Latest LGB &Co comments31 Jul 2023 15:16
Recent Developments
Last Updated: Weds-26/07/2023
Kromek’s final numbers for the year to April released 24 July showed a materially better H2 performance than implied at the time of the placing (gross margin over 50% vs high 40s, and free cashflow of £1.1m vs broadly neutral). Sales for the year grew 44%, and they have 60% visibility for the broker forecasts of an increase to £21m – which looks modest, given over £8m work in progress at year end and would only be double H2’s level.
We met the management subsequently and were pleased that they anticipate that the medical imaging business, now the only independent supplier of the advanced CZT imaging material, is expected to sign up all of the OEMs without their own in house supply (six each in SPECT and in CT scanning) within the next 2-4 years, as the industry switches to this superior image quality product. Revenues from their unnamed Tier1 OEM (Philips) are expected to start flowing towards the end of this FY, and their existing Spectrum Dynamics contract is expected to bring in c $8m / year over the next five years.
As a reminder, the “unnamed”Tier 1 OEM medical imaging company- which they have previously revealed to to be Philips- has given them a seven year deal to integrate their CZT-based detectors into their OEM scanners. No value was placed on the deal. Brokers finnCap have suggested that this contract could be worth $120-150m over seven years.
The other CZT deal announced this year is a collaboration with the US company Analogic, a 50 year-old business taken private for $1.1bn in 2018 which has a range of medical and security imaging technologies. The deal is intended to develop next-generation CT scanners with improved image quality and reduced radiation emissions. Numbers were not disclosed though their brokers suggested that the scale of the business might be similar to the $58m 7-year contract they have with Spectrum Dynamics.
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