FQ2/22 Preview: Expecting marginal q/q decline in revenues due to Omicron impact in the quarter
Our view: OpSens will report FQ2/22 (Feb-qtr) results pre-market on 13- Apr. We estimate revenues of $8.0MM (-1.2% q/q) for FQ2, slightly lower than the $8.1MM reported in FQ1, as we expect continued negative impact from Omicron in OPS’s key markets. We expect revenues to rebound in FQ3 with peak of the Omicron wave likely behind us. On the earnings call, we expect the focus to be on the operational outlook given that the peak of Omicron is likely behind us and additional updates on the approval timelines and launch of SavvyWire.
Key points:
Adjusting estimates to reflect Omicron trends. We expect revenues of $8.0MM (-1.2% q/q) for FQ2/22 (Feb-qtr) when OpSens reports on Wednesday. We reduce our estimates, as the Omicron trends in OPS’s key markets for FQ2 have been worse than we initially anticipated, along with the supply chain challenges and labor shortages, particularly in the hospital environment. We expect operating expenses to increase q/q as OPS prepares for the commercial production and launch of SavvyWire later in the year. On the positive side, we expect revenues to rebound in FQ3/22 with the peak of Omicron wave likely behind us. On the earnings call, we would expect updates from the management on the procedure volumes in FQ3, i.e., March and April months, as Omicron likely peaked in FQ2.
Timelines around regulatory approval of SavvyWire. Management has previously noted a potential approval for SavvyWire from Health Canada in the May’22–Jun’22 timeframe and from the US FDA in the Sep’22–Oct’22 timeframe. We would look for any updates on the approval timelines and any feedback from the agencies (Health Canada and US FDA). We would also look for the timelines for regulatory filing in the EU and Japan.
Operational updates. We anticipate updates on the sales team expansion in the US ahead of the potential approval of SavvyWire. Management has previously highlighted that the company will increase the number of territory managers in the US from ~10 to ~20–25 later this year.
Potential for SavvyWire to become the new standard of care in TAVR. Currently, the TAVR procedure typically requires the use of an echocardiogram and pacemaker in addition to a guidewire. SavvyWire can deliver the valve, provide pacing, and perform continuous pressure measurement simultaneously. We believe the time/cost savings and efficacy benefits could allow OPS to ultimately command a 35–40%+ share of TAVR guidewire supply in its current markets (US, Canada, EMEA, and Japan). TAVR is a ~US $4B+ global market which we estimate to grow at an 11–12% CAGR to ~US $7B+ by calendar 2025, with the number of procedures increasing from our forecast of ~200K in 2020E to 300K+ in 2025E. See our in-depth note here for more details on our positive outlook for SavvyWire.