Opsens Inc T.OPS

RBC Reaction

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April 13, 2023

Opsens Inc.
FQ2/23: Results ahead of estimates; focus on SavvyWire ramp-up

TSX: OPS | CAD 1.66 | Outperform | Speculative Risk | Price Target CAD 3.50

Sentiment: Positive

Our view: OpSens reported FQ2/23 (Feb-qtr) revenues at $10.8MM, above RBCe ($10.2MM) and consensus ($10.5MM). Revenues were up +6% q/q and +33% y/y. Net loss of $3.0MM during the quarter was also better than RBCe ($3.7MM loss) and consensus ($4.4MM loss). On the earnings call, we expect the focus to be on the SavvyWire ramp-up in the US and Canada. TAVR (SavvyWire) revenues grew +31% q/q to $0.5MM as the company ramps up commercialization of SavvyWire but were light vs. RBCe ($0.7MM). We will also look for any early trends related to US physicians adopting LV pacing during TAVR. Currently, only ~10% of US surgeons use LV pacing during TAVR procedures in contrast to significantly higher levels in Canada and Europe. In our view, the ramp-up of SavvyWire in the US will be dependent on the shift to LV pacing for TAVR procedures over time. We will look for additional commentary related to any commercial synergies between OptoWire and SavvyWire since both the wires utilize the same OptoMonitor device. Finally, we will look for any updates to EU approval timelines for SavvyWire (expected in mid-2023) and regulatory filing for SavvyWire approval in Japan.

Revenues above RBCe and consensus estimates. FQ2/23 revenues of $10.8MM (+6% q/q and +33% y/y) were above RBCe ($10.2MM) and consensus ($10.5MM). Total medical revenues were $9.9MM (+8% q/q; +40% y/y), including FFR and dPR sales of $5.7MM (+23% y/y) ahead of RBCe ($5.4MM). FFR and dPR revenues were led by strong performance in North America (+24% y/ y) with US sales growing at 30% y/y (likely reflecting revenue synergies with SavvyWire launch and benefits from the increase in the US sales force), while EMEA and Asia Pacific (markets served through distributors) recorded growth of 13% y/y despite some headwinds (including FX). Optical medical products revenues (including the supply agreement with Abiomed) were $3.4MM (+43% y/y), above RBCe ($3.2MM). TAVR (SavvyWire) revenues were $0.5MM (+31% q/q) below RBCe ($0.7MM). Industrial revenues were $0.9MM (-12% y/y) came in line with RBCe ($0.9MM).

FQ4 net loss of $3.0MM was better than RBCe ($3.7MM loss) and consensus ($4.4MM loss). Gross margins were ~57%, above RBCe (~56%) and consensus (~54%) but below prior quarter (58%, benefited from some one-time items) led by a favourable product mix, more direct sales and higher volume sales. Operating expenses at $9.3MM (-4% q/q; +44% y/y) were broadly in line with RBCe and consensus (~$9.4MM). Operating expenses have increased y/y as the company has invested in sales and marketing of the SavvyWire product launch along with an increase in R&D due to structural heart and coronary artery projects.

Cash position. OpSens ended FQ2/23 with a cash position of $21.9MM (vs. $17.5MM as of FQ1/23, prior to the bought deal). The company closed a bought deal offering in December for gross proceeds of $11.5MM.

Operational updates. Management noted initial results from SavvyWire commercialization are indicating steady acceptance by physicians and hospitals with premium pricing. The company is now ramping up commercialization of SavvyWire after a controlled market release following FDA approval. The company is seeing some commonality in terms of customers who are using both SavvyWire and OptoWire products. Additionally, OPS is also benefiting from the increased demand in optical sensors for business partnerships.

Conference call at 11:00am ET today. Dial-in details: 1-833-756-0865 or 1-412-317-5754 or via a live webcast (link).