This maker of biomaterials and bioimplants consistently beats estimates and is rewarding shareholders by buying back shares at a rapid pace.
MiMedx (MDXG)
from BI Research
MiMedx (MDXG) is hitting on all cylinders with the best yet to come in the remaining three quarters of this year. For the latest quarter, EPS was $.04, a penny higher than the consensus and well above last year’s loss of $.01. Revenue grew 108% to $40.8 million at the upper end of the guidance range, and the company notes that it likely could have been $1 higher were it not for bad weather.
This is the 14th straight quarter of meeting or beating revenue guidance, so MiMedx has a good handle on knowing what to expect from its business. Wound care (73% of revenues) was up) 103% to $30 million while surgical, sports medicine and OEM (SSO) was up 125% to $11 million.
Looking ahead, the company raised the lower end of its $175 - $190 million guidance range to $180 to $190 million and reiterated its projected operating margin of “in excess of 15%” for the year as a whole.
EPS in Q2 should be in the $.04 - $.05 range. I believe guidance translates to $.24 to $.25, on 116 million shares diluted now, so the back half of the year is expected to come in at $.15, say, vs. $.09 in the first half.
This tremendous growth rate justifies the current forward PE of 40 and an apparent 2015 exit run rate PE of more like 30. Growing as rapidly as it is, there is no sense looking at the trailing PE.
The company has added 25 reps to the field sales force in Q1, bringing the total to 193 and this should hit 200 any day now. This compares to 140 just 6 months ago. So this will be one driver of progressively higher results as we go through 2015. MiMedx added 53 million covered lives from 27 new plans during Q1. Ten Blue Cross/Blue Shield plans encompassing 20 states have added coverage during Q1. Commercial (insurance) lives coverage has grown to approximately 150 million, plus 36 million are now covered under Medicare and 29 states have now confirmed coverage under Medicaid.
The CEO stated that he believes the share price undervalues the Company and therefore it increased its share repurchase authorization by $10 million. MiMedx spent $12.7 million buying back stock in Q1, so this is no idle increase in the authorization. The CEO also noted that in his opinion (and I heartily agree) this is not a good candidate to bet against, because of MiMedx’s strong record or meeting and beating guidance, the strong growth past and expected, and because the ultimate equalizer is if the company were to be bought out.
Based on all of the above, the shares are a Buy.
Tom Bishop, BI Research, www.biresearch.com, April 28, 2015