some numbers to considerSo let’s do a bit of an analysis
GA presented two revenue models in Torrey hills capital interview
https://www.youtube.com/watch?v=55fc90Hxlik Buy model: USD 50,000/machine + $10,000/year recurring revenue per machine ($5,000/year maintenance/upgrade/support fee + consumable patch ~ 1,000 per machine per year/ $5 each) => USD$60,000 per machine.
Lease model: USD$ 15,000 with 200 consumable patches free then $50/patch after -> 65,000/year revenue and recurring every year. He also mentions that this is likely the way US hospitals will go as no budgeting is needed.
GE has 42% global cardiac market share equaling 16,800 machines from the 40,000 machines in Canada, USA and Europe. Say that it will take 10 years to sell units to support this many machines with year 1 (2021) being the lowest sales and doubling every year to year 5 and continuing for 10 years total.
| BUY MODEL | | 1 unit | service contract | | | | |
| | | | | | USD 50,000 | USD 10,000 | | | | |
| year | 16,800 Units | | x = 151 Units | | sale revenue | contract revenue | total revenue | PE multiple | MC | |
| 2021 | 1 | x | 151 | Units sold | USD 7,567,568 | USD 1,513,514 | USD 9,081,081 | 5 | USD 45,405,405 | |
| 2022 | 2 | x | 303 | Units sold | USD 15,135,135 | USD 1,513,514 | USD 16,648,649 | | USD 83,243,243 | |
| 2023 | 4 | x | 605 | Units sold | USD 30,270,270 | USD 4,540,541 | USD 34,810,811 | | USD 174,054,054 | |
| 2024 | 8 | x | 1211 | Units sold | USD 60,540,541 | USD 10,594,595 | USD 71,135,135 | | USD 355,675,676 | |
| 2025 | 16 | x | 2422 | Units sold | USD 121,081,081 | USD 22,702,703 | USD 143,783,784 | | USD 718,918,919 | |
| 2026 | 16 | x | 2422 | Units sold | USD 121,081,081 | USD 46,918,919 | USD 168,000,000 | | USD 840,000,000 | |
| 2027 | 16 | x | 2422 | Units sold | USD 121,081,081 | USD 71,135,135 | USD 192,216,216 | | USD 961,081,081 | |
| 2028 | 16 | x | 2422 | Units sold | USD 121,081,081 | USD 95,351,351 | USD 216,432,432 | | USD 1,082,162,162 | |
| 2029 | 16 | x | 2422 | Units sold | USD 121,081,081 | USD 119,567,568 | USD 240,648,649 | | USD 1,203,243,243 | |
| 2030 | 16 | x | 2422 | Units sold | USD 121,081,081 | USD 143,783,784 | USD 264,864,865 | | USD 1,324,324,324 | |
| 2031 | | | | | | USD 168,000,000 | USD 168,000,000 | | USD 840,000,000 | |
| | | | | | | above numbers include units from previous years, ie coumpounded | | | |
| | | | | | | | | | | |
| LEASE MODEL | | 1 unit | consumables | service contract | | | |
| | | | | | USD 15,000 | USD 40,000 | USD 10,000 | | | |
| year | 16,800 Units | | x = 151 Units | | lease revenue | consumable revenue | SC revenue | total revenue | PE multiple | MC |
| 2021 | 1 | x | 151 | Units leased | USD 2,270,270 | USD 6,054,054 | USD 1,513,514 | USD 9,837,838 | 5 | USD 49,189,189 |
| 2022 | 2 | x | 303 | Units leased | USD 6,810,811 | USD 18,162,162 | USD 4,540,541 | USD 29,513,514 | | USD 147,567,568 |
| 2023 | 4 | x | 605 | Units leased | USD 15,891,891.89 | USD 42,378,378 | USD 10,594,595 | USD 68,864,865 | | USD 344,324,324 |
| 2024 | 8 | x | 1211 | Units leased | USD 34,054,054 | USD 90,810,811 | USD 22,702,703 | USD 147,567,568 | | USD 737,837,838 |
| 2025 | 16 | x | 2422 | Units leased | USD 70,378,378 | USD 187,675,676 | USD 46,918,919 | USD 304,972,973 | | USD 1,524,864,865 |
| 2026 | 16 | x | 2422 | Units leased | USD 106,702,703 | USD 284,540,541 | USD 71,135,135 | USD 462,378,378 | | USD 2,311,891,892 |
| 2027 | 16 | x | 2422 | Units leased | USD 143,027,027 | USD 381,405,405 | USD 95,351,351 | USD 619,783,784 | | USD 3,098,918,919 |
| 2028 | 16 | x | 2422 | Units leased | USD 179,351,351 | USD 478,270,270 | USD 119,567,568 | USD 777,189,189 | | USD 3,885,945,946 |
| 2029 | 16 | x | 2422 | Units leased | USD 215,675,676 | USD 575,135,135 | USD 143,783,784 | USD 934,594,595 | | USD 4,672,972,973 |
| 2030 | 16 | x | 2422 | Units leased | USD 252,000,000 | USD 672,000,000 | USD 168,000,000 | USD 1,092,000,000 | | USD 5,460,000,000 |
| 2031 | | | | Units leased | USD 252,000,000 | USD 672,000,000 | USD 168,000,000 | USD 1,092,000,000 | | USD 5,460,000,000 |
| | | | | | above numbers include units from previous years, ie coumpounded | | | |
so he isn't wrong when he talks about 2B MC. Also, my calculations above only include sales to Canada, USA and Europe. What will happen if we get the news that China is implementing it in every one of their hospitals?
GLTA
disclaimer, I've been long since 2016 and today I doubled my position.