Opsens Inc V.OPS

Primary Symbol: T.OPS

Healthcare Medical Devices

OpSens Inc. is a medical device cardiology-focused company. The Company offers an advanced optical-based pressure guidewire that aims at improving the clinical outcome of patients with coronary artery disease. The Company’s segments include Medical and Industrial. The Medical segment focuses on physiological measurements, such as Fractional Flow Reserve (FFR) and Diastolic Pressure Ratio (dPR) in the coronary artery disease market and also supplies a range of miniature optical sensors to measure pressure and temperature to be used in a range of applications that can be integrated into other medical devices. The Industrial segment develops, manufactures and installs fiber optic sensing solutions for critical and demanding industrial applications. Its flagship product, the OptoWire, is a second-generation fiber optic pressure guidewire designed to provide the lowest drift in the industry and lesions access. It is approved for sale in the United States, European Union, Japan and Canada.

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Post by retiredcfon Jan 14, 2022 8:44am

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Post# 34316048

RBC 2

January 13, 2022

Opsens Inc.

FQ1/22 Results impacted by COVID-19;

Management expects growth resumption in FQ3

Our view: OpSens reported FQ1/22 (Nov-qtr) revenues at $8.1MM, in line with RBCe ($8.1MM) and marginally below consensus ($8.4MM). Management expects FQ2/22 to remain challenging due to the negative impact of COVID-19 on procedure volumes but expects revenue growth to resume in FQ3. The next major catalyst for the company is the potential approval of SavvyWire by Health Canada (May-Jun) and the USFDA (Sep- Oct). We note the near term headwinds for OPS due to Omicron but reiterate our positive outlook on the company as procedure volumes normalize and SavvyWire receives approval in OPS's key markets.

Key points:

FQ1/22 revenue of $8.1MM (+0.4% q/q, -2.9% y/y), in line with RBCe but marginally below consensus ($8.4MM). Management noted that FQ1/22 remained challenging due to the ongoing negative impact of COVID-19 on procedure volumes and FX headwinds. Gross margins were 51%, above RBCe (50%) while operating expenses at $6.0MM (+13% q/q) were marginally ahead of RBCe ($5.9MM). OpSens reported net loss of $2.1MM in the quarter, in line with RBCe but below consensus (-$1.3MM).

Management expects revenue growth to resume in FQ3/22. Management noted that although the procedure volumes improved q/q in FQ1, they are still trending below normalized levels. Further, FQ2 (Feb-qtr) procedure volumes will also continue to see a negative impact due to COVID-19. The company is growing its customer base and expects revenue growth resumption in H2/FY22 as procedure volumes return to normalized levels.

Increasing the size of the sales force. Management noted that OPS will double the size of its US sales team over the next 6 months as the company prepares for the commercial launch of SavvyWire following regulatory approval. OpSens will increase its territory managers in the US from 10 currently to 20-25 managers.

Upcoming catalysts. OPS is focusing on increasing its market share in US by targeting agreements with GPOs. Management noted that the company is in discussions to sign a number of new contracts and expects to announce at least one contract with a major GPO in the coming months. OpSens opened 7 new accounts during FQ1 and has a commitment for additional 6 accounts in FQ2. On regulatory approval timelines for SavvyWire, management expects approval from Health Canada in May'22- Jun'22 and a potential approval from the USFDA in the Sep'22-Oct'22 timeframe. OPS will also file a regulatory submission for SavvyWire in Europe this year.

Price target remains unchanged at $4.00. 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. We recently improved the risk profile of the TAVR related cash flows (details here).