RE:RE:Good Stock for 2015The company doesn't give us much information to base sales expectations and forecasts on and their revenues are known to be lumpy due to the irregular timing of large OEM orders. That being said, I would consider it a good sign to see their wound care segment sales revenues exceed the previous high of $1.41 Million (from Q3/2013) to $1.5 Million or more.....and total revenue (including coating services and licensing fees) of $1.75 Million or more.
- Any reason for big share price decline? The big price decline came after the company reported Q3 Total Revenues of $1.29 Million and a loss of $240K for Q3/2014.
In my opinion, the price may have gotten a bit ahead of itself in the $3 range; but the sell-off of this stock based purely on Q3 numbers was also a bit short-sighted. Molnlycke had just debuted their new products at the WOCN conference in Nashville at the end of June (at the end of the quarter), investors need to understand that the sales cycles of these products are lengthy, getting a hospital or infusion center to change their bandages to a more expensive alternative, in order to reduce infection rates, is going to take time for review of senior decision makers. Molnlycke does have some convincing clinical evidence to help make these sales.
- Will there sales grow next few years and how are their products competing with others. The company has three product lines that are currently being marketed: Medline Silvertouch Foley Catheters, ColActive and ColActive Ag collagen dressings (Smith & Nephew BioStep Collagen dressings are also licensed from Covalon), & Molnlycke's Mepitel Film AM & IV AM dressings. The market for infection control products and technology is strong with a growing emphasis on preventing the spread of drug resistant infections and medicare reducing reimbursement rates for the poorest perfrming hospitals, so this is a rapidly changing and growing market. I believe Covalon offers best of class products in the three market categories it currently competes in and is in a position to grow significantly in the coming years.
Medline Silvertouch Foley Catheters - This study found Medline Silvertouch capturing 2% of the antimicrobial foley cathetar market in 2009 (page 40):
Frost & Sullivan Market Research Report - June 2011 Silvertouch Brochure CoActive Collagen Dressings - I haven't found much market analysis; but consider it a pretty good indication that Edgepark Medical, the industry leader in home delivery of disposable medicl products, a division of Cardinal Health lists Covalon's product as a "Recommended" product:
Edgepark Collagen dressings Molnlycke's Mepitel Film AM & IV AM - Not much in the way of market analysis available; but the fact that Molnlycke paid $3.5M up front and has made dedicated websites for the products leads me to believe they think this can be a market leading infection control offering.
Mepitel Film AM website