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INMD

InMode NasdaqGS:INMD Stock Report

Last Price

US$36.04

Market Cap

US$3.0b

7D

-3.2%

1Y

-34.9%

Updated

11 Aug, 2022

Data

Company Financials +
INMD fundamental analysis
Snowflake Score
Valuation5/6
Future Growth3/6
Past Performance4/6
Financial Health6/6
Dividends0/6

INMD Stock Overview

InMode Ltd. designs, develops, manufactures, and markets minimally invasive aesthetic medical products based on its proprietary radiofrequency assisted lipolysis and deep subdermal fractional radiofrequency technologies in the United States and internationally.

InMode Ltd. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for InMode
Historical stock prices
Current Share PriceUS$36.04
52 Week HighUS$99.27
52 Week LowUS$20.60
Beta2.33
1 Month Change34.83%
3 Month Change48.19%
1 Year Change-34.93%
3 Year Change294.96%
5 Year Changen/a
Change since IPO431.17%

Recent News & Updates

Aug 05
Is Now The Time To Put InMode (NASDAQ:INMD) On Your Watchlist?

Is Now The Time To Put InMode (NASDAQ:INMD) On Your Watchlist?

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even...

Aug 02

InMode: Alpha Long-Term Growth - Playing The Insurance Game Next

INMD stock will likely double, given its aggressive international expansion and entrance into the medical segment. The fact that INMD continues to report stellar gross margins of over 80%, underscores its robust profitability and excellent cost management thus far. Therefore, we expect InMode to report an upwards rerating of its revenues ahead, despite the temporary headwinds in the rising inflationary issues. However, the stock is also obviously trading at a premium now due to the excellent FQ2'22 earnings call. Wait for the eventual digestion. Investment Thesis InMode Ltd. (INMD) remains well poised for growth, given its stellar margins and excellent mastery of the inflationary issues thus far. Since the company continues its aggressive expansion globally, we expect an upwards re-rating of its revenue and profitability growth, potentially triggering a long-term stock price appreciation. In the meantime, we expect INMD to expand its medical device offerings as well, with the potential benefit of insurance reimbursement in the future. This move would aid in widespread consumer adoption no matter the inflationary and recession issues, bringing the company further beyond its current aesthetic applications. Thereby, speculatively strengthening INMD's stock valuations moving forward. InMode Could Potentially Enter The Insurance Game Ahead With the recent approval of INMD's EmpowerRF device for women's health and wellness by Health Canada in June 2022 and the US FDA in August 2021, the company could be expanding further into medical wellness moving forward, beyond the usual aesthetic applications. The device received regulatory approval to improve urinary incontinence symptoms, along with Genitourinary Syndrome of menopause, chronic pelvic pain, and blood circulation. Though INMD's device is currently not covered by insurance, there is a real possibility that this technology could be adopted by multiple insurance providers in the future, assuming sufficient demand for said service and the eventual proven results. For now, ELITONE is the only nonvaginal stimulation device covered by insurance through prescription, which has been proven to successfully treat stress urinary incontinence for females. The treatment method used by ELITONE has a similar outcome to INMD's EmpowerRF with VTone attachment. Both products rehabilitate pelvic floor muscles to decrease bladder leaks henceforth. Assuming that INMD's device is eventually approved for insurance reimbursement, we may expect to see a more widespread demand ahead, given that the global urinary incontinence device market is expected to grow from $2.09B in 2020 to $6.17B by 2030, at a CAGR of 11.8%. The move would eventually boost INMD's revenue and profitability growth ahead, since it would open more doors into non-invasive medical research/ developments and procedures, instead of elective aesthetics applications. The company's recent expansion into the women's health and wellness space is already growing tremendously, with the upgraded guidance of $30M in revenue by the end of FY2022, instead of the original estimation of $20M. It will represent a good 6.9% of its total revenues then, with a high potential for multiple expansions