DCTH 25Q1, continuing to execute

[monkeydluffy]

DCTH just reported pretty solid Q1 earnings and the stock is up 22%.

First Quarter 2025 Financial Results

• Total revenue of $19.8 million, compared with $3.1 million in the first quarter of 2024
  • HEPZATO KIT™ revenue of $18.0 million, compared to $2.0 million in the first quarter of 2024
  • CHEMOSAT® revenue of $1.8 million, compared to $1.1 million in the first quarter of 2024
• Gross margins of 86%, compared to 71% in the first quarter of 2024
• Net income of $1.1 million, compared to a net loss of $11.1 million in the same quarter of 2024
• Non-GAAP positive adjusted EBITDA in the first quarter of $7.6 million, compared to a loss of $7.3 million in the first quarter of 2024
• Cash and investments of $58.9 million as of March 31, 2025
• Cash provided by operations of $2.2 million in the quarter

Business Highlights and Updates

• Activated three new U.S. centers in the first quarter and two more so far in the second quarter of 2025, bringing the current total to 19 active centers, with 10 additional centers accepting referrals
• Received FDA clearance of an IND application for a phase 2 clinical trial of HEPZATO™ in liver-dominant metastatic breast cancer
• Announced publication of comparative analysis from randomized portion of FOCUS Study in metastatic uveal melanoma
• The exercise of 1.62 million Series F warrants resulted in $16.2 million of funding in 2025. The warrants were issued in 2020 as a component of a private placement and had an exercise price of $10.00 per share and expired on May 5, 2025

As I said previously, this company’s revenue is highly predictable, as it’s essentially equal to cost-per-treatment * treatments-per-center * number-of-activated-centers. The management has been executing on their guidance very solidly and consistently. The majority of revenue comes from the US, and currently, there are 19 activated US centers (17 by end of Q1). Usually, it takes 6-7 months to activate a new center, so with 10 additional centers accepting referrals now, DCTH will likely have at least 29 activated US centers by end of year and can potentially meet their goal to have 30 by end of year. The monthly average treatments done per US center were slightly above 2, and the management guided that the average treatments per center will likely stay consistently slightly below 2 as they open new centers. 29 activated centers by end of year will ensure triple-digit YoY revenue growth at least till Q4, as they had 14 activated centers in 24 Q4 with similar average treatments per center.

Stay long.
Luffy

[prust04]

Delcath just released what I believe is their first ever annual guidance, $96M at the midpoint, with projected GM at 84% and positive EBITDA & Cash Flow. They also announced participation in the Medicade Drug Rebate Program, which they believe will accelerate adoption of HEPZATO.

Since they have never issued guidance, we have no idea to what extent they are sandbagging (or just conservative). But $96M would represent a pretty big slowdown in QoQ revenue growth, to 13%. Last quarter they grew revenue at 31% QoQ. They are down 4% on the news.

I’m holding as I imagine they would be very cautious with their first time issuing guidance.

https://investors.delcath.com/news-releases/news-release-details/delcath-systems-issues-full-year-2025-guidance

[ryshab]

I like Delcath here. The 96 mil. guidance they provided is YoY 35% higher for 2025. They are expected to do 41% growth in 2026 and then stabilize at 20% growth for the next three years. I don’t know - whenever I see 20% growth replicated for forward guidance - I feel that is lazy math by analysts. They have no idea what to do, so just model 20% and adjust in the next few years. That’s why I see what is the raise - because that tells me by what percent they are usually wrong. Currently they are wrong by 35%.

But what I really find impressive about DCTH is how far and fast they have come. Granted they launched their flagship product about a year ago - fully operational.

• In the last 12 months, they move gross margin from 65% to 85%
• FCF quarterly margins from -300% to +10%
• FCF TTM numbers from -795% to -14%
• Revenue obviously went exponential but that is not a factor - since it’s new launch.

In the next 12 months, they are expected to do 103 mil revenue without taking into account any raise in guidance. With FCF already at 10% and margins higher than 80%, I would at least expect Delcath to put up 20% FCF.

Same math - 20 mil. times 40fcf multiple puts them at 800 mil market cap. Currently DCTH is at 561 market cap. It’s not as undervalued but 20% fcf can easily be breached with the operational efficiency speed that they have shown and with any guidance raise as well.

So I am optimistic for Delcath. It’s a tier 2 conviction but once FCF crosses 20%, I will move it to Tier 1 conviction level.

Side note: this quarter’s raise was 14% higher (96 from 84 mil.) for the year. That is the highest raise Delcath has done in last 3 years. So this could be a momentum starter as well.