Monday, September 12, 2022 9:36:35 AM
A minor setback is not enough to sway Raymond James analyst Rahul Sarugaser from his bullish stance on Profound Medical (Profound Medical Stock Quote, Charts, News, Analysts, Financials NASDAQ:PROF). Sarugaser delivered a company update on Tuesday where he reiterated an “Outperform” rating on Profound Medical, saying the upcoming 2023 year will be catalyst-rich for the stock.
Profound Medical is commercializing a novel, non-invasive image-guided therapeutic technology called the TULSA-PRO for prostate cancer procedures. The company, which trades on both the NASDAQ and the TSX, has received 510(k) marketing authorization by the FDA for the TULSA-PRO and is currently ramping up its installed base across the United States.
Profound Medical released an update on September 2 on the path to reimbursement under the Centers for Medicare and Medicaid Services (CMA) for the TULSA-PRO. Profound announced that it would be withdrawing its Current Procedural Terminology (CPT) Category 1 application from consideration at the American Medical Association (AMA) 2022 meeting in September, saying instead that the application will take place next year.
The decision moves CMS reimbursement out to likely early 2025 instead of early 2024.
“As the pursuit of a CPT Category 1 code continues to be an important part of our efforts to secure longer-term reimbursement for TULSA from third-party payors, we believe that the proposed hospital payment under C9734 is sufficient to help further advance adoption of the technology in the near- to mid-term in the United States,” said Arun Menawat, CEO and Chairman of Profound, in a press release.
But Sarugaser said the company’s decision is not really a delay in PROF’s timeline. He explains that an underappreciated risk on PROF was that applying now could have resulted in the AMA opting to award the TULSA-PRO with a Category 3 CPT code for emerging technologies instead of the sought-after Category 1, the difference being that reimbursement under Cat-3 is at the full discretion of the payor and, importantly, that granting this status would delay PROF’s ability to reapply for a Cat-1 code for three years.
“PROF is currently able to access a C-code that reimburses >$13k per TULSA procedure (up +5 per cent for 2023), and the award of a Cat.-3 code would have made PROF’s current C-code defunct: a risk the company was unwilling to take,” Sarugaser wrote.
“While [the new announcement] does push potential commencement of reimbursement under CMS to Jan. 2025 (was Jan. 2024), we see this event as only mildly net negative for PROF, given: (i) there is now a greater certainty of TULSA winning reimbursement at a future AMA meeting (~mid-2023), and (ii) PROF’s current C-code is now protected from being nullified by a potential Cat.-3 CPT code allocation (see below), which, in turn, insulates short-med-term Rev,” he said.
The TULSA-PRO uses real-time magnetic resonance imaging with transurethral robotically-driven therapeutic ultrasound and closed-loop thermal feedback control for the precise ablation of pathologic prostate tissue while protecting the critical surrounding anatomy.
Sarugaser said he is reiterating his long-term conviction in Profound Medical, noting several near- and medium term catalysts, including: 2022 year-end data from a Focal prostate Ablation vs radical prostatectomy study; the year-end count of 35 TULSAs as its installed base; a CPT-reimbursement decision (expected mid-2023) and 2023 year end data on another comparison trial.
Profound’s share price had climbed a long way over the period of mid-2019 to early 2021, effectively going from $6 to as high as $28 at its peak. But the past year and a half have seen all of those gains now erased, as PROF is currently trading again in the $6 range.
But Sarugaser is expecting a lot more from the stock going forward, pairing his Outperform rating with a maintained 12-month target price of $15.00, which at press time represented a projected return of 130.1 per cent.
“[G]iven the continued sell-down in PROF, we see the present stock price as a value-level to build positions over the next six months in advance of the 2023 catalysts which lead to our long-term thesis,” he said.
By the numbers, Sarugaser thinks Profound will generate full 2022 revenue and EBITDA of $7 million and negative $25 million, respectively, which moves to 2023 revenue and EBITDA of $19 million and negative $24 million, respectively, and onto $117.8 million in revenue and positive $20.8 million by 2026.
On valuation, Sarugaser has Profound’s EV/Revenue going from 12.2x in 2021 to 11.2x in 202 to 4.9x in 2023 and its EV/EBITDA multiple going from negative 3.9x in 2021 to negative 3.3x in 2022 to negative 3.5x in 2023.
Recent PROF News
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 09/16/2024 12:15:04 PM
- Profound Medical’s PRO-Talk Live! Event Features the Present and Future of TULSA • GlobeNewswire Inc. • 09/16/2024 12:00:00 PM
- Form S-8 - Securities to be offered to employees in employee benefit plans • Edgar (US Regulatory) • 09/12/2024 10:02:56 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 09/04/2024 09:02:36 PM
- Profound Medical to Participate in Lake Street’s Best Ideas Growth Conference • GlobeNewswire Inc. • 09/04/2024 08:30:00 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/30/2024 04:15:05 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/27/2024 05:31:07 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 08/08/2024 08:50:57 PM
- Profound Medical Announces Second Quarter 2024 Financial Results • GlobeNewswire Inc. • 08/08/2024 08:05:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 07/18/2024 08:45:04 PM
- Profound Medical to Release Second Quarter 2024 Financial Results on August 8 – Conference Call to Follow • GlobeNewswire Inc. • 07/18/2024 08:30:00 PM
- Form EFFECT - Notice of Effectiveness • Edgar (US Regulatory) • 07/16/2024 04:15:13 AM
- Profound Medical Announces Category 1 CPT Codes Proposed CY2025 Rule for TULSA to Treat Prostate Diseases • GlobeNewswire Inc. • 07/11/2024 11:00:00 AM
- Form F-X - Appointment of Agent for Service of Process and Undertaking • Edgar (US Regulatory) • 06/14/2024 09:23:52 PM
- Form F-10 - Registration Statement for Securities of certain Canadian Issuers. • Edgar (US Regulatory) • 06/14/2024 09:01:28 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/14/2024 08:05:05 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/03/2024 08:30:07 PM
- Profound Medical Annual General Meeting of Shareholders Voting Results • GlobeNewswire Inc. • 05/15/2024 09:00:00 PM
- PROFOUND MEDICAL ANNUAL GENERAL MEETING OF SHAREHOLDERS VOTING RESULTS • PR Newswire (Canada) • 05/15/2024 08:12:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/14/2024 01:30:06 PM
- Profound Medical Receives U.S. FDA 510(k) Clearance for ‘Contouring Assistant’ AI Module that Enables Creation of an Automated TULSA Treatment Plan • GlobeNewswire Inc. • 05/14/2024 11:30:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/09/2024 08:15:06 PM
- Profound Medical Announces First Quarter 2024 Financial Results and Issues Full-Year 2024 Revenue Guidance • GlobeNewswire Inc. • 05/09/2024 08:05:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/06/2024 08:30:09 PM
- Growing Body of Clinical Evidence Points to the Potential of Profound Medical’s TULSA Procedure Becoming a Mainstream Treatment Modality Across the Entire Prostate Disease Spectrum • GlobeNewswire Inc. • 05/06/2024 08:15:00 PM
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