Getinge Still Needs TSO3!Dr. Wong, your analysis is excellent.
I would add that it is more obvious today than ever how much Getinge needs TSO3 and this revolutionary technology going forward. Getinge missed earnings estimates by a huge margin this AM and the stock was down today 10.5%. Apparently, however, they do have a new US head. One can only hope that he will right their ship and get his people performing in the field!
I think the market has grossly misinterpreted this new Getinge deal. This was never a case of Getinge wanting to walk away from TSO3; but, rather, TSO3 wanted to take matters into their own hands and not allow Getinge to continue to fumble the ball for another quarter. TSO3 made Getinge an offer completely on TSO3's terms, IMHO, to take back inventory at a huge loss to Getinge because Getinge has not met TSO3's expectations, due to their own internal problems, not due to any problem with the sterilizer or technology, or the enormous waiting market.
Dr. Alfa, one of the most trusted authorities in endoscope sterilization, for example, was at the Investor Day last week again supporting TSO3's proven and effective sterilization claims that remain unique in this industry.
Now, TSO3 can do its own promotion, marketing, and sales, which it was unable to do under the previous deal. And, for at least 100 VP4 units, they have the opportunity to get them into hospitals and elsewhere at a significantly reduced cost to TSO3 with greater profit. One hopes TSO3 will incentivize end users and potential clients by sharing these savings and, as well as getting market penetration to demonstrate the cost efficiency of using the VP4, this will secondarily build the valuable consumables market. This deal was the price Getinge has had to pay for their own problems and to relieve inventory pressure. Getinge will still be in the field selling the VP4 and should be far more successful with TSO3's expertice and assistance.
I doubt very much Getinge will want to let go of the market they have been so slow in establishing in the US after the summer once TSO3 has the momentum of the imminent duodenoscope FDA approval and once the changes to regulatory standards for endoscope sterilization are accepted. Getinge needs TSO3!!
On the other hand, as has been noted by others, TSO3's technology is not just valuable to Getinge, but the H2O2+Ozone patents alone should be easily worth >$4 a share to Olympus and other competitors including JNJ, Cantel, and Steris in the low temperature space. This market reaction is way overdone and TSO3 is an incredible buy at these levels.