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SMDM - China is a big market, so could be big if successful. I believe the products are already manufactured over there, I would guess if they sold them there they could save on their shipping charges. I wonder if this is in response to the tariffs. Their margins are already thin and I would guess the Chinese market is competitive. I expect this coming earnings report to be big because of their Carpool Karaoke microphone.
I don't own it yet, but FRAN looks compelling to me.
OPXS In the first sentence of their 8k they filed yesterday they seem to be making it clear that the purpose for the director change is to uplist to NASDAQ.
"
On November 4, 2019, the Board of Directors of Optex Systems Holdings, Inc. (the “Company”) appointed three new directors: Larry Hagenbuch, Dale Lehmann and Rimmy Malhotra, all of whom have been qualified as independent as defined under Nasdaq Listing Rules by the Board."
OPXS board shakeup
Optex Systems Holdings, Inc. Announces Appointment of New Board Members
Press Release | 11/04/2019
RICHARDSON, TX / ACCESSWIRE / November 4, 2019 / Optex Systems Holdings, Inc. (OTCQB:OPXS), a leading manufacturer of precision optical sighting systems for domestic and worldwide military and commercial applications, announces the appointment of three new Board Members and the resignation of three current Board Directors.
Danny Schoening, CEO of Optex commented, "We are extremely pleased with today's announcement as it achieves two critical objectives which we believe are in the best interests of our shareholders. First, it transforms our Board so it now consists of a majority of Independent Directors. Second, it adds three new Board Directors who have distinct and valuable skill sets that we believe will help Optex maximize its long-term potential. We would also like to thank the resigning Directors for their years of valuable service to the Board."
Larry Hagenbuch joins the Board and has accepted the role of Audit Committee Chair. Larry is currently a Managing Director at Huron Consulting Group. Prior to that, Larry was the Chief Operating Officer and Chief Financial Officer for J. Hilburn, Inc., a custom clothier for men from Dec 2009 to May 2019. He served on the board of directors of Remy International (REMY) from November 2008 until that company's sale to BorgWarner in November 2015, where he served on the audit and compensation committees. Larry also currently serves on the board of directors for both Arotech (ARTX) and HireQuest (HQI). Larry has served in senior management positions for SunTx Capital Partners, Alix Partners, GE / GE Capital, and American National Can Group, Inc. Larry began his professional career in the United States Navy.
Dale Lehmann joins the Board as an industry expert having over 30 years of management, strategy, product development, delivery and operational experience in the electro-optical industry. Dale was the Director of Business Development & Strategy for General Dynamics Global Imaging Technologies Group from 2014 through 2017. Prior to that, Dale was the Senior Vice President & General Manager of the Infrared Products Group for L-3 Communications/Cincinnati Electronics from 1995 through 2014. Dale currently sits on the Board of Directors for Adimec USA, a provider of application specific imaging solutions.
Rimmy Malhotra joins the Board and has accepted the role of Compensation Committee Chair. Rimmy currently manages The Nicoya Fund, an investment partnership whose partners include, high net worth individuals, entrepreneurs and family offices and has acted in that capacity since 2013. He currently serves as Vice-Chairman of HireQuest, a NASDAQ listed staffing operator. He holds an MBA from The Wharton School in Finance, MA in International Affairs from The University of Pennsylvania and a Bachelor of Science in Computer Science from Johns Hopkins University.
Concurrent with these additions, Bill Bates and Karen Hawkins have stepped down from the Board to enable a majority independent Board going forward and after several years of service, David Kittay has stepped down to pursue other interests.
ABOUT OPTEX SYSTEMS
Optex, which was founded in 1987, is a Richardson, Texas based ISO 9001:2015 certified concern, which manufactures optical sighting systems and assemblies, primarily for Department of Defense (DOD) applications. Its products are installed on various types of U.S. military land vehicles, such as the Abrams and Bradley fighting vehicles, Light Armored and Armored Security Vehicles, and have been selected for installation on the Stryker family of vehicles. Optex also manufactures and delivers numerous periscope configurations, rifle and surveillance sights, and night vision optical assemblies. Optex delivers its products both directly to the military services and to prime contractors. For additional information, please visit the Company's website at www.optexsys.com.
Safe Harbor Statement
This press release contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the products and services described herein. You can identify these statements by the use of the words "may," "will," "could," "should," "would," "plans," "expects," "anticipates," "continue," "estimate," "project," "intend," "likely," "forecast," "probable," and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, continued funding of defense programs and military spending, the timing of such funding, general economic and business conditions, including unforeseen weakness in the Company's markets, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in the U.S. Government's interpretation of federal procurement rules and regulations, changes in spending due to policy changes in any new federal presidential administration, market acceptance of the Company's products, shortages in components, production delays due to performance quality issues with outsourced components, inability to fully realize the expected benefits from acquisitions and restructurings or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, changes to export regulations, increases in tax rates, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, unanticipated costs under fixed-price service and system integration engagements, changes in the market for microcap stocks regardless of growth and value and various other factors beyond our control.
