Acarix — Sales volume growth in Q3

Acarix — Sales volume growth in Q3

Acarix’s Q3 results showed a marked upturn in the number of systems sold: seven in Q3 vs eight in H1. Disposable patch sales in Q3 were 680 vs 800 in H1. These sales generated Q3 revenues of SEK351k. We have adjusted our sales forecast upwards to SEK1.3m for the full year 2018. Feedback from German and Swedish customers has been very positive. German public reimbursement might occur in 2019. We do not expect a US launch before 2022 and we assume a US trial starts in 2019 to enable this. Per Persson, formerly commercial officer, has been appointed as CEO. The indicative value remains SEK448m (SEK19.46/share).

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Written by

Acarix

Sales volume growth in Q3

Q318 update

Healthcare equipment & services

28 November 2018

Price

SEK7.00

Market cap

SEK161m

Cash (SEKm) at 30 September 2018

73.9

Shares in issue

23.0m

Free float

29.7%

Code

ACARIX

Primary exchange

Nasdaq First North Premier

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(5.2)

18.2

(50.9)

Rel (local)

(5.8)

32.0

(48.5)

52-week high/low

SEK15.2

SEK5.4

Business description

Acarix, a Swedish company with Danish origins, has developed the CE-marked CADScor to help doctors rule out stable coronary artery disease. About half of patients can to be ruled out from further expensive testing. Full EU sales could start from 2019, with US sales possible from 2022.

Next events

2018 results

20 February 2019

Analyst

Dr John Savin MBA

+44 (0)20 3077 5735

Acarix is a research client of Edison Investment Research Limited

Acarix’s Q3 results showed a marked upturn in the number of systems sold: seven in Q3 vs eight in H1. Disposable patch sales in Q3 were 680 vs 800 in H1. These sales generated Q3 revenues of SEK351k. We have adjusted our sales forecast upwards to SEK1.3m for the full year 2018. Feedback from German and Swedish customers has been very positive. German public reimbursement might occur in 2019. We do not expect a US launch before 2022 and we assume a US trial starts in 2019 to enable this. Per Persson, formerly commercial officer, has been appointed as CEO. The indicative value remains SEK448m (SEK19.46/share).

Year end

Revenue (SEKm)

PBT*
(SEKm)

EPS*
(SEK)

DPS
(SEK)

P/E
(x)

Yield
(%)

12/16

0.0

(26.81)

(1.83)

0.0

N/A

N/A

12/17

0.64

(30.74)

(1.29)

0.0

N/A

N/A

12/18e

1.29

(42.50)

(1.85)

0.0

N/A

N/A

12/19e

3.82

(59.80)

(2.60)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. The 2016 IPO increased shares in issue.

Q3 strong volume CADScor sales

At this point in sales development, getting CADScor units into hospitals and clinics is crucial because a large installed base should eventually result in steady, high-value disposable patch sales. The sale of seven units in Q3 vs eight in H1 therefore marks a good upturn. Two more key Swedish hospitals have systems: one of them, Kristianstad Hospital, evaluated CADScor and will start using the system clinically during Q4. The Q3 gross margin was 64% vs 75% in H1. We have raised our 2018 sales forecast to SEK1.3m (formerly SEK1.1m). Higher sales are possible from 2019 if German public reimbursement is gained. Per Persson, who joined in July bringing significant commercial experience in diagnostics, has become CEO.

CAD-score: A clear indicator of low coronary risk

Acarix’s diagnostic device (CADScor) is used to help doctors rule out stable coronary artery disease (CAD). It uses a microphone linked to a self-contained processing module to record a patient’s diastolic heart sounds. There is a single-use consumable patch. The CADScor V3 algorithm calculates a CAD-score rating. A negative test result (no CAD) was correct in 96% of tested patients (Winther et al., 2017). The Dan-NICAD II study (NCT03481712) is enrolling 2,000 patients with suspected stable CAD to add data and evaluate the test in patients aged 30–39. The observational Seismo study with 200 patients (NCT03656354) explores the use of CADScor for the early diagnosis of heart failure.

