Pinned straw:
24 Feb 2025 H1FY25 Preso
The new motto is “Go slow to go fast….to scale”. Not sure I like this. I know in the medical field….this is a good thing. But for investors, I’m not sure that is the type of language that should be used. Can anyone suggest any better slogans?
Also good to see that David Williams not only puts his money where his mouth is, he puts his product where his nose is! Well done!
My takeaway points:
- They seemed annoyed with the market response to the 29% Growth for RoW.
- But I didn’t hear any really good answers, except that they will continue to take market share and grow.
- Jan did say that sales to distributors can be lumpy. Germany and Ireland for example. And this happened with some of the sales falling outside of the reporting period. So it can an affect/distort like for like YOY. If this is the case, tell us!!!
- Swami at the end said “Growth rate moving forward….25% compounded annually can be expected….however, any new disruptors could change that…”
- They did push the new products more than I remember in last meetings. Said that implantable will be in the market by 2026. Should we start to factor these revenues into our models?
- India seemed like much harder work than they were expecting. I think it will be 2-3 years before we see decent revenue from India.
- The discussion on Europe was interesting, but as they say it was lumpy growth between countries.
- Barda result early 2026 (maybe a chance of being earlier…)…Barda revenue to tapper off with the program winding down.
- Increase in revenue YoY is due to: 4% is price, 88% growth and 8% new products.
- I was encouraged by what the CFO (Jan) said “in long run…burns will be the icing on the cake….the rest of their product uses will be larger.”
- New Markets - Japan and China seem to be the focus. Japan sounds progressed. China is really only at the very beginning.
- USA market - lots of discussion about how there is much more addressable market there (gaining market share, but also new uses and new products.)
- Tariffs should be ok because they have 1 year supply already in USA. And have high margin. And Barda were talking to them about building manufacturing in USA. Early days in the discussions.
- Employee costs have gone up a little because they have filled in some senior positions, and they are ‘investing a little ahead of the curve’ for some new products [I think that is what was said].
Other considerations:
- Shorts have gone up quite a bit.
- I know some of the chartists here have been seeing some interesting trading patterns and movements. But where is the bottom!
- General market sentiment feels low
What will I do:
- I feel better about the long term growth opportunities
- Didn’t quite like the way they sold it to us.
- But synthetic products just seem better to the biologics….plus the use cases/new products will eventually start to add to revenue.
- So long term I think it is a safe investment
- But given the market….I think the SP could drop further.
I’m still digesting what what said…so my above opinions might change….
@Parko5 it is a good summary of the call. But ......
I want to state up front, that because I now am no longer a holder, my negative bias is probably going to come through but ... it is what it is.
Too much of what Swami and Jan said has an air of "trust me" about it. My question is, did you notice the change in David's demeanour. I think you could watch the presentation on mute, just looking at him and that would say it all. He has never, in my recollection, ever allowed the CEO to lead a presentation.
Because I don't believe or can't verify a lot of what was said, I have to go by the numbers. And below is one chart that sums up my reservations. It is a plot of the cashflows for the last three 1H periods.
This is why I have been adamant about one element in my thesis, consistently since I started following $PNV in 2018. High revenue growth is key. They need high revenue growth at their high margins to drive the business forward and justify the multiple.
Even today it is on an EV/Revenue multiple of 9x (albeit before the downgrades come in), and that compares with 2.8 ($AVH), 2.4 ($ARX) and 2.0 ($IART). It is a horrible metric to make a comparion on, but the difference is stark. And now, what is the justification for it?
Swami said he believes they can achieve revenue growth of 25%, absent something disruptive happening. OK. But given where they are, its going to be hard to get the mutliple justified by today's SP with 25% growth when $AVH's 2025 forecast growth is more like 57% (wait a minute, that's where $PNV used to be).
When challenged on cashflows, they variously blamed collections in the US and winter storms. (Where have I heard that one before? oh yeah, $ACAD for DAYBUE presciptions last winter.) But these aren't concentrated accounts trapped by one snow-bound hospital or one frozen Accounts Receivable Offivcer . They are many hundreds of accounts right across America, and they've NEVER before reported an issue with collections. So what,... all of a sudden US hospitals have stopped payinf their bills? (I must have missed that Executive Order. And Kennedy wasn't in post in the reporting period).
And on new products,... it all sounded very optimistic. I wouldn't be putting any of it in my models just yet. And even when approved, did you hear Swami rattling off the list of competing products already in the market!
No, everything I heard today convinced me that this is one to watch from the sidelines.
I've probably invested more time in understanding this company, its products, its competitors and its markets than any other business in the last 8 years. I wanted to hear a presentation, a story and a set of numbers that gave me comfort to invest again, at a knocked down price.
I didn't hear that story or see those numbers.
Don't get me wrong, I still believe its products are great, that it will grow and over time new products will come to market and new indications will be approved. (An approval for FTB from the BARDA trial could be a significant SP catalyst in early 2026).
But from here, I don't see this as an attractive investment.
I can't wait to see the analyst updates!
Disc: Not held
Figure 1: 1H Cash Flows