moving forward. Therefore, it made sense that INMD is also exploring multiple non-invasive pipelines, including medical treatments for gynecology, ophthalmology, ENT issues, and others. This strategy would protect INMD's profit margins and stock prices during the rising inflationary pressures, due to the eventual therapeutic appeal with little downtime compared to surgeries. Nonetheless, since this is speculative at best, it remains to be seen if the INMD stock is able to sustain its current rally, due to the pessimistic stock market and potential recession. We shall see. INMD Continues To Report Impressive Margins Despite Temporary Headwinds S&P Capital IQ INMD has definitely benefited from the reopening cadence thus far, with the robust pent-up demand for medical and aesthetic procedures. By FQ2'22, the company reported revenues of $113.55M and gross margins of 83.3%, representing an exemplary increase of 30% though a notable decline of 2.1 percentage points YoY, respectively. The revenue comprised 87% of equipment sales and 13% of consumables, the latter representing stellar YoY growth due to the expansion in the installed base. In the meantime, INMD reported net incomes of $44.05M and net income margins of 38.8% in FQ2'22, representing an increase of 4.7% though another decline of 8.1 percentage points YoY, respectively. The declines in the company's margins are mainly attributed to rising inflation, which continues to drive up manufacturing, labor, transportation, and logistic costs for most industries. Therefore, its current exemplary margins highlight INMD's supply chain prowess thus far since the issue naturally affects many global companies. S&P Capital IQ On the other hand, INMD continued to invest in its operations, with total operating expenses of $45.39M in FQ2'22, representing an increase of 25.5% QoQ and 37.2% YoY. Nonetheless, it is essential to note that the ratio to its growing revenues has been stable thus far, accounting for 40% of the company's revenues in FQ2'22, relatively in line with historical levels. S&P Capital IQ Therefore, given its improved profitability and moderated expenses, we are not surprised by INMD's robust Free Cash Flow ((FCF)) generation thus far, with an FCF of $46.42M and an FCF margin of 40.9% in FQ2'22. Though these numbers represent a notable YoY decline in FCF margins, we are not overly concerned since the rising inflation is a temporary headwind at best. Furthermore, INMD continues to report a growing war chest of $88.4M in cash and equivalents on its balance sheet by FQ2'22, despite the massive share repurchase in FQ1'22. S&P Capital IQ The main reason why INMD continues to command impressive gross, net income, and FCF margins thus far, is that it primarily outsources all of its manufacturing needs while still maintaining necessary quality controls. This allows the company to carry minimal inventory levels without having to incur significant capital expenditures for manufacturing and warehousing needs. Therefore, this strategic plan will enable INMD to report minimal net PPE assets of $6.98M in FQ2'22, representing only 1.3% of the company's total assets of $523.21M, while reporting capital expenditures of $0.56M at the same time. S&P Capital IQ Over time, we have unfortunately observed a notable increase in INMD's stock-based compensation (SBC) expenses with a total of $6.35M reported by FQ2'22. It represents a sudden increase of 205.5% QoQ and 215.2% YoY. Nonetheless, investors have nothing to worry about, since the company has also kept its stock count relatively stable thus far, with a total of 84.66M reported in FQ2'22. It indicates a minimal share dilution of 11.2% since its IPO in 2019, aided by multiple share repurchase programs thus far. Notably, for 1M shares announced in March 2022, which had reduced its share count by 1.2% by FQ2'22. We Are Likely To See An Upwards Rerating To Its Future Revenue and Profitability S&P Capital IQ Over the next three years, INMD is expected to report a notable deceleration of revenues and net income growth at a CAGR of 15.01% and 11.39%, respectively, compared to its 5Y historical CAGR of 72.99% and 244.50%. It is evident that the company's net income margins will also normalize over time, from 46.1% in FY2021 to a projected 41.9% by FY2024. Nonetheless, we are encouraged since it still represents a notable improvement from its previous net income margins of 39.1% in FY2019.

