It's very unfortunate. It reminds me of what happened to MVP until the new management took it over, and restructured the entire distribution system. Good product, but failure to manage costs, failure to allocate capital appropriately, and failure to optimise the distribution / revenue. But, I still have confidence in both of their products - and actually I don't think it's a train wreck.
My guess is that management have been better at dealing with the FDA than they have been at dealing with the distribution to hospitals and surgeons. They have somethin like 87% of surgeons certified for Recell, but less than 20% of them make up over 80% of the procedures - and it's in a pretty limited use-case. Despite getting FDA approval for 2nd degree, 3rd degree and paediatrics, it's still the adult 1st degree burns being treated by <20% of surgeons that are the bulk of their customers. Until I fundamentally see this change, I find it hard to want to meaningfully jump on board. Michael Perry promised last year that this would be the focus, but the numbers just aren't bearing out. Still, not a train wreck, but maybe they need to rethink who is in charge of this and whether an in-house distribution model is best suited for them.
The market has continued to run ahead of results. Q4 and Q1 are notoriously flat, while Q2 and Q3 is when most growth is made. So in some regards we should have expected results to have been flat - and continue to be flat for another 3-6 months. Brokers are saying that they should break even in 2024, but I feel that this may remain "two to three years away" for some time; brokers are also expecting 50% revenue growth yoy, and reality is closer to 35%. Morningstar have a target price of $7, but I reckon this is too high. I get to around $4.30 when I factor in shareholder dilution (10% over next 5yrs), lower margins (30% vs 47%), lower growth rates (20% over next 5 years), and lower multiple (12 vs 15, impacted by interest rates here too).
GLTAH.
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