1/7 $INMD. https://t.co/HEcBDglJzU— Pythia Cap(ital) (@PythiaR) September 9, 2019
86%+ gross margins, almost 30% net, extremely high ROIC med-tech company making better moustrap minimally invasive plastic surgery equipment. This is sort of $ALGN for plastic surgery equipment.
3/7 Trades at 16x EBITDA today, and 85% of that EBITDA is converted into cash flow to equity. The business is growing at 50%/year.— Pythia Cap(ital) (@PythiaR) September 9, 2019
CEO owns 19% of the company; CTO owns 16%. Ticks the founder led box.
4/7 Issues are:— Pythia Cap(ital) (@PythiaR) September 9, 2019
1) Single product company, shallow moat here aside from patents.
2) Sales are capital equipment, not consumables. Less stable revenue vs. other med-tech with more consumable revenue.
3) They're tight lipped. Press releases are sparse + no transcript
5/7 Ultimately, I see this playing out:— Pythia Cap(ital) (@PythiaR) September 9, 2019
1) $ALGN: someone else enters the market and eats away at them.
2) Sale to larger company.
3) CEO becomes a compounder.
6/7 I like the plastic surgery business. With more people, and people living longer I think differentiation for mates (flashy cars, jewelry, experiences etc.) becomes more and more important. Look at densely populated countries: lots of external shows of status.— Pythia Cap(ital) (@PythiaR) September 9, 2019
7/7 I've spent 20 mins on this, modestly intrigued, but info is sparse so if someone knows more, would love to hear it!— Pythia Cap(ital) (@PythiaR) September 9, 2019
Interesting thread. Seems like they are offering fairly new, narrowly-tested procedures in a competitive market – are you at all worried about liability risks down the line?— Critskep (@critskep) September 9, 2019
The fact it's noninvasive/minimally invasive I think may reduce that.— Pythia Cap(ital) (@PythiaR) September 9, 2019
Odds are I'll probably pass as this seems lkke a hardware business without a real moat. Doesn't mean it won't do well, just doesn't meet my bar for business quality.