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Medical Developments International Ltd crashes 5.4% on report

The Medical Developments International Ltd (ASX: MVP) share price has fallen by 5.4% after investors reacted to its reported.

Here are some of the highlights for the half-year to 31 December 2017 compared to the prior corresponding period:

  • Revenue decreased by 2.6% to $8 million
  • Gross margin increased to 72% from 69%
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 26% to $872 million
  • Net profit after tax (NPAT) decreased by 69% to $127 million
  • Dividend maintained at 2 cents per share

The company said that the building blocks are now in place for sales growth as we commence sales into all 22 new European countries, Mexico, Canada, Saudi Arabia and Hong Kong. It is also confident about growing its respiratory device sales in the USA, Europe and elsewhere.

Medical Developments pointed to 115% growth of respiratory devices in the USA and sales growth of 21% in the UK and Europe as signs of the company’s progress.

It has made ‘good progress’ with its development of the ‘Breath-A-Tech’ anti-static range of devices and the CSIRO project is ahead of expectations with small scale production for two drugs.

Outlook

Over the next few years the global market approvals and indications are expected to deliver strong growth. It says that it will continue its global expansion and in-particular build the USA business. It expects to deliver new partnership deals and expand the product offering, which should grow sales significantly.

The company believes that Penthrox could be approved by the Food Drug Administration for sale in the USA during 2020. It is in talks with several interested parties to sell Penthrox in the USA.

Foolish takeaway

It’s no surprise to me that the share price fell today, as even after the drop it’s trading at 122x FY18’s estimated earnings and it will have to have a very good second half to deliver on those expected earnings. It may have an exciting long-term future, but it’s hard to justify today’s value when the profit and revenue went backwards in this report.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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