@BullsWool , I saw the data somewhat differently. I saw total sales comprising USA + RoW. $5.2m + $1.9m, which can equal $7.2m, if there is a favourable rounding error.
Again, to reinforce @Rick ’s point, the constant cherry-picking by DW on what data is presented is tiresome. RoW includes different things in different reports. Sometimes, ANZ is reported separately, so it is easy to be confused.
Earlier this year when 9m results were presented, they noted Global BTM product sales, A$41.1m, growing at 49.8%
- US revenue at A$33.4m,growing at 41.8%
- ROW revenue at A$7.6m,growing at 99.5%
- BARDArevenue at A$3.4m,growing at 13.0%
So even though they sometimes breakout different markets (to highlight good news!!), you can track the consistent buckets of revenue as:
- US Sales Reveue
- Row Sales Revenue
- BARDA Revenue
Through all the spin and the noise, actually the most significant datapoint was the 11 month result of $59.1m, up 54.5% vs. STLY of $38.3m. This number compares well with @Rick 's headline sales CAGR of c. 50%, and it compares with 55% annual in my current model.
Looking ahead, FY22 closed at Total Revenue of $41.89, meaning June-22 was $3.59m.
If June-23 delivers $6m revenue, then FY23 would be $65.1m, or a y-o-y result of 55%,... which by chance it what I had in my model (which I downgraded from the FY23 number of $70m which was in my last valuation Bull Case.)
If you think the risk around June-23 could be $5.5m to $7.0m, that gives a range of FY23 growth of 54% - 58%,
Impact of $IART Recall
I noticed the AFR article commenting on the positive impact on the $IART recall, as I've discussed earlier here. Let's have a deeper look at that.
$IART Tissue Repair sales are much greater than $PNV, used in more hospitals by more surgeons in wider applications with a broader portfolio of products. The recall was annouced at start of business on 23rd May, leaving 7 of 22 working days for the month.
So imagine you are a power-user surgeon of Integra, you've tried BTM, but haven't converted over. You've just found out that stocks are recalled because your hospital is supplied by the facility affected. What do you do? Your priority is to get material so that you can perform upcoming surgeries.
Now in the recall communication from $IART you are likly to have been offered immediate replacement stock from one of the alternative manufacturing locations unaffected by the recall, assuming they had sufficient inventory.
Your choice is, do you take the replacement stock offered, or do you also call up some BTM, or even do you just call up BTM until more information emerges about the $IART recall? (Don't forget, $ARX is an available alternative too.)
I'm not a surgeon, but I guess you probably don't want to have to field questions from patients along the lines of "hey, did you use that material on me that just got recalled because of endotoxin contamination?" - not that patients would be likely to be aware of the recall.
Upon reflection, it seems plausible that the May results did receive a boost as a result of the $IART recall. If so, how long does that boost persist? I don't know, but it could give some impetus for more surgeons to convert to BTM, or if they are using both, to increase their share of BTM as a contingency against potential future interruptions from $IART. (You are more likely to change your buying habits once a sole or primary supplier has let you down.)
If the potential "boost" is longer lasting than the last few days of May, then we could well see $PNV finish the year (very) strongly.
Given that $PNV went from a record $5.45m Product Sales month in March to a record $7.2m Product Sales month in May does point to some unusual impetus. Sure, the new markets will be helping as well, but they are starting from a very low base. Even the callout for Canada is May YTD of $1.2m, a montly run-rate of $0.1m, which given its start from $0m likely means an exit run-rate in that market of $2-3m, or $0.2-0.3m per month.
My Key Takeaways including for Value
Just as 3Q was a softer quarter that had the market projecting annual sales growth dropping below 50% and allowing the shorts to have a field day given the SP had headed back up to a bullish $2.40, so too a strong 4Q is pushing the forecast annual number back well above 50%, indicating the market had over-corrected earlier in the year.
Its a dizzying dance, with DW's unique form of investor relations providing both mirrorball and strobe lights.
I am happy with my moderated view of 55% growth for this year and 50% for next. While I won't update my valuation until the FY results are in (because I want to see the cost picture) my sense is that my valuation will see the bear case still around $1.60 and the bull case pull back from $3.20 to the somewhere in the range $2.50 - $2.75, with an expected value around $2.20-$2.30. That's it unless costs have really blown out.
Let the dance continue!
Disc: Held in RL and SM
