Nothing new under the rain
Nothing new under the rainEARNINGS/SALES RELEASES
FACT
DMS released H1 18 sales which reached €10.7m (-16%), including a 19% fall in the historic Imaging business to €10.1m and an increase in Wellness and Biotech (from €0.2m to €0.6m).
ANALYSIS
No big change compared to what was witnessed in Q1. New segments are growing, from a very low basis though and despite the rather intense communication of the group in H2 17/Q1 18 which probably suggested a higher absolute level. On the core Imaging segment, business is still poor (-19% in H1, including -23% in Q1), reaching €10.1m. The group insists the first Platinum and Optima sales to UniHA (the first cooperative purchasing group of French public hospitals) should take place in H2. We would rather wait for these sales to materialise. Concerning the negotiations with Intrasense (see our Latest dated 16 May), we are a bit surprised that the relative valuations of DMS Imaging and Intrasense are still being discussed, which means shareholder meetings will not take place any time soon. With respect to the size of the deal, this seems a bit strange (also keeping in mind that these approvals were initially planned in June)… We also reiterate our doubts on the new financing obtained in May, since the implied dilution could be strong. In short, this release does little to improve our confidence in the group which clearly disappointed since H1 17. It remains to be seen whether future releases will be more convincing but it will take time (and better numbers!) to restore management’s credibility.
IMPACT
No impact at this stage and before the release of H1 18 results (28 September). That said, it is rather unlikely that the group will be able to post any top-line growth at all in FY18 (we still have +4.7% even if the comparison basis will be somewhat lower in H2). In other words, the likelihood that we will revise downwards our numbers again, at least at the revenue level, is quite high.
DIAGNOSTIC MEDICAL SYSTEMS SA, (formerly known as DMS), is a France-based company, which together with its subsidiaries, designs, produces and markets medical imagery devices dedicated to conventional and digital radiology as well as bone densitometry. The Company manufactures a range of products for bone densitometry examination, including the ultrasound imaging system UBIS 5000, Challenger Envision, Stratos dR and Stratos. In the radiology sector, its products include Baccara dRF 43, EOL, Platinum and Da Vinci solutions, among others. In addition, it offers such products as scanners, transcranial Doppler, and Giotto Image mammography system. The Company operates several direct subsidiaries, AXS Medical, Apelem SAS, which manufactures radiology equipment, Medilink SARL, which produces Doppler and bone densitometry devices, Apelem SA, based in Spain, Alpha MOS based in France and one indirect subsidiary, SA Apelem and one indirect affiliated company, Spectrap.
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