After reading the recent 28-page press release and listening to the company's conference call I came away with two overarching conclusions regarding InMode (INMD), one of our recommended portfolio holdings, notes Tom Bishop, small cap expert and editor of BI Research.
One thought is that as March sales dropped off a cliff and April was likely horrific — but moving into May things are opening up in some places and this will continue even more so into June and beyond. As such, the company feels that 2020 revenues will ultimately not be much less than 2019’s $156 million.
The second conclusion is that the company’s minimally invasive cosmetic products put InMode’s technology in the catbird seat post-pandemic. It's products do not requiring hospitalization or anesthesia or lengthy recovery time — or in some cases — even much face-to-face time with physicians.
This is especially true for the newly introduced Evoke (face and neck skin tightening, fat reduction and muscle toning, all in one hands-free device) and Evolve (facial and neck skin tightening also hands free).
The RF devices are strapped to you head of neck and allowed to work eliminating most of the physician-patient interaction time. These platforms generally cost in the $120,000 to $130,000 range but have a payback that generally averages 6 to 12 months.
Evolve was only launched in late 2019 and the Evoke in late January of this year, sales were so brisk that they already commanded 30% of Q1 revenues! And the company feels they are really in the sweet spot. This is an exciting company with great opportunity once we get over this COVID-19 speed bump.
The company has been hiring laid off reps from other competitors; conducting over 50 webinars (to surprisingly high interest given the pandemic); and developing virtual training videos for physicians (and new sales reps) to see how to use its devices and the results.
With $200 million and growing in the bank (of which only $70 million was from the IPO), and no debt, the company is in an extraordinarily strong financial position to easily weather this storm and prosper on pent up demand and new products on the other side. Think a year out; the stock is a "Strong Buy".
