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Currency in GBP
Last close As at 09/06/2023
GBP0.25
▲ 2.00 (8.60%)
Market capitalisation
GBP89m
Research: Healthcare
Creo Medical reported 168% y-o-y growth in its FY21 revenue (to £25.2m), broadly in line with Edison (£25.9m) and consensus estimates (£25.1m). While the increase was largely driven by the full-year contribution from Albyn Medical (acquired in July 2020), we are encouraged by the improved momentum in the core asset Speedboat Inject in H221, as COVID-19 headwinds subside. Management also announced a multi-year robotics collaboration with market leader Intuitive Surgical to optimise certain Creo products to be compatible with Intuitive’s robotic technology. The terms of the agreement include joint clinical studies and the potential for royalty and milestone payments to be received by Creo. We believe this agreement strengthens the company’s differentiated positioning in a rapidly evolving subsegment. While we wait for more details to incorporate the announcement into our valuation, we believe there may be upside potential on successful commercialisation of the covered products.
Creo Medical |
Solid FY21 followed by robotics deal with Intuitive |
Results update |
Healthcare equipment & services |
25 May 2022 |
Share price performance
Business description
Analysts
Creo Medical is a research client of Edison Investment Research Limited |
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Creo Medical reported 168% y-o-y growth in its FY21 revenue (to £25.2m), broadly in line with Edison (£25.9m) and consensus estimates (£25.1m). While the increase was largely driven by the full-year contribution from Albyn Medical (acquired in July 2020), we are encouraged by the improved momentum in the core asset Speedboat Inject in H221, as COVID-19 headwinds subside. Management also announced a multi-year robotics collaboration with market leader Intuitive Surgical to optimise certain Creo products to be compatible with Intuitive’s robotic technology. The terms of the agreement include joint clinical studies and the potential for royalty and milestone payments to be received by Creo. We believe this agreement strengthens the company’s differentiated positioning in a rapidly evolving subsegment. While we wait for more details to incorporate the announcement into our valuation, we believe there may be upside potential on successful commercialisation of the covered products.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/20 |
9.4 |
(23.0) |
(12.7) |
0.0 |
N/A |
N/A |
12/21 |
25.2 |
(30.3) |
(15.0) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Creo reported its FY21 results broadly in line with management guidance and consensus expectations. Revenue grew 168% (year-on-year) to £25.2m, reflecting the full-year contribution from the acquisitions of Albyn Medical and Boucart Medical in 2020. FY21 revenue also marked a ramp-up in initial sales from the flagship Speedboat Inject asset (£0.3m vs £32k in 2020), which saw volumes double year-on-year on the back of subsiding COVID-19 headwinds. However, the loss before tax of £30.3m was higher than our estimate (£22.7m), which we attribute to higher R&D expenses than expected and an increased investment in workforce. Other key developments included acquisition of Aber Electronics (November 2021), launch of a regional hub in Singapore (to support commercial roll-out in Asia-Pacific) and the announcement of the non-binding heads of terms agreements (January 2022) with a number of parties, to provide third-party access via potential licensing deals to its advanced energy technologies (ie SpydrBlade, Cool Plasma and MicroBlate). The company ended the year with net cash of £33.0m (supported by the £34.3m equity raise in September 2021), which may offer a cash runway into early FY23 at the current free cash flow burn rate (£32.1m).
Separately, in a positive development, Creo announced signing a long-term robotics collaboration with market leaer Intuitive Surgical (a US-based medical robotics developer for minimally invasive surgeries). The agreement will entail limited co-development for an undisclosed Creo product(s) for compatibility and for FDA regulatory studies, which we understand will likely require c 18 months. While the deal terms have not been disclosed, we believe this agreement solidifies the company’s differentiated offering and Creo could be entitled to potential royalties and milestones. Our valuation remains unchanged at £434m, and we plan to revisit the valuation and estimates once we have better visibility of the deal terms.
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Research: Oil & Gas
Canacol’s recent independent prospective resources audit has assigned 7.6tcf to the company’s Lower and Middle Magdalena Valley (LMV and MMV) assets, up from 1.7tcf in 2021 and with 6.6tcf sitting in the untapped MMV. This will be key to the company’s success as it looks beyond its core LMV producing area to secure its targeted reserves replacement ratio of 200% per year (on average). The company’s first test of the MMV will be the Pola-1 well spudding in Q322, targeting 470bcf of mean gross risked prospective resources. Success here would be transformational given that Canacol currently holds 607bcf of 2P reserves. We believe the share price does not reflect the exploration upside and value the company at C$6.29/share, more than double the current share price.
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