GXDX Notes
Lehman Initiation Report 12/18/07
Expect 50% EPS Growth per year for 2007& 2008
Company does not have contract relationships with most managed care providers
Each salesperson tends to generate 1.8m revenue per year – growing number of reps even by a small amount is material
Only lab service to focus exclusively on serving hematologists and oncologists
Potential for GXDX to be acquisition target by larger lab such as Quest, Labcorp or Sonic Healthcare
EPS and conference call 2/12/08
Q4 revenue 18.6m up 137%, Full year revenue $59.3m up 147%
Operating income 22% of revenue compared to loss last year (Q4)
EPS of 0.27 for Q4
Full year EPS 0.78 – first year of profitability
Cash of 85.5m after IPO and cash from operations
Reduced bad debt expense to 2% of total revenues
Guiding 2008 revenues of 90m and net income $15-17m – equates to EPS of 0.85-0.95
2008 Capex expected at 4-6m
No long-term debt – IPO solidified attractive balance sheet
Growth plan is to further penetrate current market and expand sales coverage to additional territories
Diagnostic services targeted towards more complex patient situations
DSO’s declined from 82 in 2006 to 58 for 2007 ending at 52
Advancement in billing systems, collection processes
Finished January with 35 sales personnel – expect to grow to mid 40’s this year
Only diagnostic test to identify specific subtype of leukemia
Building out unimproved warehouse space to expand laboratory space by 76%
Will select additional lab site in 2008 and bring it online mid 2009
Only 38% of business is Medicare so CMS changes will not have a drastic effect on revenues
Some confusion with capex numbers – 4-6m seems light to analysts and management states that big ticket purchase of new lab facility not likely to actually occur until 2009
IBD Article 1/29/08
- Number of hematologists/oncologists rising about 3.8% per year
- GXDX has about 4% market share and competes with Labcorp, Quest Diagnostics, and Genzyme
- Company gets 38% of revenue from Medicare and Medicaid
EPS Release and conf call 5/8/08
- Q1 revenue 22.3m versus 10.7m last year ($651k due to accounting estimates from ’07)
- Growign customer base and improving case volumes drove revenue
- EPS 0.34 after non-cash items
- March 31, cash and equivalent 84.7m – no long-term debt
- Expects revenue of 90-95m for 2008 and income near high end of previous guidance ($15-17m) – GAAP EPS 0.85 to 0.95
- Capital Expenditures expected at $6m for 2008
- 15th consecutive quarter of significant growth in sales and number of cases
o Volumes increased 78% over last year to 7.828 cases
o Approximately 800 ordering physicians per month
- Headcount: 17 Hematopathologists and 42 sales members up from 34 at end of 2007
o Goal of housing staff of hemapaths numbering mid 20’s by end of 2008
- Revenue per case increased 4% to $2,800 (up over $100 compared to Q4 ’07)
- Expanding lab space by 75% and intend to make use of space by Q4 2008
o Committed to second laboratory site (Eastern US) by middle of 2009
- Forecasting growth driven by volume, not expecting significant contribution from pricing
- Management giving conservative guidance – any positive news with CMS Medicare reimbursement program would likely mean outperformance.
Lehman Report 5/9/08
- Even at high end, management guidance likely conservative
- Lehman forecasting 50% EPS growth in 2009
- Revenue adjustments because the company bills commercial insurers but unsure exactly what will get paid. This month included favorable adjustment
- GXDX is only lab testing company to focus exclusively on Hematologists and Oncologists.
- Differentiated by service, quick turnaround times, lab physicians available to discuss with patient physician
- Business is highly scalable, leverage business across higher revenue base.