some news29 Jan 2010 08:08
Blood monitoring specialist LiDCO, whose shares are up 106% since a recommendation here at 8.75p in April, says revenues for the half to July will be ‘significantly higher’ than the same period last year.
Despite a tougher environment for sales of its monitors – house broker FinnCap notes the company’s three global competitors are reporting that pressure on hospital capital spend is impacting their sales – LiDCO's distribution network across 34 countries has enabled it to grow market share and sell record numbers of the disposable element of its technology. July’s US distribution deal with Aspect Medical, involving a $1.15m (£0.7m) upfront license fee, is underway and is expected to result in faster adoption of the company's LiDCOrapid monitors.
Since Aspect is buying monitors from LiDCO at a reduced price and giving them to hospitals for free, full year profit margins will be lower and losses wider than previously forecast, though the loss will still be smaller than last year’s £1.8m before tax. However, a much larger installed base of rapid monitors in hospitals will in turn increase the recurring revenues from sales of disposables.
With this much wider installed base of monitors, LiDCO chief executive Terry O'Brien says the company is 'on track' to deliver a maiden profit for the subsequent year. ‘The agreement with Aspect is key to significantly increasing our share of the US market,’ he says, ‘and the foundations are now in place for future growth and increasing recurring revenues.’
House broker FinnCap has increased its forecast loss for this year from £413,000 to £1.1m and cut its profit predictions for the year after from £1.1m to £943,000. However, with debts paid off after May’s £3.1m fundraising and with strong sales momentum, LiDCO shares look an increasingly good long-term bet. Hold if you have them, buy and lock away if you don't.
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