Itamar Medical Ltd. (TASE:ITMR), which develops home devices for diagnosing sleep apnea, today officially announced its intention of being listed for trade on Nasdaq. Itamar Medical said that it had already filed its request for listing with the US Securities and Exchange Commission (SEC). Itamar will probably be listed for trade in the coming months through American Depository Receipts (ADRs), a security that followings a share traded on another exchange. No offering of shares is expected in the US at this stage.
Following Itamar Medical's announcement and the company's publication of good results today, the company's share price rose 3.6%, pushing its market cap up to NIS 339 million. Itamar Medical's share price has remained fairly stable over the past year and fluctuations have been relatively moderate for the past five years.
The company's reports show continued stable growth in revenue. Itamar Medical's revenue totaled $6 million in the second quarter, 20% more than in the second quarter of 2017. The company's revenue in the first half of 2018 was $11 million, 22% more than in the corresponding period last year. If Itamar Medical maintains this rate of revenue, its revenue will exceed $20 million in 2018, regarded as the threshold for a medical devices company interested in the US capital market.
Itamar Medical's gross profit margin hit 76% in the second quarter, the same as in the second quarter of 2017. Thanks to a small decrease in the ratio of marketing and sales expenses to revenue, the company's operating loss fell slightly to $900,000 in the quarter. Its net loss was $400,000 in the second quarter and $300,000 in the first half of 2018, making it appear that Itamar Medical is poised to reach the break-even point.
Itamar Medical had $8.5 million in cash after repaying the last bonds remaining from its 2007 issue and raising $6 million from its principal shareholders.
Almost all of the company's revenue comes from its Watchpat device for diagnosing sleep apnea, while revenue from its Endopat device for diagnosing blood vessel conditions fell to several hundred thousand dollars annually, due to the company's focus on sleep. Itamar Medical was not able to find a suitable business model and clinical niche for this product.
On the other hand, the company's focus on marketing its sleep product in the cardiologist market, while foregoing, at least for now, the market for sleep doctors, who prefer more comprehensive sleep diagnosis (rather than only sleep apnea) in the sleep laboratories with which they have various economic relations, was very successful.
Itamar Medical hopes to obtain approval for the next generation of its leading product for diagnosis of sleep apnea by the middle of next year. The new product is designed to be both smaller and easier to operate and cheaper to produce.
Nasdaq has become more hospitable to young medical device companies over the past year, after having preferred drug companies in previous years. The current wave of Nasdaq offerings also included several medical device companies, mainly those including an artificial intelligence or tele-medicine aspect.
iRhythm Technologies, which diagnoses cardiac arrhythmia using a small mobile monitoring device, held its IPO in 2016 at a company value of $100 million. Today, two years later, the company's market cap is nearly $2 billion, with quarterly revenue of $35 million and $150 million in projected annual revenue, albeit still with no profit.
Itamar Medical regards itself as similar to this company, because they both focus on home diagnosis devices marketed to the cardiology market, although one important difference between them is that Itamar Medical is offering a one-time diagnosis, while iRhythm is offering continuous monitoring.
Another company in a field tangential to that of Itamar Medical is Inspire Medical, which has developed an innovative device for preventing sleep apnea (the same problem diagnosed by Itamar Medical, which also distributes conventional treatment for the condition). Inspire Medical's share price has risen 180% since its IPO last May. The company's revenue totaled $10 million in the most recent quarter, not far from that of Itamar Medical's. Inspire Medical has also yet to make a profit.
Even if these companies are not necessarily comparable to Itamar Medical, they indicate that the market is open to young medical device companies.
Itamar Medical president and CEO is Gilad Glick.
Published by Globes [online], Israel business news - www.globes-online.com - on August 12, 2018
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