SPINEGUARD Morning Note - 14th April 2023
SPINEGUARD | France - Medtech | |||||||
2022 Annual Results and Q1 2023 revenues | BUY | |||||||
▪ A rebound year in 2022 | Fair value (EUR) | 1.56 | ||||||
▪ | 2023: on all fronts | Price (EUR) | 0.753 | |||||
▪ | Fundamentals unchanged and still undervalued | Upside/down side | +107.2% | |||||
Good sales momentum restored
SpineGuard released its annual results last night. After two financial years disrupted by the pandemic, the number of DSG units sold in 2022 was 5,934 (+15%), generating revenue growth of +27.1% (+17.4% at constant exchange rates), driven by a very good dynamic in Europe and Latin America. The United States also returned to growth, but at a more moderate rate (+9% at constant exchange rates). These figures published in January have already been commented on (see our comment of January 10th).
Logical increase in expenses in view of the actions taken
Having stocks of certain components, SpineGuard was able to limit the increase in the COGS of its medical devices over part of the year. Price increases applied to customers contributed to a significant improvement in the gross margin, which stood at 84.2% (vs 81.9% in 2021). This improvement will certainly be short-lived. Indeed, with the disposal of stocks of parts purchased before the inflation period, the gross margin should be impacted in 2023 as the group will be subject to the various price increases from its suppliers over the full year.
Regarding operating expenses, 2022 saw a return of the teams to the field, leading to a logical increase in commercial expenses, which stood at EUR 3.70m (vs. EUR 2.66m). The group also continued to invest in R&D to reach key stages in certain promising projects. The current operating loss is therefore higher than last year (EUR -1.53m vs. EUR -1.24m).
The company's indebtedness logically weighs on the income statement (financial expenses of EUR 427k) but the management is looking at solutions to reorganize this debt (possible partial reimbursement). A reversal of deferred tax of the American subsidiary also impacts the income statement. The net loss is thus increased to EUR-2.39m (vs EUR-1.72m).
Cash and cash equivalents as at 31/12 amounted to EUR4.2m. With additional financing (BSAR), visibility is at the end of 2024.
Mixed performance in Q1
Alongside the annual results, the company also published its turnover for Q1. It stands at EUR1.27m, up by +12% (+10% at constant exchange rates). Europe performed very well as well as Latin America, with the number of DSG units sold up by 34%. In contrast, US activity was stable (565 units sold in Q1 vs 569 in Q1 2022). This lacklustre performance can be explained in part by a probable stock effect at partner Wishbone, which has honored a minimum of its contractual commitment, but above all to the structuring of the sales team, which needs to be established on a long-term basis (sales representatives working in states far from the subsidiary located in Colorado). New recruitments are underway to strengthen the presence on
Lionel Labourdette, PhD, MBA
lionel@biostrategic-research.com+33 617 965 019
Stock data (2023-04-13)
ISIN | FR0011464452 |
Ticker | ALSGD.PA |
Price (EUR) | 0.753 |
Market capitalisation (EURm) | 27.1 |
Free float (%) est. | 96.1 |
Floating capitalisation (EURm) | 26.0 |
Number of shares (,000) | 35,975 |
Average daily volume (3 m) | 273,117 |
12m performance
2,0 | |||||
1,5 | |||||
1,0 | |||||
0,5 | |||||
0,0 | 14/08/22 | 14/02/23 | |||
14/04/22 | 14/06/22 | 14/10/22 | 14/12/22 | ||
ALSGD | ALSGD rel to CAC Small & Mid 190 |
Change (%) | 1 m | 3 m | 12m |
Absolute | -18.1 | +9.1 | -28.3 |
Rel. to CAC SM190 | -17.8 | +9.4 | -23.9 |
Rel. to Next Biotech | -21.9 | +17.2 | -18.9 |
Financials (31/12)
EURm | 2021 | 2022E | 2023E | 2024E |
Sales | 4.4 | 5.6 | 7.2 | 8.9 |
EBITDA | -1.5 | -0.4 | 0.3 | 1.0 |
EBIT | -1.8 | -0.7 | 0.0 | 0.6 |
Net income | -2.7 | -1.1 | -0.3 | 0.5 |
EPS (EUR) | -0.10 | -0.03 | -0.01 | 0.01 |
Net debt | 4.4 | -1.0 | -1.6 | -2.8 |
Key ratios
2021 | 2022E | 2023E | 2024E | |
EV/Sales | 7.5x | 4.7x | 3.7x | 2.9x |
EV/EBITDA | na | na | na | 32.1x |
EV/EBIT | na | na | na | 57.5x |
PER | na | na | na | 94.6x |
ROIC | na | na | na | 12% |
ROE | na | na | na | 5% |
EV/IC | 7.8x | 6.3x | 6.5x | 6.7x |
Gearing | na | -17% | -24% | -37% |
The issuer and Biostrategic Partners have agreed that Biostrategic Partners will produce and disseminate investment research as a service
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the ground.
