Given debt should be well and truly paid down by then and the company has significant NOLs, EBIT should pretty much convert entirely to FCF, absent any large capex requirements. I can see the company doing ~$25-30M in FCFs by FY27 quite easily if they continue along current growth trajectory. Clearly, a lot has to happen b/w now and then and I am more concerned with near-term milestones but the potential for that is most certainly there.
Enjoyed this write-up. Question re my basic match. E.g. Q4, Revenue breakdown was ~$4.75M from machines sold (135 x $35,000) and the remaining was from applicators (~$6M). With $100 revenue/applicator (assuming no discounting) and ~1,000 machines active (on avg throughout the quarter), that's only ~65 applicators/machine for the quarter, not even 1 procedure/applicator per day in the quarter for each machine. Is my math correct? If so, why such low utilization?
Thanks for the kind words and for the question Robert.
In Q4, Applicator sales were $5.9M and Systems sales were $4.4M.
We also know that in reality the company still does some discounting, so it is a false premise to assume zero discounting.
We can play out that exercise but I believe it is somewhat misleading due to the vast array of different client use cases for UltraMIST.
For example, if you consider the UltraMIST usage patterns of a single physician's office versus a post acute facility:
In the skilled nursing home with a theoretical 80 beds there is little reason the nurses couldn't do 2-3 procedures per hour, or at least be very high ticket users of UltraMIST.
On the other hand, a single physicians' office will clearly have a lot less usage and may be lucky to achieve 1 procedure per day.
Most of Sanuwave's early UltraMIST customers haven't been these larger scale clients (yet, we've still seen very impressive growth).
However, as we've heard on the most recent earnings calls, the company is now focussing on and dealing a lot more with these prospective higher volume customers such that they land these more 'consultative sales.'
I'm not too concerned with the lack of average usage on a per day basis due to the massive amount of post-acute care facilities that exist in the U.S which remain completely untapped.
As Sanuwave continues to land more and more of these larger clients, we should start to see applicator sales tick up in an asymmetric fashion when comparing YoY results and it's something I will be continuing to monitor as the thesis pans out.
Thanks for the write-up. What fcf do you expect at the end of 2027? Around 20 million usd? I’m trying to come up with a reasonable valuation myself.
Given debt should be well and truly paid down by then and the company has significant NOLs, EBIT should pretty much convert entirely to FCF, absent any large capex requirements. I can see the company doing ~$25-30M in FCFs by FY27 quite easily if they continue along current growth trajectory. Clearly, a lot has to happen b/w now and then and I am more concerned with near-term milestones but the potential for that is most certainly there.
Enjoyed this write-up. Question re my basic match. E.g. Q4, Revenue breakdown was ~$4.75M from machines sold (135 x $35,000) and the remaining was from applicators (~$6M). With $100 revenue/applicator (assuming no discounting) and ~1,000 machines active (on avg throughout the quarter), that's only ~65 applicators/machine for the quarter, not even 1 procedure/applicator per day in the quarter for each machine. Is my math correct? If so, why such low utilization?
Thanks for the kind words and for the question Robert.
In Q4, Applicator sales were $5.9M and Systems sales were $4.4M.
We also know that in reality the company still does some discounting, so it is a false premise to assume zero discounting.
We can play out that exercise but I believe it is somewhat misleading due to the vast array of different client use cases for UltraMIST.
For example, if you consider the UltraMIST usage patterns of a single physician's office versus a post acute facility:
In the skilled nursing home with a theoretical 80 beds there is little reason the nurses couldn't do 2-3 procedures per hour, or at least be very high ticket users of UltraMIST.
On the other hand, a single physicians' office will clearly have a lot less usage and may be lucky to achieve 1 procedure per day.
Most of Sanuwave's early UltraMIST customers haven't been these larger scale clients (yet, we've still seen very impressive growth).
However, as we've heard on the most recent earnings calls, the company is now focussing on and dealing a lot more with these prospective higher volume customers such that they land these more 'consultative sales.'
I'm not too concerned with the lack of average usage on a per day basis due to the massive amount of post-acute care facilities that exist in the U.S which remain completely untapped.
As Sanuwave continues to land more and more of these larger clients, we should start to see applicator sales tick up in an asymmetric fashion when comparing YoY results and it's something I will be continuing to monitor as the thesis pans out.
Really appreciate the question!
You mentioned the tech was invented and presumably patented 25 years ago. Do they have any patents which are still in effect?
Yes they do. Sanuwave hold more than 140 issued or pending patents worldwide that cover various aspects of the company’s technology.