Opsens Inc. is set to release its Q1/23 earnings on Thursday, January 12th, 2023. We would like to remind readers of the opportunity present in the Savywire technology and the future prospects for OPS.

2023 Expectations: We are expecting FY/23E revenue at $53.3M and FY/23E Adj. EBITDA at -$9.7M. We expect a ramp up on sales of SavyWire. OPS has approximately doubled their sales team and is in the process of sending team members to health centres across the US. The goal of the OPS salesforce is to have one representative per centre to start, with each representative taking on more than one centre as relationships are developed.

Catalysts for 2023: OPS is looking to capitalize on GPO sales channels in addition to their newly minted sales force focusing on one centre per team member. During Q4/22 OPS was forced to temporarily halt production in their clean room which will likely provide a bump to QoQ Q1/23 results. During Q4/22 Johnson and Johnson acquired Abiomed, OPS and Abiomed have pre-existing relationships and we are optimistic that J&J plans to extend the geographical reach of Abiomed to have a global presence. As a result, we see OPS’s OEM pressure products directly benefiting.

Future of Opsens: OPS management sees $100M in revenue for 2025, representing ~88% growth from our FY23 expectations. Based on a ramp of SavyWire production we see gross margins continuing to improve and are modelling accordingly. TAVR is becoming an increasingly valuable market with studies upwardly revising market size expectations. Incumbents such as Edwards life sciences continue to release positive results from studies which have been concluded. Recent examples show a material improvement in lifestyles post transcatheter tricuspid valve replacements.

Depending on approvals within the industrial segment, there is a potential for the segment to provide an additional ~$20M in revenue on top of the $100M management estimate for 2025 revenue. Alternatively, we see the opportunity for a strategic review as we assess the potential outcomes for OPS industrial.

Valuation: We continue to believe OPS will be able gain solid market share in TAVR due to the various key advantages of the SavvyWire (continuous pressure measurement, use of a single wire vs. multiple devices, single access point, cost savings, time savings) with potential to become the dominant guidewire in 3-5 years. With GPO sales channels and a bigger dedicated sales team, we are expecting accelerating sales growth from the FFR/dPR segment in FY2023 with improving gross margins.

Additionally, we are looking forward to a potential for growth in the industrial sector. Applications in the mining and nuclear sectors look promising as there is a renewed push to make investments into these sectors. We are maintaining our BUY rating and our $4.00/share target price based on 5x 2023E sales ex-TAVR and 2.5x 2025E TAVR sales.