Retractable Technologies, Inc. (NYSE:RVP)

Retractable Technologies, Inc. (NYSE:RVP) ($5.11; $167.0M market cap), a company that designs, develops, manufactures, and markets safety syringes and other medical products for the healthcare industry in the United States and internationally announced Q1 2020 results via 10-Q late on Friday. 

• Sales of $11.2 million vs $7.9 million in the prior year
• EPS of $0.00 vs a loss of $0.01

While the results for Q1 were sequentially down from Q4, this has been the typical pattern for the company in which the company reports stronger results in the latter half of the year when flu season is at its height. The current quarter also had not begun to realize the impact from its recent large COVID-19 contract win. The 10-Q discusses the large contract:

“On May 1, 2020, the Company was awarded a delivery order under an existing contract by the Department of Health and Human Services of the United States to supply automated retraction safety syringes. The total fixed price under the delivery order is $83,788,440. The existing contract was executed in September 2018, but the order placed on May 1, 2020 is unusually significant to the Company. The Company expects to increase both domestic and foreign production and add additional personnel in response to this material delivery order. The Company expects to perform under this delivery order during 2020 and a portion of 2021.”

Company verbiage clears up a bit of confusion centered around the period of time the contract would be recognized, mostly since there was some information that indicated that the contract ran through 2023. There was some good information disclosed in the 10Q showing that the company’s domestic and international revenues are growing aggressively. 

“Domestic sales accounted for 74.4% and 77.4% of our revenues for the three months ended March 31, 2020 and 2019, respectively. Domestic revenues increased 35.8% principally due to increased volumes. Domestic unit sales increased 31.4%. Domestic unit sales were 65.2% of total unit sales for the three months ended March 31, 2020. International unit sales and revenues increased 56.8% and 59.9%, respectively, due to higher unit sales. Our international orders may be subject to significant fluctuation over time. Overall unit sales increased 39.2%. While we cannot predict the effect of the novel coronavirus on future periods, we do not believe that the virus had a material effect on sales in the first quarter of 2020.”

It is possible that a perfect storm is shaping up for RVP, allowing it to produce consistent and elevated growth for a period of time.

1. The legal egal victory it had against BDX who used unfair marketing practices could lead to significant market share gains for the company, as it now faces less resistance in marketing its first class safety syringe product to healthcare customers. We highly doubt that given the COVID-19 situation that BDX will “play nasty” again.
2. Obviously, the contract with the government helps validate the company’s product

See our original report here.