CAS Medical Systems (Acquired) (CASM) research, news, and more from GeoInvesting

Company description

Mon, 25 Jun 2018 14:16:29 GMT

CAS Medical Systems, Inc. is a medical technology company that develops, manufactures and markets non-invasive patient monitoring products for patient care. The Company designs, manufactures and distributes the FORE-SIGHT and FORE-SIGHT ELITE brand tissue oximeters and sensors. It operates through Tissue Oximetry Monitoring, which includes sales of its FORE-SIGHT tissue oximeter monitors, sensors and accessories. The FORE-SIGHT Tissue Oximeter technology provides clinicians a non-invasive, quantitative measurement of oxygenation in cerebral tissue.

Research

Thu, 14 Mar 2019 16:18:36 GMT

We Have Closed Out Our CASM Position

On February 12, 2019 CAS Medical Systems, Inc. (NASDAQ:CASM) ($2.42, $68.2M market cap) was acquired by Edwards Lifesciences for $2.45 per share. As we stated we were not happy with the takeover price and did look into a potential fight to obtain a better price. Due to more lucrative opportunities we see right now, we feel our time and money is better spent elsewhere, and have decided to not pursue that angle any further and have closed out our long position.

Research

Tue, 12 Feb 2019 19:04:59 GMT

CAS Medical Systems, Inc. (NASDAQ:CASM) ($1.79, $49.8M market cap), a medical device company agrees to be acquired by Edwards Lifesciences for $2.45 per share.

"We are pleased with this opportunity to bring together CASMED's expertise in brain and tissue oxygenation monitoring with Edwards' long history of leadership in hemodynamic monitoring," said Thomas M. Patton, president and CEO of CASMED. "We are confident that the combination of these technologies will result in an important measurement tool for physicians that can empower them to improve care."

Obviously, this news will move the stock off Maj’s Favorite List, leaving an open spot for what we feel to be the next best stock from our full list. We’ll provide an update on this as soon as we come to a consensus on what that stock should be.

CASM was also part of our Mock Takeover Candidate Portfolio, and while the price was not what we were hoping for, the takeover came to fruition. We will be looking into the terms of the deal to see if we can potentially fight for a better price for shareholders. Management had been alluding to reaching an inflection point upon finding a sales partner, which they recently did. Management has also suggested that the company’s stock was undervalued at its pre-takeover price. We’ll be mindful of this as we look at available options to fight for a better price for shareholders.

Research

Fri, 04 Jan 2019 16:01:36 GMT

CAS Medical Systems, Inc. (NASDAQ:CASM) ($1.79, $49.8M market cap), a medical device company, announcedpreliminary Q4 sales of $5.8 million, a 13% increase from the prior year period and ahead of analyst Q4 sales estimates of $5.4 million. The company also guided 2019 sales growth to be in the low-teens percentage, not including any contributions from its OEM smart cable sales which the company expects to launch in the second half of 2019.

“It was gratifying to ship our first production of FORE-SIGHT OEM smart cables to our corporate partner in late-December,” he added. “Given our progress, we are on track to commercially launch our FORE-SIGHT OEM smart cables in mid-2019.

Excluding potential OEM smart cable sales, for 2019 we expect low-teens percentage growth in U.S. FORE-SIGHT sales, driven by mid-teens percentage growth in U.S. disposable sensor sales, as we continue to take market share from competitors and expand the market for cerebral and tissue oximetry monitoring. We expect international FORE-SIGHT sales to increase in the high single-digit percentages. Therefore, before OEM sales, we expect low double-digit total FORE-SIGHT sales growth for the year. We plan to update our 2019 outlook in mid-2019 to include the contribution from OEM smart cables,” Patton concluded.

The key takeaway from the release was acknowledging that they have a partner for their new OEM product and that the partner ordered some product. The next big catalyst could be the unveiling of the partner’s identity.

The OEM smart cable opportunity is the upside catalyst we highlighted in our original report, which we feel will help the Company rapidly steal market share from its competitors. You can see more on this here.

Research

Tue, 18 Dec 2018 16:08:00 GMT

CAS Medical Systems, Inc. (NASDAQ:CASM) ($1.56, $43.4M market cap), a medical device company, recently presented at the LD Microcap conference. Below is a summary of the presentation:

FORE-SIGHT tissue oximetry is now sole focus
88% of sales is recurring sensor revenue
5 year FORE-SIGHT senor revenue CAGR of +20%
Still in early stages of adoption with movement towards standard of care

Multiple avenues for growth

Commercial introduction expected mid-2019
Opportunity to leverage 3rd party OEM partners

Much of this information mimics what we wrote about in our original article you can see here. The stock has been a little weak lately. Again, as we said in our original article, we thought this is more of a longer-term play and the nearest short-term catalyst would be the submission for the final approval to the FDA pertaining to the medical devices OEM product, which would enable the company to quickly and significantly expand its revenue if approved. The company expects submission in early 2019 with approval/commercialization in mid 2019.