You must carefully consider any such statement and should understand that many factors could cause actual results to differ from the Company's forward-looking statements. These factors include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. The Company does not assume the obligation to update any forward-looking statement. You should carefully evaluate such statements in light of factors described in the Company's filings with the SEC, especially on Forms 10-K, 10-Q and 8-K. In various filings the Company has identified important factors that could cause actual results to differ from expected or historic results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete list of all potential risks or uncertainties.
Contact:
IR@optexsys.com
1-972-764-5718
SOURCE: Optex Systems Holdings, Inc.
View source version on accesswire.com:
https://www.accesswire.com/565220/Optex-Systems-Holdings-Inc-Announces-Appointment-of-New-Board-Members
I think that is likely the perspective that is driving the stock this low.
"If ZYXI is so profitable, why did their competitors leave the space?"
They didn't leave. The competitors were being toooooo scammy and the OIG told one they could not be in this space anymore, and told the other one that they would have to pay a big hefty fine, but the company negotiated a smaller fine if they left the space, and the judge said "Ok". You could view the fact that they didn't fight to stay in the space as a negative, but I just think they have other lines of healthcare business where they can act unabated in their scamminess. The OIG also inspected ZYXI but didn't find anything to fine them over as they were acting in the norms of healthcare scamminess. Before these competitors left it wasn't as profitable of an opportunity as there were 3 players competing. So then ZYXI now finds itself the lone survivor in an area where FDA approval is required for devices being sold.
"Why have no larger companies entered the space with a superior product? "
I think larger companies would come in with a superior product if they could do it easily, but they have to have the scammy FDA approval to be obtained. ZYXI itself has a great blood volume monitor that can detect internal bleeding but they are waiting for scammy FDA approval.
"Just makes no sense for a very profitable medical device company like ZYXI to spend nothing on R&D."
R&D is very expensive and earns the company nothing for many years as can be seen by their blood volume monitor, and right now they are able to take over the old business left over by the competitors who were forced out. It is difficult and expensive to sell doctors on a new machine, and so they are selling doctors on their TENS IFC machine who were previously prescribing these competitors machines. They are doing the reasonable thing IMO. Why spend money on new opportunities when there is a large untapped market directly before them? They are currently spending money on studies on their blood volume monitor to make sure it can withstand unlikely events such as earthquakes, etc., so they are spending some money on research related items to ensure they get through scammy FDA approval.
"Especially when they have such a limited product offering."
They also have a device that can help people rehab after a stroke, but it is not as easy to sell. They also have the blood volume monitor in the works waiting on approval any day. They are preparing for a possible acquisition, which would be a better move in my opinion than trying to develop something else from scratch. Once they have saturated the TENs IFC space and have a big sales presence I believe they will start selling their other devices.
"Instead they put all their resources into hiring more & more salespeople."
They are doing what seems to be the most prudent thing to do in their situation. As a shareholder, I would be unhappy with them spending money on research into some new unproven product instead of spending money on salespeople.
"You probably saw this but there was a negative article on Seeking Alpha last week:"
Yes, I read that article saying that the Zynex abusive pricing model is unsustainable. I, however believe that the Zynex abusive pricing model is well within the norms of healthcare system scamminess judging by its recent OIG inspection in which the inspectors had nothing to report. Also judging by my own experience whenever I go to any medical professional - the abusive healthcare pricing models are in no way kept in check by my own insurance company. Your experience may vary.
"I'm curious to see how this one plays out."
Me too. I'm also watching to see if anything looks wrong to me, but it is currently playing out the way I would expect it to. I was hurt the first time ZYXI had explosive growth which quickly deteriorated, so I am on the lookout.
The whole healthcare system is scammy IMO.
ZYXI makes a lot of their money through a large markup on commodity items. There is a risk that the insurance companies will crack down on this. However, I view it as similar to the risk that the insurance companies might crack down on overpriced Tylenol pills or other supplies at the clinic down the street. However ZYXI is currently the only player in this space, growing revenues at >40%, and accelerating. The earnings are down because they are aggressively hiring salespeople on salary, plus they are paying taxes this versus no taxes last year (so now Uncle Sam is getting his cut too).
ZYXI ($9.50) Accelerating revenue growth from 36% last quarter up to 45% this quarter. Might be 95% revenue growth down the road a few quarters. Rate of new salesperson hiring moving to 15 per month up from 10 per month.
