No profit for Osprey Medical Inc but it’s primed for growth

Shares in medical device company, Osprey Medical Inc (ASX: OSP) opened up 1.6% to 30c per share today despite the company posting a net loss of $14.3 million on the release of its full year results for the year ended December 31 2017.

Osprey, with US-based operations, is focused on protecting patients from the harmful effects of contrast dye used during angiographic imaging, especially those with poor kidney function.

The full year net loss of $14.3 million has increased 22% from the prior corresponding period when a net loss of US$11.7 million was logged.

But Osprey has long caught the eye of growth investors, reporting full year sales revenue of US$1.6 million, up 178% from FY16 revenue of US$0.6 million, with proceeds of A$32.5 million from an oversubscribed capital raising completed in August 2017 and a 181% year-on-year growth in unit sales.

Operationally, Osprey announced its thirteenth consecutive quarter of sales growth for the final quarter of 2017, with strong lead indicators for future growth and 98 hospitals purchasing their DyeVert or DyeVert Plus products, with 62 hospitals in the evaluation-to-purchase phase.

Osprey Medical has seen significant share price volatility in the last 12 months, sliding from a January 19 high of 41c per share to 29c per share at month’s end.

It is difficult to establish whether the loss-making Osprey has efficiently used shareholders’ funds over the last year, but its higher-than-market average revenue increase is one of several figures heading in the right direction.

The company’s debt-free balance sheet is also a bonus, with analysts expecting high earnings growth over the next few years for a small cap which appears to be positioned for growth.

Osprey is accelerating its product commercialisation, with a focus on podium presentations at leading industry events across the U.S. to strengthen its commercialisation strategy and it plans to have 35 sales force personnel to open new hospital accounts by the end of the 2018 calendar year.

Osprey’s trading was impacted by U.S. hurricanes Harvey and Irma during the reporting period, but Osprey CEO Mike McCormick said the company returned to normal quickly afterwards with continued strong growth in unaffected territories.

In 2018 Osprey plan to initiate commercial pilot activities in several countries across Europe, with a European roll out planned for the 2019 calendar year.

A focus on physician awareness of dye reduction and monitoring will also underpin its market development strategy, with Osprey announcing proven customer adoption metrics in their December investor presentation and a 144% increase in new hospitals purchasing its products year on year.

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Motley Fool contributor Carin Pickworth 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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