Conference Call Notes

Thu, 01 Nov 2018 17:30:10 GMT

CAS Medical Systems, Inc. (NASDAQ:CASM) ($1.84, $51.1M market cap), a medical device company, announced Q3 2018 results yesterday. The Company continues to steal market share with its best-in-class product. We believe this will provide us with superior long term returns. However, the stock may still not attract short term investors until certain catalyst are achieved and more clarity on the impact of the tariffs is understood. Highlights from the call include:

Taking market share:

“We will continue to focus our resources on the successful execution of FORE-SIGHT sales growth, while carefully controlling operating expenses. We are focused on continued growth with the following multipronged strategy. First, we believe we can continue to take market share from our competitors, while simultaneously expanding the market for cerebral oximetry with our best-in-class FORE-SIGHT technology.”

Regaining large customer:

“You might recall that about a year ago, we lost a major hospital system in the upper Midwest to a competitor based mostly on pricing with little clinician input. Well after significant objections were raised by the clinicians regarding the performance of the competitor product, a robust evaluation of various alternatives was conducted and I'm proud to report, in September, we regained that business in full driven primarily by clinician preference for the quality of cerebral oximetry offered by FORE-SIGHT.

Operating Leverage:

“Given our third quarter performance, we continue to believe we will reach cash flow breakeven from operations by the end of 2019 depending upon investment in our OEM product and the continuation of tariffs should there remain in place throughout 2019. While working capital needs will increased modestly as the company increases revenues, we believe that with a relatively fixed infrastructure and lower product cost already realized, we will see solid contribution margins from future revenue gains, which should further reduce our operating loss at our cash consumption.”

501(k) Clearance:

“we continue making progress with our next-generation FORE-SIGHT technology in an OEM format. We expect the 510(k) will be filed with the FDA for our first co-development project early in the first quarter of 2019, which is about a month later than we had originally planned. This technology, though, we'll permit FORE-SIGHT tissue oximetry values to integrate with the third parties monitors thus allowing us to work with this partner to expand access to the benefits of our FORE-SIGHT technology.”

“As we've discussed on previous calls, this represents an entirely new sales channel for our disposable sensors and gives us scale by leveraging our partners selling resources to more quickly expand of the market for tissue oximetry and gain share in what could be a transformative approach for us.”

Tariffs (Caveat)

“The impact of tariffs was roughly 200 basis points for the third quarter and we expect the impact will be about 400 basis points in the fourth quarter of 2019. For 2019, we anticipate an ongoing impact of tariffs of about 300 basis points or $150,000 to $200,000 per quarter. We have not yet made any decisions about moving production, but we'll continue consider such a move if it appears that the tariffs are going to be in place for an extended period.”

Research

Wed, 31 Oct 2018 15:05:24 GMT

CAS Medical Systems, Inc. (NASDAQ:CASM) ($1.90, $52.7M market cap) a medical device company, announced Q3 2018 results:

Sales of $5.4 million vs $4.5 million in the prior year
Net loss of $0.06 vs net loss of $0.07

“We are reporting outstanding financial results for the quarter with across-the-board increases in sales of FORE-SIGHT products as we continued to accelerate growth, while we also narrowed our operating loss by 25% from the prior year,” said Thomas M. Patton, President and Chief Executive Officer of CASMED. “Strong execution on our strategy led to a 20% increase in total FORE-SIGHT sales, our fourth consecutive quarter of double-digit growth, with FORE-SIGHT sensor sales up 22%, including 20% growth in the U.S. Our results for the quarter also featured a strong international performance, with international FORE-SIGHT sensor sales up 38% and international shipments of 50 FORE-SIGHT oximetry monitors.

Following our continued strong performance in the third quarter, we are reaffirming our 2018 expectations for year-over-year mid-teen percentage growth for total FORE-SIGHT sales.”

We are eagerly awaiting for the company to provide an update on the FDA approval status of their OEM module platform that that could accelerate the company's ability to capture market share. To see more on this please read the “Upside Catalyst” section in our report.

Research

Tue, 07 Aug 2018 14:18:36 GMT

** Model Portfolio Update

Cas Medical Systems, Inc. (NASDAQ:CASM) ($2.43, $70M market cap) - We’re adding CASM, a medical technology company that develops, manufactures and markets non-invasive patient monitoring products for patient care, to “Maj’s Favorites” model portfolio based on our belief that over the longer term the company is going to have consistent and predictable top line growth. We believe the bottom line will eventually follow suit and that the company is reaching an important inflection point.

Research

Fri, 03 Aug 2018 04:00:00 GMT

Cas Medical Systems, Inc. (NASDAQ:CASM) ($2.19, $60.1 million market cap) - Craig Hallum raised their CASM price target from $2 to $4. We participated in the company’s call yesterday. Everything seems to be on track in terms of mid and longer term trends, confirming our bullish thesis. Proposed tariffs could put some short term pressure on gross margins for the time being. The company is working through these issues. Since part of our thesis is expansion of gross margin, we’re going to have to wait for the company to propose solutions outside of China for manufacturing and production, which they are working on. Management believes that if tariffs are put into effect that profitability could be delayed one quarter from their expectations (from Q3 2019 to Q4 2019).

