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Stock Analysis Medical Devices

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Abiomed and Thoratec are medical device companies. Abiomed's Impella is the world's smallest heart pump used for high-risk patients after surgery or heart attack. Thoratec's Heartmate II is a ventricular assist device for advanced heart failure. Both companies see growth opportunities in expanding their applications and markets. Thoratec has higher revenue growth, profitability, and valuation multiples, but also higher debt levels than the debt-free Abiomed, which has seen renewed optimism from recent sales growth of its Impella pump.

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Stock Analysis of Medical Devices Abiomed Inc. (ABMD) Thoratec Corp. (THOR) Impella - World’s smallest pump for left ventricleHeartmate II LVADDePaul University FIN 524Wanda Hartmann Oehrli
OutlineABMD and THOR company’s valuesAbiomed Inc. (ABMD) Recovering Hearts. Saving LivesThoratec Corp. (THOR) Life RestoredDescription & competitive environmentValuation of Medical Instruments & Supplies IndustryMore attractively valued company
AbiomedThoratecdevelopment, and sale of medical devices that provide circulatory support to acute heart failure patients across the continuum of care in heart recovery
Impella – world’s smallest heart pump
Protect, support, assist in recovery after surgery or heart attack
High risk patient
minimally invasive - angioplasty FutureMore Applications, Surgical products, Expand MarketsAdvanced Stage Heart Failure –ventricular assistHeartmate II Heartmate IIIhttp://www.marketwatch.com/video/asset/help-for-damaged-hearts/24626C3F-2C52-4AEF-809C-F922AE7A8960http://www.thoratec.com/videos/about-thoratec.aspx
Medical Devices Competitive EnvironmentEstimated worldwide sales > $300 B (2011)U.S. -largest market - estimated sales of roughly $95B (2010)Cardiology, Oncology, Neuro, Orthopedic, Aesthetic Devices and Healthcare ITAging population & lifestyle diseases (heart disease, obesity)Healthcare reform/ FDA policy & regulationsAve Financial InfoProfit Margin 20%EV/Sales Multiple 3.5xEBITDA Multiple 12.8Zacks Investment Report http://finance.yahoo.com/news/Medical-Devices-Industry-zacks-1123678571.html?x=0&.v=1 http://www.fool.com/investing/general/2011/02/25/the-magic-formula-for-these-medical-device-stocks.aspxhttp://www.nytimes.com/2009/11/05/business/05device.htmlhttp://www.horizonviewpartners.com/index.php?p=1_8_Medical-Device-Market
ComparisonABMD stock is up 68% yet EBITDA, Operating Margin and Net Income are Negative?Renewed optimism around sales of Abiomed'sImpella heart pump has been a key factor behind the market run-up.Read more: CEO of red-hot Abiomed sells $1.1M in stock | Boston Business Journal
New generation of heart pumpsStock up 68% since start of yearGreat December Quarter 2010More Patient increase 77%7th consecutive quarter of triple digit reorder revenueNon-GAAP profitable quarter – first time in a long timeGenerated $5 M $60M in CashNo debtAbiomed
ABMD Income StatementRevenue growth 22% aveincreasingless negativeless negativeEBITA = Rev – COGS - SG&A + D&A= EBITDA : neg
ABMD Income Statement
ABMD Balance SheetCurrent Ratio = 4.58No Debt
ABMD Balance SheetLong Term Debt to Equity = 0Debt to Equity = 0Total Debt = 0License Leverage= TA =129570 = 1.2 TE 107956Quick(Acid Test) = 3.74= 4788 + 53477+13516 18,064Cash = 3.23= 4788 + 53477 18,064ROE = NI/SE= N/AP/E = Price /earnings = N/AEPS = N/AEBITDA MULT= __EV___= N/A EBITDASales Mult = 646.54M/95.60M = 6.76
ABMD Cash Flowless negativeincreasingincreasing
ABMD Cash Flowincreasingdecreasingincreasing
THOR Income StatementRevenue Growth 39%increasingincreasingincreasingEBITA = Rev – COGS - SG&A + D&A= EBITDA :126.44M
THOR Balance SheetincreasingCurrent Ratio = 3.16increasingsame

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Stock Analysis Medical Devices

