Chad, I think if you check with the company, you’ll learn the Al-Hidaya situation is dead. Maybe someone else in the Middle East steps up, maybe not.
Second, the distribution agreements that we’ve been privy to show the unit price to be just under $120,000. A hundred units = $12,000,000 gross income; likely about $6MM net, less operating expenses, taxes, etc. = a net in the area of $2.8MM if that’s the only order for the year. That would be EPS of $0.007 cents a share on the 395MM authorization or $0.0056 on the proposed authorization.
Just saying, I have no idea where your $225,000,000 figure comes from.
Until we know how AS performs in the real world and what the actual protocols are to achieve desired HAI reductions, we have no idea whether a sales or service model will best serve the interest of the customer or shareholders. Management needs to figure out how to get a fair share of the $45B annual US HAI hospital cost and selling machines for $120,000 won’t get us much.
There are about 5,000 hospitals in the US. Even if we assume 100% market penetration at 2 units each, that’s 10,000 units. At $120K per, that’s a gross, one-time revenue of $1.2B. At a 50% gross margin its $600MM. Less operations and taxes. I hope you and others begin to realize that MZEI has a lot of work to do to define and defend the value proposition. MZEI needs to define a business model that demonstrates the ability to gain revenues of X% of the annual $45B HAI cost in the US.
Clearly, MZEI needed to have started real world trials a long time ago to aid in formulating the value proposition to both the hospital community and to suitors. Instead, our illustrious management has spent time devising ways to feather their nests and protecting their jobs. Even if we get EPA approval in a few months and Ascension Health buys a few machines to test with, by the time they get the machines (late this or early next year) and do 6-12 months of testing, I don’t see MZEI being sold until 2018. In the meantime, I hope Ed doesn’t give away the company value through the formulation of more unfavorable-to-shareholder distribution agreements that lock up big swaths of the world. Just watch, without having done the work necessary to define the economic value of AS, he’ll announce some distribution deal with Asia (aka: China) ala the S. America deal and folks will get all excited.
Look, the $45B annual US HAI cost translates into a cost of $9MM per US hospital per year. For Ed to cut deals that deliver one-time revenue of $240K per hospital (+ disposables) is absurd, but that’s what he’s been doing. It’s time for shareholders to wake up!
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