Great quarter. Accelerating revenue growth from 36% last quarter up to 45% this quarter. He addressed the bear attack. They aggressively cut back on the non-performing sales reps so the absolute number has not increased much but now the sales people are exclusive to ZXYI. The only negative was a reduction in net income due to the increased SG&A investment. It sounds like he is planning for a great deal of growth. Now the pace of hiring has increased from 10 sales people per month to 15 per month which occurred in September.
Great quarter. Accelerating revenue growth from 36% last quarter up to 45% this quarter. He addressed the bear attack. They aggressively cut back on the non-performing sales reps so the absolute number has not increased much but now the sales people are exclusive to ZXYI. The only negative was a reduction in net income due to the increased SG&A investment. It sounds like he is planning for a great deal of growth. Now the pace of hiring has increased from 10 sales people per month to 15 per month which occurred in September.
I met with RFIL CEO at the microcap rodeo. He is a competitive pure sales guy. He simplifies the business into something easy to sell, then sells it. I'd guess he'll be able to increase margins at the new acquisition.
SCIA - Do you have any expectations for this quarters results? Seems like the China thin film deal was sort on hold. Also they were building out a new part of their lab. I'm not sure if that will eat into their profits. The ex-CEO salary and severance might be gone now.
This article argues that the health system has an incentive to keep prices high
https://www.npr.org/sections/health-shots/2018/05/25/613685732/why-your-health-insurer-doesnt-care-about-your-big-bills
I am holding my position. I don't find anything new in this article. And I expect the report that will come out soon to be great. There is some risk in the stock. But there is allot of upside from here if the insurance companies don't crack down on them. They have said that reimbursement rates are the same that they have been for twenty years.
SMSI - folks on the StoryTrading WhatsApp group seem to think the stock will have around a $.12 quarter versus street estimates of .06-.08 they do alot of monitoring of the app downloads and interviewing of sprint salespeople.
The parents magazine selection was an actual test with real individuals. Seems very positive.
UFO, nice call on the ZYXI price dip. Also, thanks for giving your downside rationale on if they were to change the power ratings for the lower powered devices. I don't know if that would happen, but it would be an instant killer to ZYXI.
FRAN (17.17) moving up on this turnaround in progress.
PCHM $1.75. I expected it to fall after paying out the dividend but it seems to be holding strong.
Yes, exactly, I'm worried they did something with the accounting or timing of orders to make the recent growth look better than it really was and that future quarters will have much less growth. I don't have any reason to think that, it is just a concern. There isn't much information on the company to go off of. I'm not sure how much growth to expect going forward, but even if they don't hit the cover off of the ball, they don't seem expensive.
I followed you into INMD. Company seems inexpensive for 55% revenue growth in an exciting space. I just hope the numbers aren't manipulated.
ZYXI 95% order growth
https://finance.yahoo.com/news/zynex-announces-95-order-growth-131600796.html
The orders are accelerating with the additional salespeople.
95% order growth
https://finance.yahoo.com/news/zynex-announces-95-order-growth-131600796.html
I think there is a long delay before the orders turn into cash, but sales are accelerating.
I liked the last paragraph of that OPXS statement also. In the beginning of the post he had been talking about hiring difficulties so it was good to see him close with a statement that sounded optimistic on the quarter.
SMDM I'm surprised that SMDM is trading so low given that they will probably have a large quarter due to retailers stocking up on the carpool karaoke microphone. Maybe because tariffs could hit them hard next year, but this year should look good.
What are your current favorite stocks?
The company wouldn't get any money from his sale of shares, only he would.
ZYXI congrats on making something out of your short. Are you saying ZYXI at $8 is a good long play?
CRWD 61.26 and falling. Nice call.
Why is the stock up so much on this acquisition?
Hi hweb2,
Here is the bull case as I see it.
ZYXI is at a trailing P/E of 25 and is growing revenues at 34% as of last quarter. So the company is cheap on PEG basis using the revenue growth rate. Also the company is a fast growing medical device company and the market gives higher multiples to such companies.
The company has recently renewed their Medicare provider number. So they had stopped giving devices to those patients with on medicare at some point and now will begin giving devices to those patients on medicare also. I don't know exactly how large this market is, but I think it is a large market and should give revenues a boost.
By the end of 2019 ZYXI will have 250 salespeople. Sandgaard says that when a salesperson is mature they should make about $1Million a year per salesperson. He is targetting to have 400 salespeople in total and them at a rate of something like 12 per month. From what I remember Sandgaard says it takes about 3 years for a salesperson to mature. $250 salespeople at $1Million p/y gives $250M a year and 400 gives $400Million a year. The current annual revenue is about $34Million a year. So if the company is able to hit those targets they would grow 7 times the size in 3 years, and 11 times the size in 4 years.