  • 1. Stock Analysis of Medical Devices Abiomed Inc. (ABMD) Thoratec Corp. (THOR) Impella - World’s smallest pump for left ventricleHeartmate II LVADDePaul University FIN 524Wanda Hartmann Oehrli
  • 2. OutlineABMD and THOR company’s valuesAbiomed Inc. (ABMD) Recovering Hearts. Saving LivesThoratec Corp. (THOR) Life RestoredDescription & competitive environmentValuation of Medical Instruments & Supplies IndustryMore attractively valued company
  • 3. AbiomedThoratecdevelopment, and sale of medical devices that provide circulatory support to acute heart failure patients across the continuum of care in heart recovery
  • 4. Impella – world’s smallest heart pump
  • 5. Protect, support, assist in recovery after surgery or heart attack
  • 6. High risk patient
  • 7. minimally invasive - angioplasty FutureMore Applications, Surgical products, Expand MarketsAdvanced Stage Heart Failure –ventricular assistHeartmate II Heartmate IIIhttp://www.marketwatch.com/video/asset/help-for-damaged-hearts/24626C3F-2C52-4AEF-809C-F922AE7A8960http://www.thoratec.com/videos/about-thoratec.aspx
  • 8. Medical Devices Competitive EnvironmentEstimated worldwide sales > $300 B (2011)U.S. -largest market - estimated sales of roughly $95B (2010)Cardiology, Oncology, Neuro, Orthopedic, Aesthetic Devices and Healthcare ITAging population & lifestyle diseases (heart disease, obesity)Healthcare reform/ FDA policy & regulationsAve Financial InfoProfit Margin 20%EV/Sales Multiple 3.5xEBITDA Multiple 12.8Zacks Investment Report http://finance.yahoo.com/news/Medical-Devices-Industry-zacks-1123678571.html?x=0&.v=1 http://www.fool.com/investing/general/2011/02/25/the-magic-formula-for-these-medical-device-stocks.aspxhttp://www.nytimes.com/2009/11/05/business/05device.htmlhttp://www.horizonviewpartners.com/index.php?p=1_8_Medical-Device-Market
  • 9. ComparisonABMD stock is up 68% yet EBITDA, Operating Margin and Net Income are Negative?Renewed optimism around sales of Abiomed'sImpella heart pump has been a key factor behind the market run-up.Read more: CEO of red-hot Abiomed sells $1.1M in stock | Boston Business Journal
  • 10. New generation of heart pumpsStock up 68% since start of yearGreat December Quarter 2010More Patient increase 77%7th consecutive quarter of triple digit reorder revenueNon-GAAP profitable quarter – first time in a long timeGenerated $5 M $60M in CashNo debtAbiomed
  • 11. ABMD Income StatementRevenue growth 22% aveincreasingless negativeless negativeEBITA = Rev – COGS - SG&A + D&A= EBITDA : neg
  • 13. ABMD Balance SheetCurrent Ratio = 4.58No Debt
  • 14. ABMD Balance SheetLong Term Debt to Equity = 0Debt to Equity = 0Total Debt = 0License Leverage= TA =129570 = 1.2 TE 107956Quick(Acid Test) = 3.74= 4788 + 53477+13516 18,064Cash = 3.23= 4788 + 53477 18,064ROE = NI/SE= N/AP/E = Price /earnings = N/AEPS = N/AEBITDA MULT= __EV___= N/A EBITDASales Mult = 646.54M/95.60M = 6.76
  • 15. ABMD Cash Flowless negativeincreasingincreasing
  • 17. THOR Income StatementRevenue Growth 39%increasingincreasingincreasingEBITA = Rev – COGS - SG&A + D&A= EBITDA :126.44M
  • 18. THOR Balance SheetincreasingCurrent Ratio = 3.16increasingsame
  • 19. THOR Balance SheetLong Term Debt to Equity = 0Debt to Equity = TD = 138,165 = 0.22TE 621360Total Debt =TD= 138,165= 0.16 TA 837,743License Leverage= TA = 837,743 = 1.35 TE 621,360Quick(Acid Test) =2.80= 524571187017Cash =2.40= 448,143187017ROE = NI/SE= 58,166M/621,360= 9% returnP/E = Price/earnings = 35.18EBITDA MULT= __EV___= 11.79 EBITDASales multiple = market cap/revenue= 1.80B/ 382.97M = 4.7
  • 20. THOR Cash Flowsincreasingincreasingdecreasing
  • 21. Conclusion: Which is More Valuable?http://biz.yahoo.com/p/s_ttmu.html