Acarix — Sales consistent in H1

Acarix — Sales consistent in H1

Acarix’s H1 results show steady sales with eight systems and 800 disposable patches sold to June. These generated H1 revenues of SEK465k with gross profit of SEK349k, a 75% average margin. We now expect sales of just over SEK1m for the full year 2018 before hoped-for German reimbursement in 2019. A new commercial officer, Per Persson, has joined. We do not expect a US launch before 2022 and we assume a US trial starts in 2019. The indicative value remains SEK448m (SEK19.46/share). Additional clinical studies are ongoing.

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Acarix

Sales consistent in H1

Interim results

Healthcare equipment & services

17 September 2018

Price

SEK7.02

Market cap

SEK161m

Cash (SEKm) at 30 June 2018

85.2

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

17.4

(12.3)

(64.4)

Rel (local)

15.1

(15.2)

(66.4)

52-week high/low

SEK21.0

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

Q3 results

14 November 2018

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 H1 results show steady sales with eight systems and 800 disposable patches sold to June. These generated H1 revenues of SEK465k with gross profit of SEK349k, a 75% average margin. We now expect sales of just over SEK1m for the full year 2018 before hoped-for German reimbursement in 2019. A new commercial officer, Per Persson, has joined. We do not expect a US launch before 2022 and we assume a US trial starts in 2019. The indicative value remains SEK448m (SEK19.46/share). Additional clinical studies are ongoing.

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

1.08

(33.70)

(1.46)

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.

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.

Q2 showed strong margins but lower patch sales

Acarix sells CADScor devices and single-use patches. Acarix now sells its products in Germany, Austria, Demark and Sweden and aims to expand into other European countries. In Q2 there were four units sold, making eight in H1. Patch sales in Q2 were 320 (vs 420 sold in Q118) making 800 sales in H1. The Q2 margin was higher, with SEK349k gross profit, and a 75% H1 margin. We have fine-tuned our 2018 sales forecast to about SEK1.1m (formerly SEK1.3m) due to our reduced expectations of patch sales in H2. Gross margin is harder to forecast and we nudge down our gross profit estimate from SEK977k to SEK831k. However, it is still only a year into the initial market adoption phase. Higher sales are possible from 2019 if German public reimbursement is gained. A new, experienced chief commercial officer, Per Persson, started in July and we anticipate sales strategy changes.

Valuation: Remains SEK19.46 per share

Our valuation assumes sales develop more strongly from 2019 on German reimbursement; management has not issued any forward guidance. We assume a US trial, needed to support US sales forecasts from 2022, starts in 2019 with 2018 preparatory work. Using a discounted cash flow model, a 12.5% discount rate and a terminal valuation, the indicative value is unchanged at SEK448m as the adjustments net out; this implies a fair value of SEK19.46. The marginal change in 2018 forecast unit sales (Exhibit 1) does not affect this.

Exhibit 1: Financial summary

SEK 000s

2016

2017

2018e

2019e

Year end 31 Dec

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

-

638

1,081

3,816

Cost of Sales

-

(208)

(250)

(1,164)

Gross Profit

-

430

831

2,652

EBITDA

 

 

(26,790)

(29,211)

(31,393)

(57,348)

Operating Profit (before amort. and except.)

 

(26,790)

(30,743)

(33,793)

(59,748)

Intangible Amortisation

-

(1,261)

(2,400)

(2,400)

Exceptionals

-

-

-

-

Operating Profit

(26,790)

(32,004)

(36,193)

(62,148)

Other

(24,250)

-

-

-

Net Interest

(15)

7

114

(50)

Profit Before Tax (norm)

 

 

(26,805)

(30,736)

(33,679)

(59,798)

Profit Before Tax (FRS 3)

 

 

(51,055)

(30,736)

(33,679)

(59,798)

Tax

2,815

960

-

-

Profit After Tax (norm)

(23,990)

(29,776)

(33,679)

(59,798)

Profit After Tax (FRS 3)

(48,240)

(29,776)

(33,679)

(59,798)

Average Number of Shares Outstanding (m)

13.1

23.0

23.0

23.0

EPS - normalised (ore)

 

 

(183.01)

(129.31)

(146.26)

(259.68)

EPS - FRS 3 (ore)

 

 

(368.00)

(129.31)

(146.26)

(259.68)

Dividend per share (ore)

0.0

0.0

0.0

0.0

Gross Margin (%)

N/A

67.4

76.9

69.5

EBITDA Margin (%)

N/A

(4,581)

(2,904)

(1,503)

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

N/A

(4,822)

(3,127)

(1,566)

BALANCE SHEET

Fixed Assets

 

 

23,123

25,191

22,791

20,391

Intangible Assets

18,179

20,351

17,951

15,551

Tangible Assets

0

0

0

0

Acquired rights

4,944

4,840

4,840

4,840

Current Assets

 

 

150,163

108,865

77,585

20,187

Stocks

0

1,945

1,945

1,945

Debtors

1,643

2,468

2,468

2,468

Cash

145,895

103,457

73,172

15,774

Other

2,625

995

0

0

Current Liabilities

 

 

(17,771)

(5,118)

(5,118)

(5,118)

Creditors

(4,404)

(1,464)

(1,464)

(1,464)

Short term borrowings

0

0

0

0

Short term leases

0

0

0

0

Other

(13,365)

(3,653)

(3,653)

(3,653)

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

95,258

35,460

CASH FLOW

Operating Cash Flow

 

 

(11,856)

(41,506)

(30,398)

(57,348)

Net Interest

(15)

7

114

(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)

(30,284)

(57,398)

Opening net debt/(cash)

 

 

2,121

(145,895)

(103,457)

(73,173)

HP finance leases initiated

-

-

-

-

Other

(620)

(118)

-

-

Closing net debt/(cash)

 

 

(145,895)

(103,457)

(73,173)

(15,775)

Source: Acarix reports, Edison Investment Research


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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

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Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Acarix and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. 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.

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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