Admedus Ltd

AHZ Details

LeMaitre Vascular Deal: Admedus Ltd (ASX: AHZ) provides innovative healthcare solutions and is engaged in developing, investing and delivering leading edge medical technologies. As on 30 December 2019, the market capitalization of the company stood at $55.54 million.The company sold the distribution rights of CardioCel® and VascuCel® patch business to LeMaitre for an upfront payment of $22.8 million and stated that LeMaitre Vascular Inc. has placed an order for approximately 12,500 units of CardioCel® and VascuCel® patches. 

Cardiocel 3d Approved for Sale in Israel: The company has received regulatory approval for the sale of the CardioCel® 3D product portfolio in Israel, allowing Admedus to service a greater segment of this market, with a solution for the repair of high-complexity congenital heart defects.

Increasing Cash Balance: Admedus Ltd has released its quarterly report for the period ending 30 September 2019, wherein it stated that revenue of the company for Q3FY19 stood at $4.1 million as compared to $6.3 million for the prior corresponding period. This reflects the near-complete exit from the Infusion business subsequent to the divestment of the major part of the Infusion business to BTC Health Ltd. Cash balance at the end of the period stood at $1.7 million, and the company received $21.2 million in upfront payment from LeMaitre, which will be reflected in the December quarter. During the first half of 2019, Gross profit for the Group was $4.74 million, representing a gross profit margin of 44%. The loss for the Group after providing for income tax for the half-year ended 30 June 2019 was $11.91 million as compared to the prior period loss of $11.54 million.


Financial Performance (Source: Company Reports)

What to Expect: The company aims to develop novel ADAPT® based products for global markets, which will allow a higher return on capital investment. The reputation of the company promises to make rewarding partnerships with key industry players, resourced and motivated to fund the commercialization of prospective products. The company is also focusing on product innovation of the TAVR programme and future structural heart products and expects the market to grow to $US12 billion within 5 to 6 years.

Stock Recommendation: The stock gained 46.88% in the last one year, 36.23% in the past 6 months and 5.62% in the last one month. Currently, the stock is trading close to its 52-week high of $0.110. During the FY18, EBITDA margin of the company stood at -92.6% as compared to the industry median of 21.9%. In the same time span, net margin of the company came in at -96.1%, lower than the industry median of 12.1%. In terms of the valuation, the stock is trading at a Price/Book Value multiple of 5.2x, higher than the industry median of 3.7x. Thus, considering the current trading levels, below industry margins and stretched valuations, we are of the view that most of the positives are factored in at current juncture. Hence, we suggest investors to book profit and recommend a “Sell” rating on the stock at the current market price of $0.105, up by 11.702% on December 30, 2019. 

 
AHZ Daily Technical Chart (Source: Thomson Reuters)

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