CASM first entered our radar after we spoke with the Company at the LD Microcap conference in early June. On July 13, 2018 we issued our full article on the company, titled, “CAS Medical Systems: A Bet on a CEO With an Amazing Track Record”.

Please see the full article here.

Research

Thu, 02 Aug 2018 14:37:34 GMT

CAS Medical Systems, Inc. (NASDAQ:CASM) ($2.09, $57.7M market cap) a medical device company, announced Q2 2018 results:

Sales of $5.3 million vs $4.6 million in the prior year
Non gaap EPS of $0.08 vs non gaap EPS of $0.09 in the prior year

Most important to us is that gross margins continue to increase as revenues scale up, which could eventually help the Company reach profitability sometime in fiscal 2019. As you can see, gross margins have made sequential improvements over the past several quarters.

In the meantime, the Company will likely continue to lose money until further gross margin improvements and sequential revenue growth starts to pick up, presumably as the growing installed base of monitors begin to bring in the cash.

“We are reporting strong financial results for the second quarter that feature top-line growth, gross margin expansion, and expense control, leading to a 43% reduction in our operating loss versus the prior year,” said Thomas M. Patton, President and Chief Executive Officer of CASMED. “Total FORE-SIGHT sales increased 17%, our third consecutive quarter of year-over-year double-digit growth, led by a 20% increase in U.S. FORE-SIGHT sales. Worldwide disposable sensor sales increased 13% and included 16% growth in U.S. sensor sales.

“Given our continued strong performance in the second quarter, we are affirming our full-year 2018 expectations for year-over-year mid-teen percentage growth for total FORE-SIGHT sales, U.S. FORE-SIGHT sales, and U.S. disposable sensor sales. We are raising our expectation for international FORE-SIGHT sales to a low double-digit increase over 2017.”

Please see the full article here.

Research

Fri, 13 Jul 2018 12:29:57 GMT

**CASM Article Now Available

CAS Medical Systems, Inc. (NASDAQ:CASM) ($1.90, $52.5M market cap) - We first mentioned that CASM, a medical device company, entered our radar after we spoke with the Company at the LD Microcap conference in early June.

On June 25, 2018, we disclosed our long position and added the stock to our Mock Takeover Candidate portfolio. Some of you might appreciate that CASM has been trading with more liquidity than the typical microcap stock we discuss at Geo.

With its best in class solution, CASM is a $20 million company addressing an immediate $125 million and $1 billion long-term market opportunity. We are impressed with the CEO’s track record, the market potential of the product, the recurring revenue model and the fact that the company could be on the brink of profitability. We feel the company’s recurring revenue model has reached an inflection point that will lead to consistent and accelerated revenue growth.

After several calls with management, we have finalized our full article on the company, titled, “CAS Medical Systems: A Bet on a CEO With an Amazing Track Record”.

Please see the full article here.

Research

Mon, 25 Jun 2018 18:19:07 GMT

Established a Long Position in CASM and Adding it to our Mock Takeover Candidate Portfolio; RFT (Reasons For Tracking) in the Pipeline

With a fully diluted share count of 42.4 million, medical technology company Cas Medical Systems (NASDAQ:CASM) ($2.06, $59.1m market cap) is a microcap that offers more liquidity than the average microcap we usually bring to you. We think the company’s recurring revenue model has reached an inflection point that will lead to consistent and accelerated revenue growth. But, because it is still losing money it is possible that the company’s stock could experience large pullbacks until profitability is attained. With this in mind, we took a position in the stock with a long-term game plan (potentially multi-year holding may be necessary). We are willing to withstand pullbacks as we wait for what we think will be a very rewarding investment.

Some of the areas the RFT will cover include:

CEO track record
CEO makes changes
Why what they do is important
Market potential
“Built a better mousetrap”
Recurring revenue model
Company well capitalized
On the brink of profitability

Research

Mon, 11 Jun 2018 14:50:19 GMT

CAS Medical Systems, Inc. (NASDAQ:CASM) ($1.67; $46.1M market cap) -.We are excited about this medical device/technology company. The company has developed a sensor called FORE-SIGHT, a simple non-invasive adhesive sensor applied to the skin which alerts clinicians to the oxygenation levels of a patient's brain or other body tissue during medical procedures. This can help doctors avoid harm caused by insufficient oxygen, otherwise known as hypoxia.

Management believes its solution is significantly better in terms of accuracy and timeliness of data. The company has a recurring revenue aspect. While revenue growth has been flat over the last several years, I think it may be at an inflection point to reverse that trend. I was extremely interested in the CEO who is a doctor and has been involved in several past successful business ventures.

This is a good example of how ignoring stocks that are losing money can cost you lost opportunity. Admittedly, I shrugged off CASM when it was trading at around $0.60 because I just focused on EPS, quickly placing it in my ignore bucket.

We may include the company in our multibagger portfolio.