ImpediMed Limited

Contract Revenue Pipeline Witnessed A Growth Of 10% In March Quarter: ImpediMed Limited (ASX: IPD) is engaged in the business of medical technology to non-invasively measure, monitor and manage tissue composition and fluid status with the help of BIS (Bioimpedance Spectroscopy). IPD recently released its quarterly cash flow for the March Quarter 2019.

Financial and Operational Performance as per the March Quarterly Report- Pipeline for Contracted Revenue at $7.7 million was up 10%.  A contract value for SOZO® for the amount $1.3 million was signed in March quarter with total contract value at $9.8 million since the launch of SOZO. Annual Recurring Revenue for SOZO contracts at $2.8 million as on March 2019 saw a growth of 12%. For the quarter, net operating cash outflow stood at $4.8 million with cash receipts of $1.0 million. Cash on hand came in at $17.1 million as of 31 March 2019.

On the operational front, the company received a multi-year national purchasing agreement from Ascension Health Resources for its SOZO Digital Health Platform. As per the agreement, the SOZO platform will be available for 151 Ascension hospitals to take advantage of it.

The company also launched 3^rd-generation SOZO Software which offers a new interface which is easy to navigate and provides the highest level of security and privacy to data related to the patient with additional security to hospital administrators and clinical users. Annals of Surgical Oncology accepted the full PREVENT manuscript for publication and will be released immediately after the presentation to be given at the ASBrS Annual Meeting by the PREVENT trial principal investigator.

Contracted Revenue Pipeline (CRP) and Annual Recurring Revenue (ARR) by FY Quarter (Source: Company Reports)

Financial Performance in 1H FY19: Total revenue in 1H FY19 stood at $1.8 million including recognised SOZO® revenue of $0.8 million. The company incurred a loss from continuing operations amounting to $12.1 million as compared to $14.4 million in 1H FY18. Net cash flows used in operating activities in 1H FY19 came lower at $9.4 million as compared to $11.7 million in 1H FY18. Cash balance as on 31 December 2018 stood at $22.6 million against $31.3 million at the end of June 2018.

What to Expect: The management is of the view that the company has made significant progress to build SOZO® business in the first half of FY19and signed contracts of more than $4.0 million.  Contracted Revenue Pipeline of $7.0 million still to be recognized as revenue as of 31 December. With the acceptance for publication of PREVENT interim results manuscript, management has turned focus to meet with Private Payors.

Stock Recommendation: At the current market price of $0.280, market capitalization for the stock stood at ~$98.74 million. 52-week high and low range for the stock stands at $0.580-$0.180. The stock had run-up sharply in the last 5-days with the gains of 13.04%. The stock has appreciated 20.93% in last 1-month and 33.33% on a YTD basis.

Considering the SOZO contribution towards revenue, developments on operational front, decent business outlook and looking at the current trading level with significant gain in the last one-month, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.280 per share (up, 7.692% on 01 May 2019).  

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