RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:TSO3 Inc has a 181 per cent upside, says Echelon Wealth@ Joey and others: for the record, I am expecting >200 orders this year, hence no need for any financing whatsoever. This is my base case.
Q4: a majority (i.e.: everything except maybe a couple) of the 21 orders came internally, and not Getinge. Seems like you can't win either way:
- If majority comes from Getinge: the 21 are just hot leads from Getinge, and things will fall part in 2019. If Getinge has so many hot leads, why did they only installed 50 VP4s over 2.5 years. They can see their order book, right? If there are many more hot leads to come, why wouldn't they sweeten the pot (more upfront cash and manpower) and stay in?
- If majority comes internally: all the Getinge quotes must be duds. Remember all the Getinge quotes are transferred to TSO3 sales people, who took over completely (i.e.: Getinge no longer involved except for those whose orders have already been placed before Aug1). So our sales people will have to sit down with these potential customers, re-educate them (because Getinge didn't focus on cost savings for example), requote (because all Getinge quotes were for $120k+), and the tender could need to be resubmitted altogether. So it is reasonable to expect a delay in realizing these Getinge quotes into actual orders
No one will give another round of financing.
- If we ever burn through the $20mm from Courage, we will have $30+mm of tax shield--enough to shield $100mm of income, vs. a net debt of $20mm. Any profitable acquirer could buy TSO3 and use this tax shield immediately
- So regardless of whether you think there is any value to the inventory, the technology, the patents, the installed base, etc., just the tax shield alone warrants another $10mm of capital injection. One can easily argue there is at least some value in the technology and patents
Catalysts to Expect:
Instead of all the gloom-n-doom, how about some possible positive catalysts this year besides sales updates:
- If you listened to AAMI webcast, it is certain they will be strenghtening their recommendation to terminally sterilize ERCPs and other critical scopes. Their draft will likely be finalized and come out this year
- VGH usage data: this will be published in Q1, with likely 0% contamination rate and 30+ uses of ERCP compatibility
- Large orders: either from institutions already trialing the VP4, or RR's efforts in GPOs
- More prestigious users: I can see someone like Clevland Clinic coming on board this year