Real challenges in 2023
For several months now, the activity of operating theatres has not been disrupted by the pandemic. The priority for 2023 is above all to regain momentum in the United States. The resources allocated should help stabilize the teams and assert a presence in the field to improve visibility and capitalize on the strong interest of doctors at recent conferences.
The year 2022 saw significant progress in the development of new products:
- The DSG Connect offer is gradually being implemented as the number of surgeries passed the 500 mark (version of the PediGuard paired with a tablet for signal visualization, a more ergonomic version than the historical device with a simple sound signal). The learning curve of the first users is used to refine the device and reinforce its attractiveness.
- The robotics project is well underway with recent results on 100% bone breach detection. The company is funding a new thesis with the Sorbonne team to advance the robotic integration work.
- The "smart drill" project is progressing as planned with the design of a drill that is compatible with the various drill machines available on the market (making the device accessible to as many surgeons as possible regardless of their existing equipment). Key features such as an automatic stop system or depth and angle measurement are being developed for the second prototyping.
- The "smart screw" project with US partner Omnia Medical is on schedule. A specific development of DSG technology to guide the surgeon during sacroiliac fusions is also underway.
The only downside is a setback on the dental project. Although progress was made in 2022, the partner Confident ABC seems less responsive and the programme has slowed down. The technical rationale is not in question. Nor are the commercial prospects in question. SpineGuard, still convinced of the potential of this project, wishes to maintain a sustained pace of development and is looking at possible outcomes or evolutions of this partnership in order to quickly bring the first devices to market.
Valuation and rating
The figures published are not really surprising. After the pandemic, the company is recovering its business and needs to invest in the commercial side to return to high growth rates. The commercial momentum in the US is the real issue in our view but an increased presence on the ground should help to regain momentum. We are waiting for the financial report to be published to adjust the cost structures in our model. The fundamentals remain strong and there is interest in new projects. We therefore remain positive on the dossier.
Next communication :H1 revenue on July 12th
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Profit and Loss
As of 31/12 (EURm) | 2017 | 2018 | 2019 | 2020 | 2021 | 2022E | 2023E | 2024E |
Sales | 8.17 | 7.58 | 6.83 | 4.85 | 4.41 | 5.62 | 7.16 | 8.91 |
Change n-1 | 9.5% | -7.3% | -9.9% | -29.0% | -9.2% | 27.6% | 27.4% | 24.4% |
Other revenues | - | - | - | - | - | - | - | - |
Total revenues | 8.17 | 7.58 | 6.83 | 4.85 | 4.41 | 5.62 | 7.16 | 8.91 |
Gross margin | 6.95 | 6.55 | 5.77 | 4.04 | 3.61 | 4.56 | 5.90 | 7.38 |
EBITDA | -2.66 | -0.86 | -0.14 | -1.49 | -1.04 | -0.38 | 0.35 | 0.97 |
Change n-1 | 20% | 68% | 84% | -993% | 30% | 63% | 191% | -178% |
Depreciation & amortisation | 0.31 | 0.26 | 0.30 | 0.35 | 0.31 | 0.33 | 0.34 | 0.35 |
Goodwill | - | - | - | - | - | - | - | - |
EBIT | -2.96 | -1.11 | -0.43 | -1.84 | -1.35 | -0.71 | 0.01 | 0.63 |
Change n-1 | 18% | 63% | 61% | -326% | 27% | 47% | 102% | -4338% |
Net financial income | -1.16 | -1.21 | -0.64 | -0.84 | -0.30 | -0.40 | -0.28 | -0.15 |
Minorities | - | - | - | - | - | - | - | - |
Other | - | - | - | - | - | - | - | - |
