Forum Topics PNV PNV Long term thoughts on PNV

Pinned straw:

Added a month ago

Saw some interesting posts on other forums regarding PNV

So revenue per patient is down....which mainly reflects the size of the product being used is smaller. But Patient numbers are going up.

I then saw this post that discusses future revenues/products for PNV:

"China, Japan and India not accounted for yet. Orthopaedics not yet covered as well as plastics. Every tendon and nerve repair will be wrapped in MTX in the future. The same with poor blood supplied fractures in the frail plus elderly. MTX is a polyfiller which will be used in trauma in the near future. The joy is that it’s affordable for poorer countries and storage is less complicated than others. Swami said that he was aiming for one million patients per annum, that’s one billion in earnings IMHO. Happy to plateau at that."

So I think we have discussed most of these before. But I guess the main issue (as we also previously discussed) was that these revenues are about 5-10 years away (at least).

I think you are right @mikebrisy . Might be time to lighten some of my PNV holdings next time it goes above $2.50. And then buy back in as the new products start to roll out in a few years time?

My only concerns are that maybe a Johnson and Johnson puts in a bid to buy us out. Our current Market Cap is about $1.5 billion at a SP of about $2.10. J&J would think nothing of paying $3 billion...which would equate to about a SP of $4. And the next 1-2 years is the perfect time for a J&J type buisness to strike. We have a proven product with cash flow...and a bunch of new products due in the next 5-10 years. @mikebrisy you have worked extensively in this sector and M&A....what are yout thoughts?



nerdag
Added a month ago

@Parko5, problem with the acquisition argument is that unless you're an insider at the acquirer, it's difficult to know at what price and time such an acquisition is right.

That's two sell/buy back decisions you have to get right, and then timing it with unknown factor of when is it right for the acquirer.

Might be in the skill set of some here to get it right, but that's way too hard for me.

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mikebrisy
Added a month ago

@Parko5 $PNV is an attractive acquisition target for a major medical devices firm with dermal repair focus because the product would significantly enhance the product portfolio of the acquirer.

However, the sticking point is valuation. EV/Revenue is currently 11. Acquisition multiplies for a single product, medical device firm, just profitable, with a decent addressable market and proven growth would likely be towards the upper end of 5-10x (IMHO).

So, assuming an acquisition premium of 30%, $PNV is at 14-15x. I think that’s likely too expensive for a firm like J&J which has other options in the space (e.g. $AVH, $ARX).

Of course, if revenue growth slows, and the SP follows, then $PNV could come into range.

I think $PNV is at an interesting stage now. It is hard for a single product company to make it as a business in this industry, and the slowing revenue growth - if part of a continuing trend - will need very good capital discipline because now earnings growth is going to become very important. I hope DW wakes up to that, quickly. He needs to change his tune from “it’s about growth, … I don’t care about profits”.

If he manages that successfully,$PNV can still be a successful investment case. If he doesn’t, he’s toast.

I’m not holding for an M&A case, but for earnings growth. But I need to run some sensitivities on my model to see what that looks like with an earlier revenue maturation.

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