Opsens Inc.
FQ3/22: Revenues in line; US SavvyWire expected approval timelines in early cQ4 unchanged
Our view: OpSens reported FQ3/22 (May-qtr) revenues of $10.1MM, in line with RBCe ($10.1MM) and slightly above consensus ($9.3MM). Management noted that FQ3/22 benefited from a normalization of the supply chain (primarily in Japan) and, as such, FQ4 revenues are likely to moderate slightly. The company reiterated the regulatory approval timelines for SavvyWire in Canada and the US. We reiterate our positive outlook on the company as procedure volumes normalize and SavvyWire receives expected approval in the key US marketplace in cQ4.
Key points:
FQ3/22 revenue of $10.1MM (+24% q/q and +9% y/y) in line with RBCe and above consensus ($9.3MM). Included in the $10.1MM were total medical revenues of $9.2MM (+32% q/q; +8% y/y), with FFR and dPR sales of $6.6MM (+44% q/q). Other medical revenues were $2.6MM (+7% q/ q). Industrial revenues were $0.9MM (-14% q/q), above RBCe ($0.8MM). Gross margins of 51% were below RBCe (54%) and in line with the prior quarter (51%). Operating expenses at $7.9MM (+22% q/q) were above RBCe ($7.5MM), as the company invests ahead of the commercial launch of SavvyWire in the US in 2023. FQ3 net loss of $2.9MM came in above RBCe ($2.2MM loss) and consensus ($2.1MM loss). OpSens ended FQ3 with a cash position of $28.0MM (vs. $30.9MM as of Feb-22).
Operational updates: Japan fuels growth on “catch-up” shipments.
FQ3/22 was a record quarter for the company and benefited from the pent- up FQ2 demand which faced Omicron-related challenges and supply chain issues in Japan. Management noted Japanese revenues grew 168% vs Q2 and were helped by a $350K order not expected to recur in Q4. As such, OPS expects revenues to moderate in Q4 based on this item and seasonality. This is consistent with our forecast for $9.5MM in revenues in Q4.
Commercial preparations for SavvyWire underway. OPS continues to make commercial preparations ahead of the potential launch of SavvyWire but noted US sales rep hiring is taking a bit longer than expected. The company noted presentations are to be made at the TCT medical conference in Boston this September on the device.
Maintaining $4.00 price target. We modestly revise our forecasts (see RHS). Our $4.00 price target is based on a DCF valuation, including TAVR in our base case estimates. We apply a 1.0x multiple to cash flow from the existing business and a 0.8x multiple to SavvyWire, reflecting the execution risks and uncertainties related to the product.
CDN SavvyWire Approved and launched in FQ3: US Approval timelines for SavvyWire remain by early cQ4 (FQ1/23). The company received approval for SavvyWire from Health Canada during the quarter and commercialized SavvyWire in this market. OPS noted ~40 CDN procedures have been completed since the limited roll-out launch with no technical or safety issues. Separately, management has previously noted FDA approval of SavvyWire is expected in early Q4/22 (calendar quarter) and this timeline remains unchanged. Recall, OPS submitted the regulatory filing for SavvyWire approval for Europe in FQ2.