Osprey Medical Inc. (ASX: OSP) has a mission to improve outcomes in chronic kidney disease patients by reducing contrast-induced acute kidney injury and lowering hospital costs. It is a commercial stage company under the health care sector.
The company today, on 16th April 2019, reported unit growth for its dye saving technologies for the 18th consecutive quarter. In the first quarter of 2019, the DyeVert™ product range, which includes DyeVert, DyeVert Plus and DyeVert Plus EZ unit sales grew to 2,478 units, an increase of 73% over the prior corresponding period and up 16% over the fourth quarter of 2018. The DyeVert Plus EZ system continues to show strong acceptance by the clinical community since its launch in November 2018 in the US, with approximately 59% of Osprey’s DyeVert unit sales currently attributable to this simple yet innovative product improvement.
Quarterly sales revenue of the company was US$826k in the first quarter of 2019, an increase of 56% over the prior corresponding period (pcp). Total revenues reflect the payment of administrative fees to the GPOs of up to 5% of the company’s relevant revenue. Revenue growth during the quarter was outpaced by unit sales growth, reflecting the cycling effect of a lower percentage of Group Purchasing Organisation (GPO)-based sales in the pcp and mix effects attributable to DyeTect/Syringe sales. During the quarter, the average selling price of the DyeVert system in the US remained stable at US$355, excluding administrative fees to GPOs.
During the quarter, Osprey recorded cash receipts of US$854k, up by 70% over the pcp. Net cash used in operating activities stood at US$5.1 million, an increase of 15% versus the pcp and 33% versus the fourth quarter of 2018, reflecting the payment of staff bonuses for the 2018 financial year during the quarter and increased product manufacturing required to meet expected future demand.
The temporary increase in net operating cash outflow as compared to the December quarter is expected to improve in subsequent quarters as the revenues continue to increase and the growth in operating expenditure moderates. Osprey has a strong balance sheet with no debt and cash of US$20.1 million (A$28.3 million) as of 31 March 2019.
The company continues to focus on its strategy of driving sales through contractual relationships with US multihospital systems referred to as GPOs. In December 2018, the company announced that it had signed a GPO contract with Premier, one of the largest hospital groups in the US, giving Osprey access to Premier’s network of 4,000 hospitals. Osprey currently has four GPO contracts, which represent 50% US market coverage of addressable chronic kidney disease patients undergoing a coronary angiogram.
During the quarter, unit sales directly attributable to newly established GPO accounts was 1,374 units, up by 158% on the prior corresponding period and represents 62% of Osprey’s US unit sales mix versus 40% in the pcp. Continued growth from new and existing hospital accounts associated with a GPO contract throughout 2019 and beyond is anticipated by the company.
The discussion of the company with additional GPOs is progressing well and accordingly, the company maintains its view that additional GPO contracts will be signed during FY2019 to further expand coverage for DyeVert across the US.
On the price-performance front, the stock of Osprey Medical is trading at $0.155, an increase of 3.33% during the day’s trade with a market capitalisation of ~$64.77 million (On 16 April 2019, AEST 1:45 PM). The stock has generated a YTD return of 36.36%, with returns of -26.45%, 25.0% and 42.86% over the past six months, three months and one-month period, respectively. Its 52-week high price stands at $0.269, and 52-week low price stands at $0.085, with an average trading volume of ~224,339.