Acarix’s Q3 results showed a marked upturn in the number of systems sold: seven in Q3 vs eight in H1. Disposable patch sales in Q3 were 680 vs 800 in H1. These sales generated Q3 revenues of SEK351k. We have adjusted our sales forecast upwards to SEK1.3m for the full year 2018. Feedback from German and Swedish customers has been very positive. German public reimbursement might occur in 2019. We do not expect a US launch before 2022 and we assume a US trial starts in 2019 to enable this. Per Persson, formerly commercial officer, has been appointed as CEO. The indicative value remains SEK448m (SEK19.46/share).
Written by
Acarix |
Sales volume growth in Q3 |
Q318 update |
Healthcare equipment & services |
28 November 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 Q3 results showed a marked upturn in the number of systems sold: seven in Q3 vs eight in H1. Disposable patch sales in Q3 were 680 vs 800 in H1. These sales generated Q3 revenues of SEK351k. We have adjusted our sales forecast upwards to SEK1.3m for the full year 2018. Feedback from German and Swedish customers has been very positive. German public reimbursement might occur in 2019. We do not expect a US launch before 2022 and we assume a US trial starts in 2019 to enable this. Per Persson, formerly commercial officer, has been appointed as CEO. The indicative value remains SEK448m (SEK19.46/share).
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 |
1.29 |
(42.50) |
(1.85) |
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.
Q3 strong volume CADScor sales
At this point in sales development, getting CADScor units into hospitals and clinics is crucial because a large installed base should eventually result in steady, high-value disposable patch sales. The sale of seven units in Q3 vs eight in H1 therefore marks a good upturn. Two more key Swedish hospitals have systems: one of them, Kristianstad Hospital, evaluated CADScor and will start using the system clinically during Q4. The Q3 gross margin was 64% vs 75% in H1. We have raised our 2018 sales forecast to SEK1.3m (formerly SEK1.1m). Higher sales are possible from 2019 if German public reimbursement is gained. Per Persson, who joined in July bringing significant commercial experience in diagnostics, has become CEO.
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.
Valuation: Remains SEK19.46 per share
Our valuation assumes sales develop more strongly from 2019 on German reimbursement. We assume a US trial, needed to support US sales from 2022, starts in 2019. Using a discounted cash flow model, a 12.5% discount rate and a terminal valuation, the indicative value is unchanged at SEK448m; this implies a fair value of SEK19.46 per share. The marginal change in 2018 forecast unit sales does not affect this.
Exhibit 1: Financial summary
SEK000s |
2016 |
2017 |
2018e |
2019e |
||
Year end 31 Dec |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||
Revenue |
|
|
- |
638 |
1,285 |
3,816 |
Cost of Sales |
- |
(208) |
(320) |
(1,164) |
||
Gross Profit |
- |
430 |
965 |
2,652 |
||
EBITDA |
|
|
(26,790) |
(29,211) |
(40,240) |
(57,348) |
Operating Profit (before amort. and except.) |
|
(26,790) |
(30,743) |
(42,640) |
(59,748) |
|
Intangible Amortisation |
- |
(1,261) |
(2,400) |
(2,400) |
||
Exceptionals |
- |
- |
- |
- |
||
Operating Profit |
(26,790) |
(32,004) |
(45,040) |
(62,148) |
||
Other |
(24,250) |
- |
- |
- |
||
Net Interest |
(15) |
7 |
144 |
(50) |
||
Profit Before Tax (norm) |
|
|
(26,805) |
(30,736) |
(42,497) |
(59,798) |
Profit Before Tax (FRS 3) |
|
|
(51,055) |
(30,736) |
(42,497) |
(59,798) |
Tax |
2,815 |
960 |
- |
- |
||
Profit After Tax (norm) |
(23,990) |
(29,776) |
(42,497) |
(59,798) |
||
Profit After Tax (FRS 3) |
(48,240) |
(29,776) |
(42,497) |
(59,798) |
||
|
||||||
Average Number of Shares Outstanding (m) |
13.1 |
23.0 |
23.0 |
23.0 |
||
EPS - normalised (ore) |
|
|
(183.01) |
(129.31) |
(184.55) |
(259.68) |
EPS - FRS 3 (ore) |
|
|
(368.00) |
(129.31) |
(184.55) |
(259.68) |
Dividend per share (ore) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Gross Margin (%) |
N/A |
67.4 |
75.1 |
69.5 |
||
EBITDA Margin (%) |
N/A |
(4,581) |
(3,132) |
(1,503) |
||
Operating Margin (before GW and except.) (%) |
N/A |
(4,822) |
(3,318) |
(1,566) |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
23,123 |
25,191 |
24,309 |
21,909 |
Intangible Assets |
18,179 |
20,351 |
19,454 |
17,054 |
||
Tangible Assets |
0 |
0 |
0 |
0 |
||
Acquired rights |
4,944 |
4,840 |
4,855 |
4,855 |
||
Current Assets |
|
|
150,163 |
108,865 |
69,346 |
10,910 |
Stocks |
0 |
1,945 |
2,539 |
2,539 |
||
Debtors |
1,643 |
2,468 |
2,918 |
2,918 |
||
Cash |
145,895 |
103,457 |
62,851 |
5,453 |
||
Other |
2,625 |
995 |
1,038 |
0 |
||
Current Liabilities |
|
|
(17,771) |
(5,118) |
(4,694) |
(4,694) |
Creditors |
(4,404) |
(1,464) |
(1,414) |
(1,414) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Short term leases |
0 |
0 |
0 |
0 |
||
Other |
(13,365) |
(3,653) |
(3,279) |
(3,279) |
||
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 |
88,961 |
28,125 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
(11,856) |
(41,506) |
(40,749) |
(57,348) |
Net Interest |
(15) |
7 |
144 |
(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) |
(40,606) |
(57,398) |
||
Opening net debt/(cash) |
|
|
2,121 |
(145,895) |
(103,457) |
(62,851) |
HP finance leases initiated |
- |
- |
- |
- |
||
Other |
(620) |
(118) |
- |
- |
||
Closing net debt/(cash) |
|
|
(145,895) |
(103,457) |
(62,851) |
(5,453) |
Source: Acarix reports, Edison Investment Research
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