Valuation: Remains SEK19.46 per share

Our valuation assumes sales develop more strongly from 2019 on German reimbursement. We assume a US trial, needed to support US sales from 2022, starts in 2019. Using a discounted cash flow model, a 12.5% discount rate and a terminal valuation, the indicative value is unchanged at SEK448m; this implies a fair value of SEK19.46 per share. The marginal change in 2018 forecast unit sales does not affect this.

Exhibit 1: Financial summary

SEK000s

2016

2017

2018e

2019e

Year end 31 Dec

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

-

638

1,285

3,816

Cost of Sales

-

(208)

(320)

(1,164)

Gross Profit

-

430

965

2,652

EBITDA

 

 

(26,790)

(29,211)

(40,240)

(57,348)

Operating Profit (before amort. and except.)

 

(26,790)

(30,743)

(42,640)

(59,748)

Intangible Amortisation

-

(1,261)

(2,400)

(2,400)

Exceptionals

-

-

-

-

Operating Profit

(26,790)

(32,004)

(45,040)

(62,148)

Other

(24,250)

-

-

-

Net Interest

(15)

7

144

(50)

Profit Before Tax (norm)

 

 

(26,805)

(30,736)

(42,497)

(59,798)

Profit Before Tax (FRS 3)

 

 

(51,055)

(30,736)

(42,497)

(59,798)

Tax

2,815

960

-

-

Profit After Tax (norm)

(23,990)

(29,776)

(42,497)

(59,798)

Profit After Tax (FRS 3)

(48,240)

(29,776)

(42,497)

(59,798)

 

Average Number of Shares Outstanding (m)

13.1

23.0

23.0

23.0

EPS - normalised (ore)

 

 

(183.01)

(129.31)

(184.55)

(259.68)

EPS - FRS 3 (ore)

 

 

(368.00)

(129.31)

(184.55)

(259.68)

Dividend per share (ore)

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

67.4

75.1

69.5

EBITDA Margin (%)

N/A

(4,581)

(3,132)

(1,503)

Operating Margin (before GW and except.) (%)

N/A

(4,822)

(3,318)

(1,566)

BALANCE SHEET

Fixed Assets

 

 

23,123

25,191

24,309

21,909

Intangible Assets

18,179

20,351

19,454

17,054

Tangible Assets

0

0

0

0

Acquired rights

4,944

4,840

4,855

4,855

Current Assets

 

 

150,163

108,865

69,346

10,910

Stocks

0

1,945

2,539

2,539

Debtors

1,643

2,468

2,918

2,918

Cash

145,895

103,457

62,851

5,453

Other

2,625

995

1,038

0

Current Liabilities

 

 

(17,771)

(5,118)

(4,694)

(4,694)

Creditors

(4,404)

(1,464)

(1,414)

(1,414)

Short term borrowings

0

0

0

0

Short term leases

0

0

0

0

Other

(13,365)

(3,653)

(3,279)

(3,279)

Long Term Liabilities

 

 

0

0

0

0

Long term borrowings

0

0

0

0

Long term leases

0

0

0

0

Other long term liabilities

0

0

0

0

Net Assets

 

 

155,515

128,939

88,961

28,125

CASH FLOW

Operating Cash Flow

 

 

(11,856)

(41,506)

(40,749)

(57,348)

Net Interest

(15)

7

144

(50)

Tax

2,815

960

0

0

Capex

(12,201)

(2,984)

0

0

Acquisitions/disposals

0

0

0

0

Financing

176,698

1,203

0

0

Dividends

0

0

0

0

Other

(11,046)

0

0

0

Net Cash Flow

144,395

(42,320)

(40,606)

(57,398)

Opening net debt/(cash)

 

 

2,121

(145,895)

(103,457)

(62,851)

HP finance leases initiated

-

-

-

-

Other

(620)

(118)

-

-

Closing net debt/(cash)

 

 

(145,895)

(103,457)

(62,851)

(5,453)

Source: Acarix reports, Edison Investment Research


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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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London +44 (0)20 3077 5700

280 High Holborn

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United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

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NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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This report has been commissioned by Acarix and prepared and issued by Edison, in consideration of a fee payable by Acarix. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the Edison analyst at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2018 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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New Zealand

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United Kingdom

Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document (nor will such persons be able to purchase shares in the placing).

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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Research: TMT

Kape Technologies — Integration update

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