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Research Note - Opsens Inc. (OPS:TSX|BUY $4.00 TARGET) - Missing Q4 Expectations , Solid Ramp For 2023

This morning Opsens Inc. announced Q4/22 financial results that missed our expectations. Revenues shrunk QoQ on a softer performance from Japan, but strength in US sales remained robust. Gross margin came in softer than expected based on end-of-life production for the OptoWire 2, supply chain and ramp up of SavyWire. On the conference call management guided for gross margins improvement into 2023 as the company focuses on direct sales and Savywire begins to penetrate market share. OPS has doubled their salesforce and has the team trained and ready for the field. OPS is guiding for improving revenue ramp into 2023, with most of the effect felt towards the latter half of 2023.

 On the conference call OPS made clear that there is increasing demand from emerging markets, and a continued demand from the US. The TAVR market continues to have strong forecasts of between $8B-$10B by 2027. Looking ahead we are optimistic into 2023. We are looking forward to sequential QoQ growth heading into Q1/23 to Q4/23. Although operating expenses are expected to swell into 2023, OPS suggested the increasing expenses would be mostly absorbed by higher margins as the Savywire penetrates the market.

Additional highlights from the quarter include:

  • Revenue of $9.1M (-10.2% QoQ, +12.2% YoY) vs. our estimate of $10.0M. Medical sales came in at $7.8M, industrial sales came in at $1.0M

  • Gross profit of $4.4M (48.3% margin) vs. our estimate of $5.2M (52% margin) and $5.1M (52% margin) reported in Q3/22

  • EBITDA of -$3.4M vs. our expectation of -$1.3M and -$2.1M reported last quarter. The miss was driven by the lower gross margin and ramping SG&A/R&D expenses for the SavvyWire

  • The Company ended the quarter with $23.8M in cash

Clinical cases in Europe: On October 26th 2022, OPS announced the successful completion of the first cases in a clinical study, named SAFE-TAVI, studying SavvyWire in Europe . Dr. Regueiro from Hospital Clínic de Barcelona, Spain , conducted the procedures as one of the primary investigators of the study. This study is part of the OpSens pre-CE mark clinical strategy that will lead to the commercialization of SavvyWire in Europe.

20221123 - M Partners - OPS - Q4 Results
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