GCIInspiration Healthcare secures $4.3m contract for neonatal ventilators, sets stage for long-term growth
In the investment world, it's 'better to be lucky than smart'.
Fortunately in this case - since highlighting neonatal care specialist () as a possible turnaround idea at Mello on Monday - I've been the former.
Indeed, today announced that it had signed a much delayed $4.3m Middle Eastern contract for SLE6000 neonatal ventilators, First Breath Humidification and associated accessories.
So what does this mean?
Well, together with the recent £3m top-up placing at 14p/share - this deal for me is a major step forward, taking the business out of intensive care and back onto the hospital wards in order to further progress its turnaround plan under industry veteran and exec chairman Roy Davis (ex Medica and Optos).
Next steps are to obtain a Bank guaranteed 'letter of credit' for this export order, ship the products sometime over next 6 months, and hopefully agree a longer-term relationship with the customer.
Sure, is not totally out the woods, albeit the $4.3m of cash (once received) should bolster the balance sheet (ie reduce inventory) and allow the Board breathing space in terms of reducing gearing levels (est proforma net debt of £7m).
Regarding numbers, house broker Panmure Liberum has a 40p/share price target, based on Jan FY'25 turnover, adjusted EBITDA, and EPS of £40.9m, £2.0m and -0.9p/share - climbing to £50m, £6.8m, and 3.5p respectively by Jan FY'27. Putting the stock on a modest 12x EV/EBITDA, this would equate a theoretical intrinsic worth of 90p/share, assuming the turnaround is successful of course.
That said, remains high risk and certainly not for the faint-hearted.
Follow News & Updates from Inspiration Healthcare:
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.