BSD Medical Corporation
Transcription
BSD Medical Corporation
Morningstar Equity Research BSD Medical Corporation BSDM (ASE) Last Close Industry Sector 1.84 Medical Devices Healthcare USD Profile Pricing data through 10 May 2012 In addition to this comprehensive company profile, Morningstar offers in-depth analyst research and ratings on selected companies. For information about our full analyst coverage, please contact: Morningstar Equity Research +1 (312) 696-6869 [email protected] Contents Company Profile 1 Company Data 2 Management & Ownership 3 Industry Focus 4 BSD Medical Corporation was originally incorporated under the laws of the State of Utah on March 17, 1978. On July 3, 1986, the Company was reincorporated in the State of Delaware The Company develops, manufactures, markets, and services medical systems that deliver precision-focused radio frequency (RF) or microwave energy into diseased sites of the body, heating them to specified temperatures as required by a medical therapies. Its business objectives are to commercialize its products developed for the treatment of cancer and to further expand systems to treat other diseases and medical conditions. Its product line for cancer therapy has been created to offer hospitals and clinics a complete solution for thermal treatment of cancer as provided through microwave/RF systems. Microwave ablation system is to be used to ablate (remove or vaporize) soft tissue with heat alone. Thermal ablation is used to destroy local tumors using a short intense focus of heat on a specific area, which is usually small, similar to surgical removal of the tumor. Its product line includes systems that have been strategically designed to offer a range of thermal treatment systems for the treatment of cancer, including both hyperthermia and ablation treatment systems. One of its important contributions to the advancement of medical therapy has been its pioneering work in developing a new treatment for conditions associated with enlargement of the prostate that afflicts most men as they age. Some cancers, such as certain cancers of the liver, prostate, kidney, bone metastases and lung cancer, are treated using heat alone to deliver thermal ablation. BSD-500 is used to treat cancers located near the surface of the body, or areas that could be accessed using inserted antennae. The BSD-500 comes in several versions, depending on the customer requirements. The BSD-2000 is used to noninvasively treat deep cancers. This system also comes in several versions, including models with three dimensional, or 3D, steering of electromagnetic energy, as well as the ability to be integrated with MRI. MTX-180 has been developed to employ precision-guided microwave energy to ablate soft tissue. The MTX-180 is a compact, mobile system that includes a state-of-the-art computer, a microwave generator, single-patient-use disposable applicators and a proprietary thermistor-based temperature monitoring system. Through research funded by the National Cancer Institute in the United States and supportive efforts by other domestic and international research institutions, the Company enhanced the BSD-2000 to create the new BSD-2000/3D. The BSD-2000/3D adds three-dimensional steering of deep focused energy, as opposed to the twodimensional steering of energy available in the BSD-2000, delivering even more precise heating of the tumor. Using sophisticated microwave filtering and imaging software, the BSD-2000/3D/MR allows an MRI system to be interfaced with and operate simultaneously with a BSD-2000/3D. Its target customers include clinics, hospitals and institutions in which cancer is treated, located either in the United States or international markets. The company generally provides a 12-month warranty and record a liability for the warranty following installation on all cancer treatment systems and a 90-day limited warranty on individual components. Competitors in the thermal ablation market include RadioTherapeutics, a division of Boston Scientific Corporation, Covidien Ltd., Angiodynamics, Inc. and Microsulis Medical Ltd. ©2009 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Page 1 of 5 Morningstar StockResearch Data Sheet Morningstar®Equity Pricing data thru May 10, 2012 BSD Medical Corporation BSDM Sales USD Mil Mkt Cap USD Mil Industry Sector 3 55 Healthcare Fair Value Uncertainty . . BSD Medical