@Parko5 I'm not putting any of my $ into this, at least until the full story has emerged and leadership is stabilised.
Let me deal with performance and leadership separately.
Performance
Putting the leadership issue aside, while we know that annual revenue growth has slowed from c. 55% to c, 25% in the space of 6 months, we don't know if the rate of change in growth has stabilised. Ideally, I'd like to see the next 6-month report (i.e., FY25) to get that picture.
Yes, we know that BTM/MTX is being applied to more and more patients, but the average square-cm per treatment is falling, as complex wound repairs often involve small areas of dermis than major burns and major trauma.
From the recent result, we heard that ANZ actually DECLINED. I know it's a small market of c. $6-8m p.a., but what if that trend played out over more of the developed markets? I didn't see that coming.
So, overall, I don't have any handle on what the future revenue growth looks like from here. Certainly, $PNV appears to have fallen into the pack. And there are competitive headwinds, including from $IART (coming back from quality problems - I may write up some separate notes on this), $ARX, $AVH which, while not head-to-head competitors in many indications, do compete in indications that $PNV is seeking to grow into.
The financials are also muddy. While gross margin is a stand out in the sector and always has been, there are a lot of expense items to get to the bottom line, and $PNV is still barely at breakeven. The cash flow performance in 1H FY25 was a significant negative surprise for me, and I didn't fully accept the partial explanation that was given. If there explanation is true, we should see a significant reversal in the 2H, and so overall FY25 should indicate the true performance.
Can new markets help? China and Japan are the material opportunities. For Japan, the registration process will take time, so it is probably a couple of years until we see revenue from there; maybe 3 for China.
What about FDA FTB? Well, $PNV have yet to submit the package. So, any FTB kicker in the US won't help FY25, although it could give something of a boost beyond FY26, depending on the specifics of the ruling, and how that compares with the standard of care. We've not really had ANY details on this. From my perspective the BARDA decision is a wild card.
As for new products: we are still in the pre-clinical development phase. So they remain a good 4-5 years from generating revenue IMO.
From my perspective, the thesis for $PNV has changed dramatically. In the space of a few months, I have gone from a clear model for developed and developing market growth and margin assumptions/scenarios, to a situtation I can no longer describe with any conviction.
Should SR exit, there will presumably be a payout of some kind, so that will hit cashflow and expenses, assuming he is able to negotiate a good deal for himself.
So, I have no idea what NPAT or FCF will be in 3 to 5 years time. So, I actually have no basis for any valuation.
There are too many other businesses that I can evaluate, and I am an investor, and not a speculator. (I write this because I full accept that there is a price at which one could reasonably speculate that the SP will recover from strongly in the short-to-medium term. Who knows, maybe we are there already. But I don't know.)
Leadership
Right from the first arrival of Swami, I have been concerned about (and written here) of DW's domination of investor presentations, and the potential for a clash between the CEO and (what I have always described as) the "Executive" Chairman.
In fact, I have written to DW a few years ago expressing my concern to him and highlighting the importance that SR be allowed to play the full CEO role, and for this to be clear to investors. So, I think that tension has been there from the outset in their relationship, or at least the potential for it. And with Swami coming out of retirement to do the role, a question in the back of my mind is how much s*** it would take for him to want to return to retirement. I reconciled myself to believing that perhaps DW and SR have a clear division of responsibilities, with SR driving operational performance and DW leading on investor relations. So the current stoush has not really surprised me.
Regarding the involvement of CFO Jan in the Margin call allegations - that surprised me. DW and Jan have always seemed to me to have close working relationship, and to work effectively together when facing investors. Even under the previous CEO Paul Brennan, the main actors in investor presentations appeared to me at least to be DW and JG. If you believe Margin Call have a reliable source for their story, then the article speaks for itself, and I have no basis to comment further.
In the event that SR stands aside soon, then there will be continuity of DW and JG continuing to run the ship. Their key decisions are resource allocation to the sales and marketing units, as that is where the key value is driven in the short term.
In terms of steadying the ship, $PNV is in sufficient markets that quite a lot can be done just through driving sales and marketing. The other key thing to get right is the FDA filing for US FTB. Everything else is burning on a longer fuse in my view.
So I don't think that a period of discontinuity at the CEO level needs to have a material bearing on short term performance.
The exception is India. With sales at $0.544m, it is likley to currently be unprofitable. But what is the trajectory from here? H-o-H sales growth was 73%, as I've written previously. So what if they are now finally starting to navigate their way through Byzantine hospital procurement systems, as Swami described on the last call? Might it start to spark into life? Could we soon be seeing sales growth here of 100% or 150% p.a., so that it starts to make a significant contribution in the medium term? There is indeed where Swami's expertise is key, as no-one else in the management team - to my knowledge - has the experience to make that call.
My Conclusion
There are just too many questions for $PNV that remain unresolved and I cannot re-form a thesis. So I can't invest. I am going to sit this out, look at the FY result, and see how the leadership issue plays out, as well as continue to monitor the competitive environment.
Disc: Not held
