Dialco ValuationThere is limited information on the target market, market share, margins, and EBITDA targets. Both the Company Investor presentation and Analyst targets seem to fall short in this regard.
As a consequence, it is difficult to value (unless you use the less reliable revenue multiples and make some broad assumptions about market penetration)
What I have to rely on is statements that the DIMI will be "game-changing" for the HHD markets. This is largely due to its abiliity to tear down "barriers to adoption". Users want the promise of better health outcomes that, at the same time, will gives them more freedom to work and leave the home (eg. nocturnal PD). With bag delivery they can even travel on vacations and still be dialyzed. Requires portability and ease of use. They also don't want the cost and complexity of new plumbing and RO water sources (bags are cleaner - no muss, no fuss). Also ease of use (ala DIMI/SAMI) is paramount! Finally avoidance of possible pandemic related iinfections in public clinics will be a driver, for this particularly vulnerable population.
The paradigm shift is underway which will open the flood-gates for HHD. The big players know this and want to be apart of it, before they lose market share to competitors that do offer a good, easy to implement solution at home.
I base my valuation on what Fresenius paid for NXStage (about $ 2B usd) for arguably a less game-changing technology, and the valuation that Outset was able to achieve (before the technology started to flounder) That was also > $ 2B.
If the DIMI machine is truly game-changing and proven (in part via SAMI and ARC, and in part with the FDA Trial) then Dialco should be able to exceed these valuations for "competitor" machines.
$ 2B / 300M (fully diluted) =
$ 6.67 USD or
$ 8.67 CAD $
Add an unknown premium for "game changing" penetration potential.
Do we need a pre-FDA risk discounter? Not so much, when it's a question of "when, not if"
MM