develops, produces, sells, and services systems BSD Medical develops, produces, sells, and services systems to treat cancer and other diseases using heat therapy that is to treat cancer and other diseases using heat therapy that is provided by focused radio frequency and microwave energy. provided by focused radio frequency and microwave energy. The company also uses these technologies for other The company also uses these technologies for other therapies. BSD develops specific microwave therapy therapies. BSD develops specific microwave therapy systems for TherMatrx, a company that treats prostate systems for TherMatrx, a company that treats prostate symptoms. symptoms. Morningstar Rating — Last Price - 1.30 0.40 2.00 0.45 - 1.84 2.70 1.15 9.47 2.05 7.13 4.40 9.25 4.60 Rating updated as of May 10, 2012 Medical Devices Economic Moat - 8.50 3.10 Fiscal year-end: August 4.77 1.17 TM Stewardship Grade -. 7.40 0.86 - . per share prices in USD 5.57 2.04 2.52 1.72 Annual Price High Low Recent Splits Price Volatility 7.0 2188 West 2200 South Employees: 41 2188Lake WestCity, 2200 Salt UTSouth 84119 Salt Lake City,972-5555 UT 84119 Phone: 1 801 Phone: 1 801 972-5555Website: http://www.bsdmc.com Website: http://www.bsdmc.com Monthly High/Low Rel Strength to S&P 500 4.0 52 week High/Low 4.50 - 1.72 2.0 10 Year High/Low 9.47 - 0.40 1.0 1.0 Bear-Market Rank 5 (10=worst) Trading Volume Million 0.5 Growth Rates Compound Annual Grade: D Revenue % Operating Income % Earnings/Share % Dividends % Book Value/Share % Stock Total Return % +/- Industry +/- Market 2010 2011 YTD Stock Performance 3.3 -10.3 6.7 . 111 -4.7 -8.2 -1.1 . 107 -27.1 11.4 6.7 . 80 -54.4 -77.8 -91.3 . 37 176.7 163.9 174.0 . 134 -48.7 -48.7 -44.7 . 70 -22.4 -30.1 -31.6 0.0 55 Total Return % +/- Market +/- Industry Dividend Yield % Market Cap USD Mil 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TTM Financials 3 59.6 -1 -26.6 3 52.1 -1 -22.2 2 31.3 -1 -79.1 2 34.7 -2 -113.4 3 40.7 -5 -175.9 3 44.2 -6 -225.4 5 59.5 -4 -82.7 4 45.8 -7 -184.5 2 5.1 -7 -473.4 3 43.8 -5 -176.0 3 44.7 -7 -219.9 2007 92.0 . . . 53.3 -52.6 -41.5 -53.2 -16.1 . . . -9.0 -2.7 -13.6 -16.1 0.9 . . . -10.2 -23.6 -21.1 -21.4 3.2 . . . 28.3 5.7 2.7 3.1 Current 5 Yr Avg Ind Mkt 0 -1 8 3 9 -3 -2 -11 -7 -5 -7 13.3 22.8 7.5 9.3 5.8 7.4 2.3 16.6 . 1050.7 0.00 . 18 0.07 -0.03 . 18 0.12 0.41 . 20 0.53 0.15 . 21 0.90 0.42 . 22 1.19 -0.16 . 21 1.06 -0.11 . 21 0.66 -0.52 . 22 0.47 -0.32 . 23 0.80 -0.18 . 29 0.66 -0.22 . 30 0.60 0 0 0 0 0 0 7 0 7 -3 0 -3 -7 0 -7 -5 0 -5 -1 -1 -2 -4 0 -4 -6 0 -6 -4 0 -4 -5 0 -5 44.7 -219.9 . . 69.2 -38.0 -35.7 4.3 1.0 65.8 * 39.6 -228.4 -226.7 . 0.7 66.8 18.2 12.9 14.2 . 40.1 18.9 11.4 0.1 9.5 08-11 USD Mil 02-12 USD Mil Cash Inventories Receivables Current Assets 17 2 1 20 14 2 0 17 Fixed Assets Intangibles Total Assets 1 0 22 1 0 19 Payables Short-Term Debt Current Liabilities Long-Term Debt Total Liabilities 0 . 1 . 1 0 . 1 . 1 Total Equity 21 18 Valuation Analysis Price/Earnings Forward P/E Price/Cash Flow Price/Free Cash Flow Dividend Yield % Price/Book Price/Sales PEG Ratio 2009 124.7 121.7 118.2 . 105 10 Yr Financial Position Grade: B 2008 56.5 47.5 45.6 . 46 2004 5 Yr Return on Equity % -32.2 Return on Assets % -30.8 Fixed Asset Turns 2.1 Inventory Turns 0.7 Revenue/Employee USD K 73.6 Gross Margin % Operating Margin % Net Margin % Free Cash Flow/Rev % R&D/Rev % 2006 184.3 157.9 159.5 . 29 2003 3 Yr Profitability Analysis Grade: F 2005 -36.3 -12.9 -28.3 . 9 2002 1 Yr 5 Yr Avg Ind Mkt . . . . . 3.1 18.1 . . . . . . 4.6 29.8 . 18.6 . 12.4 16.0 1.3 2.3 2.3 . 14.7 13.6 7.0 17.4 2.0 1.9 1.2 1.8 *3Yr Avg data is displayed in place of 5Yr Avg Net Income USD Mil Earnings Per Share USD Dividends USD Shares Mil Book Value Per Share USD Oper Cash Flow USD Mil Cap Spending USD Mil Free Cash Flow USD Mil 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TTM Profitability 0.5 0.9 0.4 1.25 1.9 -31.2 -67.6 -22.2 1.41 2.7 126.6 143.9 516.0 0.25 1.1 24.3 25.5 164.4 0.15 1.0 42.1 45.6 319.0 0.13 1.1 -12.7 -13.7 . 0.11 1.1 -10.6 -11.3 -47.5 0.22 1.1 -66.3 -70.9 . 0.21 1.1 -58.4 -62.0 . 0.12 1.1 -30.5 -31.9 . 0.18 1.0 -30.8 -32.2 . 0.14 1.1 Return on Assets % Return on Equity % Net Margin % Asset Turnover Financial Leverage 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 02-12 Financial Health 1 . 1 . 0 . 1 . 11 . 11 . 15 . 15 . 25 . 26 . 23 . 23 . 19 . 20 . 11 . 12 . 11 . 12 . 20 . 21 . 17 . 