ADMA Biologics (ADMA)
I decided to look at ADMA based on it popping up on my screener. I found that some concerns for it were a new CFO and a new auditor because the old one resigned all within a 6-month period.
Brad Tade (new CFO) was promoted from the Vice President of Financial Operations. He has experience 25+ years. CohnReznick (old auditor) resigned but still completed the final earnings report and nothing of note was in the final earnings report. They hired KPMG (big 4 accounting firm) and that might have been done with the assistance of their Brian Lenz (old CFO) acting as a consultant, who started his career at KPMG. CohnReznick worked with ADMA for 17 years and helped them go public. CohnReznick is a much smaller accounting firm than KPMG and may have struggled to audit the growing size of ADMA. Points that lead me to this indication is that ADMA went with a larger firm and that CohnReznick had no disagreements on the reports they filed with ADMA.
Financial Performance Highlights
3Q 2024 Revenue: 119.8 Million, 78% gain YoY, 11.7% gain QoQ
3Q 2024 Gross Profit Margin: 49.8%
Net Income: 35.9 Million, 1300% gain YoY
Free Cash Flow: 24 Million, 114% gain YoY
Products:
BIVIGAM: Is an Immune Globulin Intravenous (Human), 10% Liquid, indicated for the treatment of patients with primary humoral immunodeficiency (PI).
ASCENIV: Is a 10% immune globulin liquid for intravenous injection, indicated for the treatment of primary humoral immunodeficiency (PI) in adults and adolescents (12 to 17 years of age). Contains ≤ 200 micrograms of IgA per milliliter. Designed for people with issues with IgA, so this is a last resort medicine for those that are not able to take medicine like BIVIGAM.
Nabi-HB: Hepatitis B Immune Globulin. It is used for passive immunization in specific at-risk populations to prevent HBV infection.
TAM:
The company sees a TAM at $20B by 2030. They expect to hit a revenue of $1B by 2030. ADMA has 2% of the market share by unit but by revenue they have 3.5-4%. So, they are able to sell at higher margins than their competitors.
Massive supply-demand misbalance, which is driving the really high prices**.**
Every producer of immunoglobulin sells everything they make.
250,000 Americans have been diagnosed with PI (Primary Immunodeficiency) and estimates that 500,000 more that need to be diagnosed.
25,000 Americans need ASCENIV which is 80-85% gross margin.
700-900 customers in ASCENIV, which is over 50% revenue (~60M per quarter)
They are limited by plasma supplies and donors not by Customers
Expect a 20% increase in plasma yield in 2025.
Ramping up 250 new plasma collection centers, which is a 5x collection size.
If they get enough high quality blood their current manufacturing plant could produce 2-2.5B in ASCENIV.
Conclusion:
They are growing their revenue at an extremely high rate and they are only slowed by the number of plasma donors. With them ramping up partnerships with 250 new plasma collection centers that’s a 5x increase in their plasma collection capabilities. They also expect to increase their extraction rate of their plasma by 20% within this year or next. With those two things going forwards for the company. I’m going to take a starter position on them going into their earnings call 2/26/25.
Drew