This quarter's cash flows are most definitely unimpressive, and most certainly at the lower end of expectations. That much is hard to dispute.
One can mount a more than plausible case around all the reasons that led to the outcome, but they cannot disguise the lack of traction in converting a good product into a good cash flow business.
It has become clear that success in winning strong NHS support from audiologists is critical to the viability of the business. The cash burn offers little wriggle room for anything but a huge conversion of products into cash starting from April, 2019. We are fortunate the R &D grant arrived when it did. That said, it is not too much of a stretch to be confident, $700,000 per quarter can turn into $2m per quarter in very short time.
I remain unmoved, one way or the other, after the 4C. To me, it was never a game changer as much as it was an indicator from the genuine commercial traction of the IQBuds Boost in the market place. I acknowledge unit sales increased by over 50%, underpinning a reasonable Q3 cash flow expectation, but that is hardly going to pacify the already sceptical market. Expect a price plunge tomorrow and for the brave, a chance to buy in the low 6's.
With not a lot of news to report (except maybe a government win), it is going to be a long 2-3 months before the next financial report. Be prepared for it, and don't lose heart. The main game for NUH and its future has not yet started. Remember that.
I am reminded of a micro I owned for 8 years in the spodumene space that promised much and delivered little year after year, CR after CR. I prefer to keep this stock unnamed except to say that after 7 years of nil return, the stock increased 1750% in 6 months. This all happened in 2018 amongst the euphoria of the lithium boom. Yes, I sold most, but not of my stock along the way up. I am nowhere near smart enough to pick tops, and I rarely have. I took 1000% on a very decent investment as reward enough, and it has funded most of the NUH holding, which I have accumulated, month after month over the past 16 months.
I need to remind myself spodumene licences are worth bugger all unless they lead to commercially viable mining. So it is with ground breaking technology and IP, such as that owned by Nuheara (notice nearly $1m was invested last quarter in patents). I also need to remind myself 16 months is not 7 years, and if I gave another stock that much time to hit absolute pay dirt, why would I not give Nuheara the same opportunity? Naturally I will, and I hope to prudently add to my existing holdings in a hopeful market panic tomorrow and next month and the month after. You see I believe that NHS is the NUH game changer and it has not kicked in 1 dollar (or pound) yet. I wont happen until the 2020 Q1 results are released, 6 long months away.
As I said in a post yesterday, the company's fate rests on moving a lot of product in the UK later this year Boost and Max will play a part. A quarterly already out of date, is not particularly relevant but can be particularly damaging to the short term share price. Hold, or buy, but don't sell into this....if you have confidence in the product. If you don't you should have sold already.
With the 4C out of the way, I have placed my orders at varying prices down to a very lowly price and am happy to look at other stocks that have reported pretty good results over the last few weeks.
Chin up all. We are in the 5th round of a 15 round bout, with a team of enthusiastic and capable engineers and Directors in our corner.
verce, you may quite fairly bask in the sun of the latest report. That is fair enough. However, in my long life as an investor I adhere to the saying "he who laughs last, laughs loudest"
GLTASH
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