18 . 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TTM Valuation 47.0 . 3.1 7.7 . . . 10.5 11.9 . 6.0 . 39.2 4.3 6.9 16.1 . 49.0 5.7 . 22.0 . 37.9 4.4 . . . 29.9 4.8 . . . 15.8 5.5 . . . 13.4 3.6 . . . 68.0 5.8 . . . 21.9 3.6 . . . 18.1 3.1 . Price/Earnings P/E vs. Market Price/Sales Price/Book Price/Cash Flow Quarterly Results Current Revenue USD Mil Gross Margin % Oper Income USD Mil Operating Margin % Revenue USD Mil Most Recent Period Prior Year Period Rev Growth % Most Recent Period Prior Year Period Earnings Per Share USD Most Recent Period Prior Year Period Working Capital USD Mil Long-Term Debt USD Mil Total Equity USD Mil Debt/Equity Industry Peers by Market Cap May 11 Aug 11 Nov 11 Feb 12 1.7 0.1 0.4 0.4 0.7 0.5 0.3 0.4 May 11 Aug 11 Nov 11 Feb 12 . -87.1 -4.7 -33.9 29.4 18.6 -38.6 -26.7 May 11 Aug 11 Nov 11 Feb 12 -0.03 -0.10 -0.07 -0.04 -0.06 -0.04 -0.07 -0.05 Mkt Cap USD Mil Rev USD Mil BSD Medical Corporat Nihon Kohden Corpora GREEN HOSPITAL SUPPL 55 . . 3 . . P/E ROE% . . . -32.2 . . Major Fund Holders % of shares . . . TTM data based on rolling quarterly data if available; otherwise most recent annual data shown. © 2012 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. ® ß Morningstar Equity Research BSD Medical Corporation BSDM (ASE) Last Close Industry Sector 1.84 Medical Devices Healthcare USD Management & Ownership Management Activity Name Position DR. GERHARD W. Director SENNEWALD,PHD DR. MICHAEL NOBEL,PHD Director DR. DOUGLAS P. BOYD, Director PHD J. GORDON SHORT,M.D. Director PAUL F. TURNER Director MR. STEVEN G. STEWART Director MR. TIMOTHY C. MCQUAYDirector HYRUM A. MEAD Director Shares Held Report Date* 6,293,167 01 May 2012 InsiderActivity - 300,486 143,669 01 May 2012 01 May 2012 - 118,067 98,151 53,431 47,970 44,200 20 Sep 2005 10 Jan 2011 01 May 2012 01 May 2012 31 Aug 2009 - *Report date represents the date on which the owner's common shares held was audited. Fund Ownership Top Owners DFA US Micro Cap I Vanguard Extended Market Idx Inv FCP OP MEDICAL BioHealth-Trds EUR H Vanguard US Total Market Shares (AU) ETF Fidelity Spartan Extended Mkt Index Inv Morningstar Rating % of Shares Held % of Fund Assets Change (k) QQQQ 0.68 0.56 0.45 0.29 0.32 0.01 0.00 0.24 0.00 0.00 -5 1 0 6 0 29 Feb 2012 31 Dec 2011 31 Mar 2012 31 Dec 2011 31 Mar 2012 QQQ QQQ Q Q 0.45 0.10 0.01 0.14 0.24 0.05 0.04 0.02 0 0 0 0 31 Mar 2012 31 Mar 2012 03 May 2012 04 May 2012 Morningstar Rating % of Shares Held % of Fund Assets Shares Bought/ Sold (k) QQQQ QQQQQ 0.29 0.56 0.00 0.00 0.00 0.00 6 1 0 31 Dec 2011 31 Dec 2011 28 Feb 2011 QQQ 0.68 0.01 -5 29 Feb 2012 QQQ QQQQ QQQ Portfolio Date Concentrated Holders FCP OP MEDICAL BioHealth-Trds EUR H PHARMA/wHEALTH I (USD) Wilshire Micro-Cap ETF iShares Russell Microcap Index Institutional Transactions Top 5 Buyers Vanguard US Total Market Shares (AU) ETF Vanguard Extended Market Idx Inv Scotia Nasdaq Index Portfolio Date Top 5 Sellers DFA US Micro Cap I ©2009 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Page 3 of 5 Morningstar Equity Research BSD Medical Corporation BSDM (ASE) Last Close Industry Sector 1.84 Medical Devices Healthcare USD Industry Focus: Medical Devices Boston Scientific Falls Behind 02 December 2011 Debbie S. Wang Senior Analyst Its lagging innovation has implications for the future. Boston Scientific BSX appears to be in a fast-follower position, now that it has fallen behind competitors in developing pipeline technologies, and we believe its formerly wide economic moat has narrowed. We think Boston's new role as the potential third or ancillary market entrant for technologies such as transcatheter heart valves, MRI-safe cardiac rhythm management products, and neuromodulation gives it a weaker competitive position. While we expect the firm can exist comfortably as a fast follower, this is qualitatively different from its previous role as a pioneer. We think this will translate into less power to command premiums for new technology. Our moat ratings for the remaining cardiac device companies-- Medtronic MDT , St. Jude STJ , and Edwards Lifesciences EW --are unchanged, as the field is already highly consolidated, which should result in less supplier switching. Most cardiac markets, including pacemakers, implantable cardioverter defibrillators, and heart valves, are divvied up among just three major players. Considering that product recalls are a