Net profit before tax | -4.13 | -2.32 | -1.07 | -2.68 | -1.65 | -1.11 | -0.26 | 0.48 |
Tax | - | -0.02 | 0.39 | -0.04 | -0.08 | - | - | - |
Net in come | -4.13 | -2.33 | -0.69 | -2.72 | -1.72 | -1.11 | -0.26 | 0.48 |
Change n-1 | 1% | 43% | 71% | -296% | 37% | 35% | 77% | 285% |
EPS | -0.72 | -0.34 | -0.05 | -0.12 | -0.06 | -0.04 | -0.01 | 0.02 |
EPS fully diluted | -0.65 | -0.31 | -0.05 | -0.10 | -0.05 | -0.03 | -0.01 | 0.01 |
Gross margin (% of sales) | 85.1% | 86.5% | 84.5% | 83.2% | 81.9% | 81.2% | 82.5% | 82.9% |
EBITDA (% of sales) | NA | NA | NA | NA | NA | NA | 4.9% | 10.9% |
EBIT (% of sales) | NA | NA | NA | NA | NA | NA | 0.2% | 7.1% |
Net margin (% of sales) | NA | NA | NA | NA | NA | NA | NA | 5.4% |
Cash Flow statement
Au 31/12 (MEUR) | 2017 | 2018 | 2019 | 2020 | 2021 | 2022E | 2023E | 2024E |
Net income | -4.13 | -2.33 | -0.69 | -2.72 | -1.72 | -1.11 | -0.26 | 0.48 |
Depreciation and amortisation | 0.31 | 0.26 | 0.30 | 0.35 | 0.31 | 0.33 | 0.34 | 0.35 |
Goodwill | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Change in WCR | 0.26 | -0.08 | 0.27 | 0.64 | -0.09 | 0.14 | 0.46 | 0.40 |
Others | 1.05 | 1.49 | 0.71 | 1.04 | 0.27 | 0.34 | 0.26 | 0.13 |
Cash-flow from operations | -2.51 | -0.67 | 0.60 | -0.68 | -1.23 | -0.30 | 0.80 | 1.36 |
Capex | -0.05 | -0.05 | -0.08 | -0.05 | -0.04 | -0.08 | -0.08 | -0.08 |
Free cash flow | -2.56 | -0.72 | 0.52 | -0.73 | -1.27 | -0.38 | 0.72 | 1.28 |
Acquisitions | - | - | -0.15 | -0.15 | -0.33 | -0.15 | -0.15 | -0.15 |
Divestments | - | - | - | - | - | - | - | - |
Dividends | - | - | - | - | - | - | - | - |
Capital increase | 2.21 | 1.68 | 1.75 | 1.75 | 6.48 | 1.00 | - | - |
Financing (bank and others) | 0.01 | 4.64 | 0.22 | 0.01 | 0.04 | - | - | - |
Others | -0.26 | -5.73 | -1.54 | -0.99 | -0.91 | -1.19 | -1.13 | -1.06 |
Change in cash over the period | -0.61 | -0.13 | 0.80 | -0.12 | 4.01 | -0.72 | -0.56 | 0.07 |
Opening cash position | 1.80 | 1.19 | 1.05 | 2.01 | 2.03 | 6.33 | 5.76 | 5.36 |
Closing cash position | 1.19 | 1.06 | 1.85 | 1.89 | 6.04 | 5.61 | 5.21 | 5.43 |
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Balance sheet
Au 31/12 (MEUR) | 2017 | 2018 | 2019 | 2020 | 2021 | 2022E | 2023E | 2024E |
Fixed assets | 0.14 | 0.12 | 0.63 | 0.50 | 0.37 | 0.30 | 0.21 | 0.12 |
Intangible assets | 0.90 | 0.72 | 0.72 | 0.69 | 0.89 | 0.72 | 0.55 | 0.38 |
Goodwill | 3.08 | 3.08 | 3.08 | 3.08 | 3.08 | 3.08 | 3.08 | 3.08 |
Financial assets | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Inventories | 0.81 | 0.84 | 0.66 | 0.66 | 0.68 | 0.56 | 0.71 | 0.88 |
Account receivables | 1.38 | 1.32 | 0.95 | 0.71 | 0.62 | 0.95 | 1.20 | 1.50 |
Other receivables | 0.54 | 0.59 | 0.55 | 0.67 | 0.57 | 0.51 | 0.65 | 0.83 |
Cash and cash equivalents | 1.19 | 1.06 | 1.40 | 1.22 | 5.21 | 4.64 | 4.23 | 4.45 |
Prepaid expenses | - | - | - | - | - | - | - | - |
Other non-current assets | 0.12 | 0.13 | 0.50 | 0.51 | 0.48 | 0.48 | 0.48 | 0.48 |
Total assets | 8.15 | 7.86 | 8.50 | 8.06 | 11.90 | 11.23 | 11.12 | 11.73 |
Equity | -0.21 | -0.50 | 0.59 | -0.01 | 5.06 | 5.30 | 5.65 | 6.64 |
Others | - | - | - | - | - | - | - | - |
Provisions | 0.05 | 0.05 | 0.05 | 0.05 | 0.05 | 0.05 | 0.05 | 0.05 |
Financial debt | 6.23 | 6.07 | 6.08 | 5.64 | 4.47 | 3.65 | 2.66 | 1.67 |
Account payables | 1.04 | 1.16 | 1.04 | 1.34 | 1.00 | 0.71 | 0.91 | 1.13 |
Other debts | 0.98 | 0.81 | 0.62 | 0.88 | 1.00 | 1.21 | 1.54 | 1.92 |
Deferred income and other liabilities | 0.06 | 0.26 | 0.11 | 0.15 | 0.32 | 0.32 | 0.32 | 0.32 |
Total liabilities | 8.15 | 7.86 | 8.50 | 8.06 | 11.90 | 11.23 | 11.12 | 11.73 |
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IMPORTANT INFORMATION
Responsibility for this publication
This publication has been prepared under the only responsibility of BioStrategic Partners.
