MRI Electrophysiology Adoption And Aging Demographics Will Drive Long Term Earnings Potential

Catalysts

About Imricor Medical Systems

Imricor Medical Systems develops MRI compatible cardiac ablation systems that enable interventional electrophysiology procedures to be performed inside the MRI suite.

What are the underlying business or industry changes driving this perspective?

• Imricor is positioned to participate in a rapidly expanding global electrophysiology market, supported by an aging population and rising arrhythmia prevalence. This context may contribute to sustained procedure volumes and recurring revenue from consumables.
• Growing hospital investment in modern MRI and CMR infrastructure in Europe, the Middle East and the United States is enlarging the addressable base of sites ready for iCMR adoption. This supports potential multi year capital equipment sales and associated service revenue.
• Potential FDA clearances for NorthStar and the broader 510(k) portfolio, building on recent MDR approvals in Europe, are viewed by some market observers as a possible catalyst for U.S. commercialization and related revenue growth from a currently low base.
• Clinical data from VISABL-AFL and VISABL-VT, which focus on shorter procedure times and higher success rates for complex ablations, may support faster adoption at high volume centers and improved utilization. Higher utilization can help improve gross margins as fixed costs are spread over a larger revenue base.
• A strengthened balance sheet with funding estimated to cover more than 11 quarters allows Imricor to maintain R&D and commercial investment through the regulatory process. This financial position may support efforts to achieve operating leverage over time and reduce net losses as revenue develops.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Imricor Medical Systems's revenue will grow by 221.0% annually over the next 3 years.
• Analysts are not forecasting that Imricor Medical Systems will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Imricor Medical Systems's profit margin will increase from -4806.1% to the average AU Medical Equipment industry of 9.6% in 3 years.
• If Imricor Medical Systems's profit margin were to converge on the industry average, you could expect earnings to reach $2.4 million (and earnings per share of $0.01) by about December 2028, up from $-36.0 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 294.4x on those 2028 earnings, up from -8.4x today. This future PE is greater than the current PE for the AU Medical Equipment industry at 36.5x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.9%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Regulatory approvals in the United States could take longer or be more complex than expected, particularly for the PMA clinical module and multiple 510k submissions. This would delay commercialization, slow the ramp in procedure volumes and constrain revenue growth.
• The company remains at a very early commercial stage, with first half 2025 revenues of 197,000 U.S. dollars that declined 52 percent year on year. As a result, even in a large and growing global electrophysiology market Imricor may struggle to convert clinical interest into sustainable site installations and consumable pull through, limiting revenue and gross margin expansion.
• Operating losses are widening, with an underlying net loss of 9.99 million U.S. dollars for the half increasing 27 percent year on year and cash outflows rising as sales and R and D investment step up. This raises the risk that the current 11 quarters of funding is consumed before scale efficiencies emerge, putting pressure on future earnings and potentially requiring further dilutionary capital raises.
• Adoption cycles at hospitals can be long and variable, depending on MRI vendor integration, new lab construction and internal approvals. A slower than anticipated conversion of the European and Middle Eastern pipeline or fewer high volume VISABL trial sites could delay the installed base build out, depressing recurring consumables revenue and delaying any improvement in net margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of A$2.14 for Imricor Medical Systems based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $24.8 million, earnings will come to $2.4 million, and it would be trading on a PE ratio of 294.4x, assuming you use a discount rate of 7.9%.
  
• Given the current share price of A$1.42, the analyst price target of A$2.14 is 33.7% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.