Just listened to the conference call and I suggest that holders or people interesting in buy NAN do the same. Here are my notes and views, with the usual disclaimer that this is just my interpretation and there is no guarantee that I heard and understood everything correctly.
Overall I think the 4c figures are great, and there was nothing in the conference call to suggest otherwise. (My views only obviously).
Direct sales:
The team in the USA have been successful and executed a number of contracts with integrated delivery networks (IDNs). A question was asked for details on contracts with IDNs. CEO described them as corporatised, consolidated hospital networks. He gave an example of 40 hospitals within an IDN. NAN would negotiate contracts with the office of the IDN, then when you go to each of the hospitals, the accounts have been set up, you just have to sell it to hospitals at the agreed price with the IDN.
Guidelines:
No news on guidelines in England on Scotland but they are hoping it will be out before end of year.
Sales mix:
40% capital sales (trophon)
60% consumables, service contracts and other
CEO cautioned against using this quarterly figure to extrapolate as sales can be lumpy so it is not necessarily representative.
Direct sales of over $2 million in USA. Very early days. Focus is on the pipeline.
R&D:
They are committed to R&D and things they are looking at include next generation trophon, chemistry research, and new decontamination devices - but can't provide details probably because they don't want competitors to know.
Q&A
Matthias Smith - CGAU - Sought clarification on the caution against taking a quarter out of context and asked if there was anything unusual we should take into account in this quarters figures. The answer was no - this is a good basis to use, there was no unusual freak orders.
CEO said that their expectation is that the second half will be stronger than the first.
Next question was on depth/penetration into hospitals - are we getting depth and penetration through direct sales effort? - Answer was yes. To date there have been a number of multiple unit orders, but there are still some that are small with one or two units. CEO points out that some initial orders were limited by departmental budgets, but there should be more in the pipeline.
Overall CGAU seems to think the transition is going well.
Next question from LHC capital about the average number of cycles. NAN's modelling is for an average of 3-4 cycles per day which and this seems to reflect what is going on.
Next question was whether GE bought any new capital units from NAN in the last quarter. Answer was no, but the CEO stated that all indications are that yes, GE will continue to buy and sell more units.
GE sold more than the direct sales team in the quarter.
Mark Becasse from Bioshares asked if NAN was getting different types of customers that GE wasn't reaching? Answer was that NAN is spending a lot of time in front of infection prevention specialists and focusing on non-GE ultrasound equipment which GE were not as focused on.
The opportunity is across departments, and they can all use different brands across departments within a single hospital which NAN is agnostic about compared to GE.
Someone asked if NAN was selling into private radiology markets? Answer: Focus is on hospitals because of large volumes. However, anywhere ultrasound is used as a diagnostic or interventionist and requires HLD is a target market.
Lost price is $11,000 USD in U.S. Actual price depends on volume etc. Could be anywhere between $7-11k.
Peter Talbot CGAU - asked for details on the timetable - ordering, payment, fulfilment.
CEO explained the process working backwards - payment is determined by payment terms agreed with the facility. e.g. 30 days, 60 days. This is not uncommon, but standard practice. Fulfilment orders that in today, will be able to ship them within 48 hours. Fulfilment is a mature model. Last quarter has tested the systems, and has demonstrated it works well and is scalable.
Buying cycle - Gave a description of a typical place that has never heard of trophon - requires talking to a number of people, across different departments, coming back to do demos, then talking to procurement area etc. The time this takes could be 3,6, 9 months for the whole sales process to complete.
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(20min delay)