This is not a new market. It was an established market filled by 2 competitors (Empi and RS) who are now out of business because of their improper billing to insurance companies they were shutdown by the government.
Many of the former Empi salespeople were acquired by ZYXI when Empi shutdown and I would expect those salespeople to have a list of names of doctors who were former prescribers of Empi and RS products. ZXYI is now working to encourage those same doctors to prescribe their product who used to prescribe the former competitors product. Because you must have FDA clearance to sell the product and because of the art of medical insurance billing is difficult to learn, I believe that ZYXI will not have any significant competition as they go after this market.
They also have the blood volume monitor which was recently approved. It takes 3-7 years to get a medical device approved. They are still within that window and could get approved any day now. The product makes sense - it detects internal bleeding without a doctor or nurse having to make calculations, and it would be large market.
The company is investing all of it's money into filling the void in the market left by previous competitors. They are also investing in supporting the blood volume monitor with clinical studies needed for clearance. I don't see any reason for them to invest in new products when they have such a great opportunity filling this market void right now. When they have built out their salesforce and fully filled the market void then they can buy an existing related company and selling their product and they will a have a strong saleforce already in-place who have relationships with doctors.
There has been some talk that the CEO Sandgaard is a shady guy. I was in the stock many years ago when the great sales all the sudden dried up and rapidly fell, I got a letter from Sandgaard saying thanks for being a shareholder, the stock kept going down and I sold. I remember the story being that it all of the sudden became difficult to bill the insurance companies. I don't know exactly what happened, but the company was sued and settled out-of-court and survived whereas the competitors to them were inspected by the government, had heavy penalties placed on them and were forced out of the business. I don't think the government gave special treatment to Zynex, I think they just didn't find billing problems that they could penalize them for. According to the CEO Zynex was recently inspected by the FDA and the inspectors went home 2 days early finding nothing wrong. So I think the fact that they were able to stay in business gives some objective confidence that they are doing things properly.
They have recently hired many salespeople that aren't producing and that is hurting their bottom line and will continue to this year, but I could see the growth even increasing and at some point the income will pick up again.
The investors who recently bought the stock did so even though the income rate of increase slowed down, so I don't think they will be as affected when the income number is poor next quarter. Also, I think Sandgaard is sandbagging and the company will do better and I think he is also planning on aggressive hiring which will depress income but boost revenue growth over the near and longer term.
The CEO has millions of shares of stock and only sold a small portion (300K=2% of his 14M shares) and that he sold in a private transaction. I view that as a positive not a negative.
I would be happy to hear all the dirt you have on Sandgaard and any negative comments you have. I sold 2/3 of my holdings in the $7.90s since the cup and handle looked to me to point to $8 and that looks like where the top of the range is and the stock will have difficult comps this year.
ITCC in with a money losing quarter.
Thanks for the HICKA alert $17.00 I got some just below $16, and lightened up on ZYXI. Also nibbled some SPRT yesterday.
OPXS report is out. Any thoughts?
This article had also come out on the same day.
https://seekingalpha.com/article/4258554-zynex-uncontested-market-leader-electrotherapy-pain-management-opioid-alternative
Good point on the other income and I agree that comps will be tougher this year with the normal tax rate.
Also driving the stock price were 2 pieces on ZYXI that came out on SeekingAlpha today.
First was this one
https://seekingalpha.com/instablog/498952-bret-jensen/5299098-4-biotech-stocks-analysts-say-buy-wednesday
Looks like this might be accounting for a little extra push today. He is targeting $9
https://seekingalpha.com/instablog/498952-bret-jensen/5299098-4-biotech-stocks-analysts-say-buy-wednesday
Good results. 34% Revenue increase. 81% gross margins staying the same. Now they will be hiring reps even faster this year - at a pace of 10 per month. A questioner asked how much of the gap left by the previous competitor has been reclaimed and Sandgaard said in the 10s of millions not in the 100s of millions that was left. They are tentatively looking at some acquisitions in a complementary space. He said they have a great training process now for new reps, and the new marketing materials are just about to be deployed to the sales reps. He also mentioned that they could be included in the Russell 2000 soon. They continue to have some clinical studies to prove the efficacy of their new blood volume monitor.
I think the stock continues to look good. They are really building out a strong salesforce and I think they could continue to grow even after fully filling the void from the previous competitor by acquiring other complementary products.
This is their weakest quarter and they still improved 4% over last quarter.
I hope so