As many have commented in this forum the current value of Ellex...

As many have commented in this forum the current value of Ellex is significantly less than the value of the separate businesses within it. Given that it is not surprising that Ellex has received an offer for the Laser and Ultrasound division.

The question is what is the Laser and Ultrasound division worth? FY19 revenues were $65.6 million with an EBITDA of $9.5 million. The first four months of FY20 showed an increase in revenues of 6% in the Laser and Ultrasound section which was largely driven by SLT sales which were up 16% to $8.6 million.

There are different valuations that can be used. A company of a similar size and in the medical technology sector is Compumedics. FY19 revenue for Compumedics was $40 million. The capitalisation is $160million which values Compumedics at approximately 4x revenue. Resmed is a larger Med Tech company and it is valued at over 10 times FY19 revenue. Arguably the value of Laser and Ultrasound could be at least 4x revenue which would value it at 4x 65 million = 260 million (=approx. 3 times current valuation of the whole of Ellex).

The attractiveness of the division is further driven by the LiGHT trial that was published in The Lancet in March 2019. The Ellex ASX release at the time stated " The study authors interpretation of the results were “Selective laser trabeculoplasty should be offered as a first-line treatment for open angle glaucoma and ocular hypertension, supporting a change in clinical practice.” With the huge size of the world glaucoma market the underpenetration of SLT worldwide this provides a huge opportunity for the Laser and Ultrasound division of Ellex. The purchase of this division could be a strategic investment for a competitor that already has their own SLT product or does not have an SLT product - which would attract an additional premium.

It is important for shareholders that the full potential of this new technology is realised if the proposed sale of the Laser and Ultraound division goes ahead. As usual do your own research but I'm interested in a discussion on the potential value of the segment given the value of similar companies and the potential of SLT after the results of the LiGHT trial.