I know there is an element of cherry picking around these announcements, however the growth trajectory of this business really is phenomenal.

The frequency of these "record" months is gradually increasing, as you'd expect: 8-9-8-6-5 (time in months befween recent records).

Just to help understand the lumpiness, I've plotted all recent reported and inferred monthly sales and revenue numbers, and fitted the revenues with a best fit curve (a couple of different exponential growth models, actually). Its a reasonable fit to the data, and the difference between the curve and the orange bars gives a PARTIAL indication of the lumpiness (partial because the dataset is incomplete, and the data is biased towards high revenue months). The actual sales performance will be even more lumpy!

Note the curve is not a curve of revenue, but a curve biased by the reporting of Record Revenues (those reported numbers, plus values I have been able to backout from other results when they have disclosed 6m-ly, quarterly, or YTD values). To estimate the revenue curve you'd have to subtract an offset so that the area under the curve gives the reported annual or 6-monthly revenue .... which I haven't done.

You can get a sense of the lumpiness by looking at how far the Aug-22 bar and May-23 bars are from the curve: about +/- $1.5 million, so the range between a good month followed by a poor month appears to be around $3m!

Another point of value in the curve, is that it causes you NOT to look at the May-23, Nov-23, Apr-24 results and conclude there is a trend that growth it slowing. The individual monthly numbers are too lumpy for that to be a valid conclusion with any reasonable confidence.

Despite the limitation, the picture helps visualise the level of lumpiness against an underlying strong growth trend.

WARNING: don't even think about extrapolating the curve!

Of course, all this analysis is unnecessary, and I just wish they'd report quarterly numbers for revenue, rather than these sales records, which are hard to gain meaningful insight from, as I've tried to explain.

At this stage, however, $PNV appears to be sustaining a rate of revenue growth well in advance of the consensus forecasts for the next year or two. I estimate we are likely to come in just over FY24 consensus of $102.7m (but who can possibly tell given there's at least $3-6m of uncertainty remaining due to lumpiness.

Importantly, FY25 revenue growth "consensus" of +30% looks undemanding, given the current trajectory.

Disc: Held in RL and SM

DW's just emailed around the Macquarie Flash Report on the update.

Note that with a TP of $2.75, Macquarie are well ahead of consensus ($2.11 before today). So, I don't expect them to change their valuation as a result, as today's revenue number is broadly in line with the trend (see my earlier post). That said, Macquarie's revenue growth for FY25 is "only" 32%.

Today's update may make it harder for some of the more bearish valuations to hold their ground, so we may see a nudge up on consensus.

(My central case is at $2.25, although if a decent result comes in for the FY on profitability, my update later in the year will increase significantly, likely closer to $3 than where I am now. But in advance of that I still see $PNV as fair value, at a minimum.)

Here's the Macquarie report summary:

Polynovo - Another One for the Record Books

What's new

• PNV announced another record month in Apr-24, recording A$10.1m total revenue. This comprised A$9.2m revenue from commercial sales and A$0.9m from BARDA and other revenue. This follows the previous milestone of A$9m in monthly sales set in Nov-23, with sales of A$9.5m recorded.

Why it matters

• Revenue forecasts: We forecast revenue in 2H24e of A$54.7m. This includes BTM revenue forecasts of A$50m, BARDA revenue of A$3.1m and other revenue of A$1.6m (partly from interest income). Our forecasts imply ~A$9.1m in total monthly sales. Given PNV's Apr-24 sales of A$10.1m, this implies ~A$8.9m is required in the other 5 months of the half to meet our forecasts.
• Revenue growth strong across regions. Compositionally, US sales in the month of Apr-24 were A$6.9m, up ~75% vs pcp. RoW sales also accelerated, with total monthly sales of A$2.4m, up ~68% vs pcp. Strong growth was noted in UK/Ireland, ANZ, Hong Kong and Germany. We see expansion outside the US as providing diversification of sales and new areas of growth.
• Strong customer acquisition supporting revenue growth. In 1H24, total customers (hospitals) grew to 861, up +67% YoY from 515 in 1H23. We see this continued growth in customers supporting sales in 2H24e.
• Profitability achieved in 1H24: PNV recorded NPAT of A$2.7m in 1H24, up from a -A$3.8m loss in 1H23. This was supported by GM of ~95%, with operating leverage evident (sales growth +63% vs opex growth of +41%). In 2H24e, we forecast NPAT of A$1m, noting 1H24 benefitted from tax credit.
• Trial recruitment progressing: At the 1H24 result, PNV noted the BARDA trial had 91 patients enrolled for the pivotal burns study, with first patient treated in India. This represents ~76% of total expected recruitment of 120 patients. We expect BARDA revenue of A$8m in FY24e, with A$4.9m recorded in 1H24 and A$3.1m forecast for 2H24e. PNV is presenting at the Macquarie Conference today, and we await further commentary regarding the trial progression.

What now

• Another month of record sales for PNV in Apr-24, with both RoW and US growing significantly. We continue to expect strength in sales, with entry into new geographies differentiating sales mix outside the US. We see several near- and longer-term opportunities for PNV, supporting valuation. Outperform.