Inmd Q419

Inmode (Inmd)
Market Cap: $1.624 billion
Price: $39.00
P/E 23.08
P/S 10.39
FCF Yield 3.8%

What is Inmode: InMode is a leading global provider of innovative medical technologies. InMode develops, manufactures, and markets devices harnessing novel radio-frequency (“RF”) technology. InMode strives to enable new emerging surgical procedures as well as improve existing treatments. InMode has leveraged its medically-accepted minimally-invasive RF technologies to offer a comprehensive line of products across several categories for plastic surgery, gynecology, dermatology, otolaryngology, and ophthalmology.

4Q:2019 Notes:

Income Statement:

Increased revenue 63% from $28.8 million to $47 million YoY, Gross Margins came in at 87% up from 86% YoY, Net income increased from $19 million to $-213 million. Earnings per share increased from $-.01 to 46. These are all GAAP numbers. The Revenue numbers are accelerating and they are becoming more profitable.

Balance sheet and shares outstanding:

The balance sheet has $193,362,000 in cash and $0 dollars in debt. They have 41,639,000 million shares outstanding. While shares have gone up their balance sheet has improved with increase cash on the balance sheet. They are now cheaper than last quarter.

Cash Flow Statement:

The company had $27.2 million in FCF in the Q4 quarter and had $61.5 million in FCF YoY. They were FCF positive in each quarter for the full year.

Event: Jan 27th , 2020
InMode Launches Evoke, the First and Only Hands-free Facial Remodeling Technology

Event: Jan 21st, 2020
InMode Launches Evoke, the First and Only Hands-free Facial Remodeling Technology

Things to Watch:

InMode has developed two FDA-cleared unique hands-free platforms, the Evolve for body and the Evoke for face. These two platforms are also cleared in Canada and also in Europe received the CE Mark for marketing and sales in Europe. We want to see how these take off and how they add to revenue. They now have two groups of products. One minimally invasive and subdermal aeshthetic surgery and the second one, hands-free aesthetic procedure.

They received Anvisa clearance in Brazil and additional clearance in the U.S. , Canada, Taiwan, and other countries in Eastern Europe.

These are elective surgeries so if the world was to go into a recession their revenues would fall off a cliff.

Concluding Thoughts:

This company is growing very well. They are profitable with gross margins of 87% and they are FCF positive. They are still a small market cap company with a long growth ahead of them. They have room to grow in the United States with only 2800 platforms sold and 4900 platforms sold worldwide. They are finally starting to spread their platform out from the United States. The company’s lock up period ended on 2/4/2020 and the short interest, while still high, has been coming down.

Current Numbers:

February 18th , 2020 4Q:2020 earnings highlights:
** Revenue was $47,002 million up 63.35% from $28,773 million
** TTM Revenue was $156.4 million or $3.76 per share
** Earnings were $.46 up from $-.01
** TTM earnings were $1.69 per share
** Shares outstanding 41.6 million
** Cash flow for the quarter was $27.2 million up from $9.4 million
** TTM cash flow was $61.5 million or $1.48 per share
** Cash $193.4 million: debt $0
** Gross margins 87%
** Trading range between Nov,6th , 2019 and Feb, 19th , 2020 was $34.75 to $58.76: the PE ratio range was 20.56 to 34.77 : PS ratio range was 9.25 to 15.65
** Special Note: The stock went down $3.27 the day of the report.

November 5th , 2019 3Q:2019 earnings highlights:
** Revenue was $40,010 million up 57% from $25,418 million
** TTM Revenue was $138,132 million or $3.54 per share
** Earnings were $.42 up from $0.26
** TTM earnings were $1.22 per share
** Shares outstanding 39.004 million
** Cash flow for the quarter was $13,461 million up from $7,062 million
** TTM cash flow was $43,642 million or $0.1.12 per share
** Cash $166,253 million: debt $0
** Gross margins 87%
** Trading range between Aug 14th, 2019 and Nov. 5th, 2019 was $15.56 to $42.00: the PE ratio range was 12.75 to 34.42 : PS ratio range was 4.39 to 11.85
** Special Note: The stock went up $6.69 the day of the report. They reported in the morning.


Inmd in Thousands except for EPS
                Q318        Q418        Q119        Q219        Q319          Q419
Rev             25,418      28,773      30,552      38,797      40,010        47,002
Net Inc          8,638        -213      10,124      15,797      16,186        19,038
EPS                .26        -.01         .32         .49         .42           .46
FCF              7,062       9,373       2,393      18,415      13,461        27,244

Andy

30 Likes

Hi STJ,

I BOUGHT IT ABOUT AS SOON AS IT WENT PUBLIC…SEVERAL TIMES LATE SUMMER or early FALL. FRUSTRATING, BECAUSE IT DID NOT STAY UP…BETTER LATELY. I KEPT MY FIRST PURCHASE. STJ

Thanks, They still have a high short interest, but it has been coming down since the lock up expired. They should start expanding over seas and hopefully they will be able to keep the growth up. The CEO stated that he wants to keep the Gross Margins in the high 80’s so that is what impressed me about this company from the start.

Andy

1 Like

Andy,
Interesting numbers. Looks good on paper.

Can’t find much research on the company. Have you read any reviews of their products? Seems that there is some noise out there that their procedures are inferior to competitors products. That they are spending a lot of money on sales and marketing yet their return on investment is really slowing.

What are your thoughts on this?

$5000-$7000 for a treatment with a $130,000 machine is a huge cash cow for the doctor, so they are motivated to keep the machine(s) in use. But the consumables, the money that flows back to InMode from every treatment are only $200-$400 per treatment.

Around Christmas there was an InMode thread here. I quote from one that quoted an F1:
“Since inception, we have sold over 257,000 consumables. We expect that as our customer base grows, the percentage of our revenues attributable to consumables will increase”

If you average the 257,000 consumables to $300 each, over InMode’s 3 years of available history I could find then, that was around $77 Million (more since the latest report). Over the same period, they reported $325 Million total revenue. $248 MM for machines, $77MM for supplies. Around 3/4 of the revenues are the machine sales. It is important to know when there are “enough” machines that growth drops off, or they have invented new machines for new applications that give the doctors a reason to spend another $130,000.

Hopefully, we can learn the margins on the consumables too. They say the percent revenue from consumables will increase.

I used their website to get names of doctors in several areas who use their machines. I entered the Hollywood zip code and found 20 within a 10-mile drive. I entered Portland, OR and found 6 within 20 miles, and another 14 within 200 miles. I found only 3 in all of Iowa, and to get 20, I had to look as far as Wisconsin. I entered the Central Park area of NYC and found 20 within a short walk.

11 Likes

Hi Trying,

Have you read any reviews of their products?

Yes I have but I do not find them that helpful. Some people seem to be doing okay then they stop posting. It takes three treatments before they say it will be good. Some people are not clear how many treatments they have had and say they do not like it.\

Seems that there is some noise out there that their procedures are inferior to competitors products.

It would be helpful if you would post a link so I could read them.

That they are spending a lot of money on sales and marketing yet their return on investment is really slowing.

They are a really small company and they are mostly in the United States and building out into Europe, Asia , and South America. Their Revenue is accelerating from last quarter and it has been going up every quarter since they first reported. They grew earnings (this is Gaap they do not report N-Gaap) from .25 cents to $1.69 yearly. Their cash has been growing and they are FCF positive every quarter since they first reported. With a company this small that is profitable, growing revenue at 63% and has a gross margin of 87%, I am not really worried about ROI.

Andy

2 Likes