SomnoMed hits patient milestone
Recommendation
The share price of SomnoMed jumped more than 4% yesterday after announcing its mouthguards to treat sleep apnoea are now being used by more than 200,000 patients. Some 50,000 were fitted over the past 12 months – double what the company sold just three years ago.
This follows an excellent full-year result where revenue rose 40% to $26m thanks to strong sales in Europe. The company now operates in 26 countries and has a distribution network of more than 4,000 dentists.
In an accompanying presentation, management noted that a significant driver of the company's rapid growth has been higher levels of patient comfort compared to continuous positive airway pressure (CPAP) treatments from the likes of ResMed and Fisher & Paykel Healthcare. The small 'oral appliances' are also less costly and more durable than CPAP.
Chairman Dr. Peter Neustadt said: 'Whilst 200,000 SomnoDent devices fitted to patients is an important milestone, we believe it is only the beginning of our long-term growth. We expect this sales trend to continue with sales growth driven by a growing acceptance among medical specialists, increased levels of reimbursement by insurers and expansion into new markets.'
Management expects 'annual growth rates of 20% to 30%' over the next few years; however, our expectations are at the lower end of that range. SomnoMed's share price has risen 42% since SomnoMed: Result 2014 from 25 Aug 14 (Hold – $1.88) and is up 101% since we upgraded the stock nine months ago in SomnoMed: A future mini-ResMed? (Speculative Buy – $1.33). HOLD