I found an interesting business - so wanted to write up my first introduction. The company is CorMedix Inc. Ticker: CRMD
They play in the life-threatening conditions and diseases space. But their flagship product is DefenCath® (taurolidine and heparin) - It is an FDA approved, novel, first-in-class, non-antibiotic antimicrobial catheter lock solution (CLS) to reduce the incidence of catheter related bloodstream infections (CRBSIs) in the limited population of adult hemodialysis patients receiving chronic hemodialysis through a central venous
catheter (CVC), a critical unmet medical need with a high rate of incidence, and high rates of morbidity and mortality.
They launched last year and is just hitting their stride in operational efficiency. The product is quite a differentiator in the market - hence the fast penetration.
Here is the investor presentation for more info:
Here are some key numbers:
Market Cap: 869 mil.
Gross Margin: 95%
FCF(ttm) -16%
This quarter FCF was +50%
Their 2025 growth is projected at 232% and 2026 growth at 54%
Analyst prediction had to be moved higher by 10% this quarter alone. So currently running a 40% run rate of analyst beat.
Debt: .5 mil.
Cash: 77 mil.
Dilution is 20% but they just went FCF+, so I don’t think this will be an issue in the next 12 months.
It scored a 117 in my methodology score, which puts it at number two position. Valuation, especially if you consider the ntm numbers is quite reasonable.
Since about 3 quarters, the management team has played the analyst prediction game pretty well.
The stock has doubled since April lows, which is keeping me away. But it is on top of my wishlist currently.
Really nice find here with this company! It is the first time I can recall where a growth stock does not have a year over year growth rate yet because there was zero revenue in the comparison quarter a year ago.
The ramp in revenue is really fast, 0 → 0.8 → 11.5 → 31.2 → 39.1M
Some things I like about this business,
Gross margin 95%+, they underlying ingredients taurolidine and heparin are inexpensive
There is no generic competition so they have regulatory exclusivity
EBITDA and net income margins are over 50% already
My biggest concern for this company is the market they are in for end stage kidney failure. For this type of kidney diagnosis it’s a unfortunate condition that has a max life span of 5 years. I learned from Ardelyx there is something called the kidney dialysis bundle which is basically like a recommended treatment for Medicare. If a medication is in the bundle it will be practically recommended every time, while if it’s out then there’s rarely a reason for a doctor to try something else. I had a misunderstanding with Ardelyx’s business where I did not understand the implication of being outside the “bundle”. Currently CorMedix is in TDAPA which is considered “not fully in the bundle”. However, it is good they are in this portion because the TDAPA still gets reimbursed. The underlying concern though is if this changes it could have a big impact on the business.
I also noticed the company mentioned their implied guidance is for 31M next quarter and they said to expect a sequential decline. From my understanding of the earnings transcript they had a large customer take an order early because of some price incentive they got, but now that customer needs to go through their inventory first before reordering.
I’m passing for now because of what I consider to be an uncertain regulatory market and the sequentially down revenue guide. However, this business does sound promising overall and I will be interested to see what they post on future quarters.
Thank you for introducing this company to the board!
In the first chart, it is pretty clear to me that operational efficiency is kicking in fast.
And using the second chart, in 12 months time, this business should have a target of 221m ntm revenue with most likely 50% fcf. So a simple back of envelope math says (if things play out), they may be generating 110m fcf and with a 25% forward growth and 50% fcf, it should get a 50 fcf multiple. That’s about 5.5 B market cap. At 30 multiple, 0t’s 3.3B market cap.
And this assumes, they don’t beat analyst expectations. Which by the look of the trends, they should beat. Since current market cap is 836 mil., I decided to get in. I am ready for a 50% pullback and will add. But the numbers do look quite good for now. I will continue to dig further.
And finally this third chart shows after this dip in revenue, the stair step higher revenue guide is in place. So this next two quarter results are key to establish the fcf dominance. Let’s see how it goes.
I really liked that its Operating Leverage (Incremental EBITDA Margin) was over 100%. Which means that for every 1 new dollar of sale they were getting more than 1 dollar to Adjusted EBITDA (QoQ, cause they don’t have a year of data yet). The only other company that I am following that has that and is growing over 30% year over year is Applovin.
Things I like about this company they have no competitors and they have very small market penetration at the moment. Their largest customer U.S. Renal Care has 3% of the market share for dialysis. Small downside is U.S. Renal Care is 80% of their business at the end of Q1. Normally this would be a huge concern with me but on 21st of May at the RBC Capital Markets Global Healthcare Conference, talked about expanding the customer base.
We onboarded, two others, IRC and DCI, late last year, and continue to to increase patient numbers with with both of those providers, and we’re we’re optimistic. As I said, we we have one of the two LDOs under contract, we haven’t disclosed which one.
IRC and DCI are both about half the size of U.S. Renal Care which provides growth potential. But the main growth potential is landing the LDO (Large Dialysis Organization). DaVita Inc or Fresenius Medical Care North America are the LDOs. They both have about 35-40% of the market of Dialysis. Which is 10 times the size of their largest customer at the moment. Larger organizations take time to implement but this could be a large potential for the company.
Another growth potential mentioned was moving into other types of long term catheter. Which was brought up on the 21st of May
I think the threshold set in the study is is lower, right, to meet, statistical significance. I’m hopeful and optimistic that we’re gonna show as good or better result in TPN. At the end of the day, our our view is that a catheter is a catheter
Nice analysis but the total TAM seems limited for their current approved product . By the way can someone suggest a god paid website for scraping financial analysis data . I use koyfin but looking ta other options
thanks
Rajesh