hazard for any cardiac device maker, providers are reluctant to put all of their eggs in one basket with a single supplier. We think this will leave the door open for all three firms. Boston Scientific's Trailing Position Has Implications for the Future Innovation is the life blood of this industry, so Boston's laggard position behind Medtronic, St. Jude Medical, and Edwards Lifesciences has implications going forward. Boston has been plagued by operational issues in the wake of its 2006 purchase of Guidant and struggled with the debt load brought on after that acquisition. In the past, the firm (and Guidant's cardiac rhythm management business) consistently had been one of the first to introduce new features and innovative technologies. However, in the past couple of years, Boston has begun lagging behind, especially on the development of pipeline technologies that we expect will drive growth during the next three to ten years. At this point, we anticipate Boston will trail its rivals by two to three years when it comes to MRI-safe CRM devices, transcatheter heart valves, ablation for atrial fibrillation, and neuromodulation. This industry is highly consolidated and dominated by just a few large companies, so being the third to market isn't necessarily the end of the world. St. Jude had historically held that fast-follower position behind Medtronic and Guidant in the CRM market, but still enjoyed a narrow moat and consistent economic profits. The high barriers to entry-which include a substantial base of intellectual property, innovative engineering, and an extensive network of relationships with practitioners--are difficult for startups to create from scratch. Moreover, by the time a small startup actually commercializes its product, one of the large device makers is likely to swoop in and purchase the smaller fish. Thus, it is not surprising that the cardiac rhythm management market has been a stable oligopoly for at least the past decade. Boston's new status as a fast follower is somewhat different from its past position as a pioneer. We anticipate the firm will not be able to garner premiums on new products that are quite as attractive as in the past, when it was the first or second to market. Conversely, we also do not expect to see any new entrants gain significant strength to displace Boston from its third-place position. We remain wary that outgoing CEO Ray Elliott was able to completely ferret out all of the firm's operational issues. Considering Boston's recent record, we would not be surprised to see another glitch come up under new president (and expected future CEO) Michael Mahoney. We had a great deal of confidence in Elliott to put things right, based on his record at Zimmer and his many years in the medical device industry. So if he couldn't fully turn things around at Boston, we're not particularly confident that Mahoney will be able to do much better. Finally, we note that Boston's return on invested capital suffered greatly following the high price it paid for Guidant. Now that the implantable cardioverter defibrillator market is mired in low-single-digit growth, thanks to larger clinical ©2009 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Page 4 of 5 Morningstar Equity Research BSD Medical Corporation BSDM (ASE) Last Close Industry Sector 1.84 Medical Devices Healthcare USD Industry Focus: Medical Devices issues that are unlikely to be resolved soon, the expected return on the Guidant investment will leave ROICs depressed for the foreseeable future. This clearly sets Boston apart from its peer group, which generally earns attractive ROICs in excess of weighted average cost of capital. We are leaving Medtronic's and St. Jude's wide moats and Edwards' narrow moat unchanged. These companies continue to pioneer emerging technologies, even as the clinical bar has been raised. Moreover, providers are reluctant to limit themselves to a single device maker, because product recalls are a fact of life for any device manufacturer. However, we are increasing the margin of safety required for Medtronic and St. Jude (by raising our uncertainty rating to medium from low), as the prospect of Medicare reimbursement cuts looms over the entire industry. ©2009 Morningstar. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. Data as originally reported. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Page 5 of 5