Acarix’s annual report confirms reported 2017 revenues of SEK638k. Gross profit was SEK430k, with a gross margin rise to 75% in Q4. We do not expect any major sales upturn in 2018, as the key factor is German government reimbursement – this 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). Mr Lindholm is the interim CEO. Additional clinical studies are ongoing.
Written by
Acarix |
Updated financial position |
Annual report |
Healthcare equipment & services |
8 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 annual report confirms reported 2017 revenues of SEK638k. Gross profit was SEK430k, with a gross margin rise to 75% in Q4. We do not expect any major sales upturn in 2018, as the key factor is German government reimbursement – this 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). Mr Lindholm is the interim CEO. Additional clinical studies are ongoing.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/16 |
0.0 |
(26.8) |
(1.83) |
0.0 |
N/A |
N/A |
12/17 |
0.6 |
(30.7) |
(1.29) |
0.0 |
N/A |
N/A |
12/18e |
1.5 |
(41.8) |
(1.77) |
0.0 |
N/A |
N/A |
12/19e |
3.8 |
(58.8) |
(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) 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 patch. The CADScor V3 algorithm (validated by the Dan-NICAD clinical study) calculates a CAD-score rating. A negative test result was correct in 96% of tested patients, according to Winther et al (2017). The ongoing Dan-NICAD II study will enrol 2,000 patients with suspected stable coronary artery disease to add data, evaluate the test in patients aged 30–39 and should aid acceptance of CADScor among key opinion leaders. The planned ‘Seismo’ study with 200 patients aims to explore the use of CADScor for the early diagnosis of heart failure.
Bundled sales underway with German focus
Acarix sells CADScor devices bundled with 120 single-use patches. In 2017, there were 10 unit sales, one deferred, plus 1,360 patches. This gave revenues of SEK 638k. We have slightly lowered the 2018 sales forecast to SEK1.5m (formerly SEK1.7m), as the level of repeat patch orders is still uncertain. Higher total sales are possible from 2019 if German public reimbursement is gained; we forecast total sales of SEK3.8m but there is a high level of uncertainty. Gross margin in Q417 improved to 75%, up from 65% in Q3, although it is too early to be clear about whether this is a trend. Total 2017 gross profit was SEK430k. Acarix also sells in Demark and Sweden, and has discussions underway to establish cost-effectiveness in the UK.
Valuation: Unchanged at SEK19.46/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; this increases our estimated 2018 and 2019 costs. Using a discounted cash flow model, a 12.5% discount rate and a terminal valuation, the indicative value remains at SEK448m, implying a fair value of SEK19.46/share. We will reassess our valuation as quarterly sales and cost data is released.
Exhibit 1: Financial summary
SEK000s |
2016 |
2017 |
2018e |
2019e |
Year end 31 Dec |
IFRS |
IFRS |
IFRS |
IFRS |
PROFIT & LOSS |
||||
Revenue |
- |
638 |
1,466 |
3,816 |
Cost of Sales |
- |
(208) |
(379) |
(1,164) |
Gross Profit |
- |
430 |
1,087 |
2,652 |
EBITDA |
(26,790) |
(29,211) |
(39,413) |
(56,348) |
Operating Profit (before GW and except) |
(26,790) |
(30,743) |
(41,768) |
(58,703) |
Intangible Amortisation |
- |
(1,261) |
(2,084) |
(2,084) |
Exceptionals |
- |
- |
- |
- |
Operating Profit |
(26,790) |
(32,004) |
(43,852) |
(60,787) |
Other |
(24,250) |
- |
- |
- |
Net Interest |
(15) |
7 |
(25) |
(50) |
Profit Before Tax (norm) |
(26,805) |
(30,736) |
(41,793) |
(58,753) |
Profit Before Tax (FRS 3) |
(51,055) |
(30,736) |
(41,793) |
(58,753) |
Tax |
2,815 |
960 |
960 |
960 |
Profit After Tax (norm) |
(23,990) |
(29,776) |
(40,833) |
(57,793) |
Profit After Tax (FRS 3) |
(48,240) |
(29,776) |
(40,833) |
(57,793) |
Average Number of Shares Outstanding (m) |
13.1 |
23.0 |
23.0 |
23.0 |
EPS - normalised (öre) |
(183) |
(129) |
(177) |
(251) |
EPS - FRS 3 (öre) |
(368) |
(129) |
(177) |
(251) |
Dividend per share (öre) |
0.0 |
0.0 |
0.0 |
0.0 |
Gross Margin (%) |
N/A |
67.4 |
74.2 |
69.5 |
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
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 |
70,386 |
14,948 |
Stocks |
0 |
1,945 |
1,945 |
1,945 |
Debtors |
1,643 |
2,468 |
2,468 |
2,468 |
Cash |
145,895 |
103,457 |
65,013 |
9,575 |
Other |
2,625 |
995 |
960 |
960 |
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 |
88,104 |
30,311 |
CASH FLOW |
||||
Operating Cash Flow |
(12,042) |
(42,960) |
(39,404) |
(56,398) |
Net Interest |
(15) |
0 |
0 |
0 |
Tax |
3,001 |
2,421 |
960 |
960 |
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) |
(38,444) |
(55,438) |
Opening net debt/(cash) |
(2,121) |
(145,895) |
(103,457) |
(65,013) |
HP finance leases initiated |
- |
- |
- |
- |
Other (FX movements) |
(620) |
(118) |
- |
- |
Closing net debt/(cash) |
(145,895) |
(103,457) |
(65,013) |
(9,575) |
Source: Acarix reports, Edison Investment Research forecasts
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Research: Financials
Scherzer (PZS) posted a NAV total return of c 22% to €2.74 in FY17 as it was able to benefit from the favourable market environment in Germany (MDAX +18%, SDAX +25% and TecDAX +40% last year). The NAV discount disappeared completely and the shares now trade at a 1% premium to the last reported NAV of €2.84 (as at end-April 2018). PZS’s portfolio of extra compensatory claims (ECS) stood at €93.2m (or €3.11 per share) as at end-March 2018 and still represents important additional NAV upside potential. Management proposed a total dividend payment of €0.10/share from FY17 earnings, including a special dividend of €0.05/share.