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In May I wrote up a debt-free, cash-rich medical-consumables microcap that had just been marked down for a single soft quarter. Revenue was down 15%, and the market read that as the whole story.
My argument was that it was order timing sitting on top of a hospital customer base that had been built faster than the revenue line could show.
The company has now reported the quarter that answers the question.
Revenue up 20%.
Gross margin up more than 2,000 basis points.
Operating expenses flat.
Adjusted EBITDA more than triple a year ago.
Earnings per share in one quarter greater than the previous five quarters combined.
And the cash balance is higher than it was before the company paid out a $4 million special dividend.
The stock has moved roughly 50% since the original write-up, most of it in the days after the print.
For paid subscribers below: the numbers, what changed in the thesis, what didn’t, how the valuation looks after the move, and my updated view from here.
To mark another great result, I’m giving away one annual subscription at 50% off. First person to redeem it gets it.