Nexstim

First steps on path towards longer-term profitability

Update | 2 March 2022

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Nexstim delivered its first ever profitable period in H221 and is guiding towards continued revenue growth and a positive operating result for FY22. Profitability and partnerships are central to FY22 strategic objectives. The recent Magnus Medical and PNC Management Services deals are trailblazers for a new technology licencing revenue stream and a deeper partnership business model for the US NBT therapy business respectively. The former deal includes a $4m upfront payment which addresses Nexstim’s prior funding shortfall, and its structure means that in the near-term, the company is able to direct its internal resources towards supporting global growth in diagnostics, US NBT partner clinics, and ex-US opportunities for the therapy business. Our updated model values Nexstim at €58.1m (€8.69 per share).

Year-end: December 31202020212022E2023E
Revenues (€m)4.16.411.911.7
Adj. PBT (€m)(4.2)(1.9)1.40.1
Net Income (€m)(4.1)(0.8)1.50.2
EPS (€)(0.02)(0.00)0.220.03
Cash (€m)3.55.26.96.6
EBITDA (€m)(3.0)(1.0)2.20.8
Source: Trinity Delta
  • Operational execution in FY22  The first FY22 strategic objective is financial: profitable net sales growth, operating profitability, and minimising future capital needs. The second focuses on building and expanding the network of partner clinics, especially in the US. Growth is anticipated in both NBS (diagnostics) and NBT (therapy) businesses, with rising system utilisation likely to boost recurring revenue. To date 200+ institutions have NBS systems, while 51 systems with therapy capabilities have been placed (21 US, 30 Europe/RoW) including both NBT and NBS5+ systems. There is growing interest in the latter which combines diagnostic and therapeutic applications on one platform.
  • A new licencing revenue stream The Magnus Medical deal brings in welcome funds, provides Nexstim with a share in the economics of the US opportunity for accelerated therapy protocols in neuropsychiatry, and is the first licence granted by Nexstim for commercial use of its NBT technology and patents. Deal terms include a $4m (€3.5m) upfront plus up to c $15m (€13m) in sales royalties over five years. While Nexstim has some restrictions on NBT sales in the US, this deal does not impinge on existing US therapy customers or impact the US diagnostic opportunity.
  • Solid revenue performance   FY21 net sales of €6.4m (FY20: €4.1m, +55%), include €3.7m in system sales (FY20: €1.7m, +113%) and recurring revenues of €2.7m (FY20: €2.4m, +13%). NBS sales performed strongly rising 71% to €3.7m, with NBT growth of 38% (€2.7m). End-FY21 cash of €5.2m was subsequently boosted by the €3.5m Magnus Medical upfront, funding Nexstim to sustainable profitability.
  • Valuation of €8.69/share  Updating our DCF-based rNPV model for FY21 results and recent deals generates a valuation of €58.1m (equivalent to €8.69/share or €7.99 fully diluted), which should rise with execution on strategic priorities.

Update

2 March 2022

Price€4.88
Market Cap€32.6m
Enterprise Value€27.4m
Shares in issue6.69m
12 month range€3.41-7.77
Free float73.6%
Primary exchangeHelsinki
Other exchangesStockholm
SectorHealthcare
Company CodeNXTMH/NXTMS
Corporate clientYes

Company description

Nexstim is a targeted neuro-modulation company that has developed a proprietary navigated rTMS platform for use in diagnostics (NBS) and therapeutics (NBT). NBS is used in planning brain surgery while NBT is focused on depression and chronic pain. FDA approval for depression was given in 2017, and the focus is on commercial roll out in the US, Europe and Asia.

Analysts

Lala Gregorek
lgregorek@trinitydelta.org
+44 (0) 20 3637 5043

Franc Gregori
fgregori@trinitydelta.org
+44 (0) 20 3637 5041

Exhibit 1: Summary of financials
Source: Company, Trinity Delta Note: The accounts are produced according to Finnish GAAP. Sales forecasts do not include any contribution from indications yet to be approved. Historic EPS, DPS and Average no. of shares have been adjusted to reflect the 100:1 share consolidation in May 2021.

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