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Biotech / Medical : CTEC: Cholestech any other investors?
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To: dstange who wrote (79)8/9/1997 6:01:00 PM
From: dstange   of 710
 
Just reveived CTEC's 1997 annual report. The rest below may simply be restating the obvious, but I think it is important to periodically review the stage at which we find CTEC.

It has produced its first quarterly profit and indications are that it will be introducing another test cassette next year. The annual report indicates the physician office laboratory is approx. 81,000 sites (U.S.). The company has less than 1200 accounts in this market, or penetration of 1.5%. The company has approx. 1500 accounts in the health promotion market. Assuming there are 30,000 such sites (using the WAG method), this gives penetration of 5%. The company has entered the retail paharmacy market. The percent penetration is minimal. The total installed base, at the time of the annual report, was 5,000 units. Clearly, CTEC has plenty room to grow.

Increased penetration of the cholesterol and lipid tests, plus an increase in usage at each account, will provide continued growth. The company has several more cassettes which, when (if) introduced, will provide substantial revenue streams. The future looks very rosy for CTEC.

The question is: How long before the new cassettes are introduced and how much will investment in R&D affect near-term earnings? It is important that CTEC capitalize on its status as the only CLIA-waived system. A large established base with a broad range of tests is the surest defense against the inevitable introduction of competing CLIA-waived systems.

One last question. Is there any concern that revenue growth in the last quarter was "only" 52% over the previous year's quarter? This may have been one reason the stock initially sold off after the recent earnings report. Looking for any thoughts on the above.
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