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Reliability of information
Every precaution has been taken by Biostrategic Partners to ensure that the information contained in this publication come from sources considered reliable. Unless otherwise specifically indicated in this publication. all opinions. estimations and forecasts given. are those of Biostrategic Partners at that date and may be revised without prior notice.
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Neither Biostrategic Partners nor SwissLife Banque Privée shall be liable for any damage that may result from the incorrect or incomplete nature of this publication. Neither Biostrategic Partners or SwissLife Banque Privée is not liable for any investment decisions. regardless of their nature. made by the users of this publication on its basis.
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Investors should note that any income from financial instruments can fluctuate and that prices can fall as well as rise. Past and simulated performance does not guarantee future performance.
Detection of potential conflicts of interest
Company | Potential conflicts of interest with Biostrategic Partners | ||||||||
SPINEGUARD | a) | b) | c) | d) | e) | f) | g) | ||
No | No | No | No | Yes | No | No | |||
The analyst has a familial relationship with a founding partner of IPF Partners who holds SpineGuard' bonds with warrants attached
- Biostrategic Partners has participated or is participating. either as lead manager or member of an investment or guarantee syndicate for a financial transaction. either as advisor of a public offering over the last twelve months or as Listing Sponsor of the company.
- Biostrategic Partners holds an investment stake greater than or equal to 5% in the capital of the company under analysis.
- The company who is the subject of this analysis holds an investment stake greater than or equal to 5% in Biostrategic Partners.
- Biostrategic Partners and/or one of its affiliates is/are liquidity provider(s) or market maker(s) for (one of) the company's financial instrument/s.
- Biostrategic Partners has agreed with the company to provide a service of production and distribution of analysis regarding the company.
- Biostrategic Partners has modified its conclusions after notifying the company before its distribution of this analysis.
- The person/s responsible for the analysis. a director or a member of the Board of Directors of Biostrategic Partners is a manager. director or member of the Board of Directors of the company.
Company | Potential conflicts of interest with SwissLifeBanquePrivée | ||||||||
SPINEGUARD | a) | b) | c) | d) | e) | f) | g) | ||
Yes | No | No | Yes | No | No | No | |||
- SwissLife Banque Privée has participated or is participating. either as lead manager or member of an investment or guarantee syndicate for a financial transaction. either as advisor of a public offering over the last twelve months or as Listing Sponsor of the company.
- SwissLife Banque Privée holds an investment stake greater than or equal to 5% in the capital of the company under analysis.
- The company who is the subject of this analysis holds an investment stake greater than or equal to 5% in SwissLife Banque Privée.
- SwissLife Banque Privée and/or one of its affiliates is/are liquidity provider(s) or market maker(s) for (one of) the company's financial instrument/s.
- SwissLife Banque Privée has agreed with the company to provide a service of production and distribution of analysis regarding the company.
- SwissLife Banque Privée has modified its conclusions after notifying the company before its distribution of this analysis.
- The person/s responsible for the analysis. a director or a member of the Board of Directors of SwissLife Banque Privée is a manager. director or member of the Board of Directors of the company.
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SpineGuard SA published this content on 17 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 April 2023 15:57:10 UTC.
