0 |
N/A |
N/A |
12/19e |
3.82 |
(57.75) |
(2.51) |
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 diagnose suspected coronary artery disease. It uses a highly sensitive microphone linked to a minimalist, 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 was correct in 96% of tested patients, Winther et al (2017). The ongoing Dan-NICAD II study will enrol 2,000 patients with suspected stable coronary artery disease to add data and evaluate the test in patients aged 30–39. The planned ‘Seismo’ study with 200 patients aims to explore the use of CADScor for the early diagnosis of heart failure.
Some Q1 discounting but strong margins
Acarix sells CADScor devices bundled with single-use patches. In Q1 there were four units sold but revenues of SEK75k; at the expected SEK30k list price, we would expect about SEK120k, implying some discounting. The lower cost of units still enabled a 69% margin. There were 520 consumable patches sold for SEK155k, roughly as expected at a SEK30 price point. We have adjusted our 2018 sales forecast to SEK1.3m (formerly SEK1.5m) and expect a pickup in sales towards the end of 2018 as awareness of the product develops. Higher sales are possible from 2019 if German public reimbursement is gained but there is a high level of uncertainty. Acarix also sells in Demark and Sweden and is in discussions in the UK. A new, experienced chief commercial officer, Per Persson, starts in August.
Valuation: Remains SEK19.46 per share
Our valuation assumes that 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; we have reduced the trial cost allocation in 2018 but increased marketing costs. 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. We will reassess our valuation as quarterly sales and cost data is released.
Exhibit 1: Financial summary
SEK 000s |
2016 |
2017 |
2018e |
2019e |
||
Year end 31 Dec |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
- |
638 |
1,336 |
3,816 |
Cost of Sales |
- |
(208) |
(359) |
(1,164) |
||
Gross Profit |
- |
430 |
977 |
2,652 |
||
EBITDA |
|
|
(26,790) |
(29,211) |
(36,823) |
(55,348) |
Operating Profit (before GW and except) |
|
(26,790) |
(30,743) |
(39,178) |
(57,703) |
|
Intangible Amortisation |
- |
(1,261) |
(2,084) |
(2,084) |
||
Exceptionals |
- |
- |
- |
- |
||
Operating Profit |
(26,790) |
(32,004) |
(41,262) |
(59,787) |
||
Other |
(24,250) |
- |
- |
- |
||
Net Interest |
(15) |
7 |
(25) |
(50) |
||
Profit Before Tax (norm) |
|
|
(26,805) |
(30,736) |
(39,203) |
(57,753) |
Profit Before Tax (FRS 3) |
|
|
(51,055) |
(30,736) |
(39,203) |
(57,753) |
Tax |
2,815 |
960 |
- |
- |
||
Profit After Tax (norm) |
(23,990) |
(29,776) |
(39,203) |
(57,753) |
||
Profit After Tax (FRS 3) |
(48,240) |
(29,776) |
(39,203) |
(57,753) |
||
Average Number of Shares Outstanding (m) |
13.1 |
23.0 |
23.0 |
23.0 |
||
EPS - normalised (ore) |
|
|
(1.83) |
(1.29) |
(1.70) |
(2.51) |
EPS - FRS 3 |
|
|
(3.68) |
(1.29) |
(1.70) |
(2.51) |
Dividend per share (ore) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
N/A |
67.4 |
73.1 |
69.5 |
||
EBITDA Margin (%) |
N/A |
(4,581) |
(2,756) |
(1,450) |
||
Operating Margin (before GW and except.) (%) |
N/A |
(4,822) |
(2,932) |
(1,512) |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
23,123 |
25,191 |
22,836 |
20,481 |
Intangible Assets |
18,179 |
20,351 |
18,267 |
16,183 |
||
Tangible Assets |
0 |
0 |
0 |
0 |
||
Acquired rights |
4,944 |
4,840 |
4,569 |
4,298 |
||
Current Assets |
|
|
150,163 |
108,865 |
72,016 |
16,618 |
Stocks |
0 |
1,945 |
1,945 |
1,945 |
||
Debtors |
1,643 |
2,468 |
2,468 |
2,468 |
||
Cash |
145,895 |
103,457 |
67,603 |
12,205 |
||
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 |
128,938 |
89,734 |
31,981 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(12,042) |
(42,960) |
(36,814) |
(55,398) |
Net Interest |
(15) |
0 |
0 |
0 |
||
Tax |
3,001 |
2,421 |
960 |
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) |
(35,854) |
(55,398) |
||
Opening net debt/(cash) |
|
|
2,121 |
(145,895) |
(103,457) |
(67,604) |
HP finance leases initiated |
- |
- |
- |
- |
||
Other |
(620) |
(118) |
- |
- |
||
Closing net debt/(cash) |
|
|
(145,895) |
(103,457) |
(67,604) |
(12,206) |
Source: Acarix, Edison Investment Research
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