Jul 25

InMode Set To Outperform Going Forward, We Join The Bull Camp

InMode raised full-year guidance, surprising market participants. We are very pleased with the company's operational development as internationalization progresses and recurring revenues increase. Asia and, in particular, China are catalysts for hyperbolic growth once pandemic-related strict policies dissipate. Concerns revolve around inflation and a hard landing recession. Our revised DCF model indicates a fair share price of $44.50, thus, INMD stock is a buy at the current price level. 2022 has been a tough year on the stock market so far. This is true for every investor, but especially for shareholders of InMode (INMD). After losing about 60% since the beginning of the year with significant negative alpha compared to indices and trading about 70% below its ATH from November 2021, InMode has recently shown signs of life. ytd price performance (normalized), (ycharts) On July 12, 2022, the company released preliminary financials for the second quarter of the current year; final numbers are scheduled for release on July 28, 2022. Management raised expectations for the full year. With this, InMode apparently caught market participants off guard, as the stock shot up in intraday trading action. The key points are as follows: Second quarter 2022 (preliminary): Revenue in the range of $113.0m to $113.3m, representing a year-over-year increase of 29% to 30%. This is a considerable beat against consensus of $103.0m. Adjusted guidance for the full year 2022: Increase of sales guidance to the range of $425m to $435m (previously: $415m to $425m). Consensus stood at $416.8m. Although InMode stock does not yet have an extensive track record (the company went public in August 2019 only), current valuation levels in terms of PSR and PER suggest an attractive entry opportunity. current valuation of INMD stock (PSR & PER fwd 1yr), (ycharts) This assessment is supported by the EV-to-free cash flow ratio. Almost at the level of the pandemic-induced low back in the first quarter of 2020 (shaded in gray in the chart below), this valuation metric reversed in June 2022. current valuation of INMD stock (EV to Free Cash Flow), (ycharts) Internationlization Internationalization is a central pillar in InMode's equity story. The number of markets in which the company sells its products recently rose to 77 (earnings call 1Q22). In the first quarter, we opened subsidiary in Italy and we are very happy with the level of demand in this territory. We see most of the growth coming from region where we have already established our presence yet, there remain opportunity in new territories and we will expect to keep expanding our presence outside the U.S. in the coming quarters. 189 direct sales representatives and a distribution network are responsible to develop these opportunities (source: investor presentation). Most recently, InMode announced that it received Health Canada certification for one of its devices for women wellness. Having completed the certification process successfully allows InMode to launch its EmpowerRF product in Canada (more details on the product can be found here). We chart below illustrates the success of InMode's revenue diversification efforts. Note that non-U.S. sales are driven by Canada, Europe and Latin America (earnings call 1Q22). Asia in general and China in particular play a minor role. This is mainly due to Asian governments' strict (lockdown) policies to combat the Covid pandemic which complicates any sales efforts considerably. For instance, let's look at the Chinese market: InMode made $1.1m of revenues in 1Q22, while the full-year budget for 2022 is at $12m to $13m. Thus, InMode is clearly behind the run rate required to meet its budget. Additionally, InMode has applied for approval for three of its product platforms with China Food and Drug Administration. However, Chinese regulators are apparently fully engaged in fighting the pandemic. Therefore, there is no clear timeline for when the Chinese market can be penetrated further. INMD sales split by geography (author based on company data) Recurring revenues In our initiation research, we mentioned our concerns about the low share of recurring revenues driven by the sale of consumables and services within InMode's revenue pile. [Arenberg Capital] would like to see a (significantly) higher level of recurring revenues to increase the business's visibility. Recall that in FY20 roughly 90% of revenues derived from the sale of medical aesthetic products. Thus, 10% stem from purely recurring items such as consumables (need to be replaced after each treatment) and warranty extensions (beyond twelve months). The first good news: InMode management recognized the need to move towards more consumables as almost every system that they are now developing will require one or more disposables (earnings call 3Q21). The second good news: In 1Q22, InMode posted a record revenue with consumables. This is indeed noteworthy as the share of recurring revenues within overall revenues jumped to 16%. In 1Q21, it stood at 12%. In the coming quarters, investors should keep an eye on whether the increase in 1Q22 is of a sustainable nature. Referring to the chart below, please note that we use InMode's peer company Cutera (CUTR) to give us a taste of the minimum potential of recurring items within InMode's revenue mix. INMD share of recurring revenues in total sales (author based on company data) Supply chain issues and inflationary pressure Regarding supply chains, InMode aims to deliver each platform within ten days to underline InMode's strong commitment to physicians and clinics. Management has established a resilient supply chain. Among other things, there are at least three suppliers for each component. Regarding inflation, InMode is hit by both the price increase for electronic components and increase in shipping costs. While the latter continues to decline, it is still way above its pre-pandemic levels. Global container freight rate index (in USD) from January 2019 to June 2022 (Statista) Although management stated in the 1Q22 call that it would not pass on price increases to customers for the time being, we are curious to see whether this approach can be maintained.

Shareholder Returns

INMDUS Medical EquipmentUS Market
7D-3.2%1.0%1.3%
1Y-34.9%-20.3%-11.7%

Return vs Industry: INMD underperformed the US Medical Equipment industry which returned -19.3% over the past year.

Return vs Market: INMD underperformed the US Market which returned -11.6% over the past year.

Price Volatility

Is INMD's price volatile compared to industry and market?
INMD volatility
INMD Average Weekly Movement10.9%
Medical Equipment Industry Average Movement9.6%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: INMD is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 11% a week.

Volatility Over Time: INMD's weekly volatility (11%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
2008362Moshe Mizrahyhttps://www.inmodemd.com

InMode Ltd. designs, develops, manufactures, and markets minimally invasive aesthetic medical products based on its proprietary radiofrequency assisted lipolysis and deep subdermal fractional radiofrequency technologies in the United States and internationally. The company offers minimally invasive aesthetic medical products for various procedures, such as liposuction with simultaneous skin tightening, body and face contouring, and ablative skin rejuvenation treatments, as well as for use in women’s health conditions and procedures. It also designs, develops, manufactures, and markets non-invasive medical aesthetic products that target an array of procedures, including permanent hair reduction, facial skin rejuvenation, wrinkle reduction, cellulite treatment, skin appearance and texture, and superficial benign vascular and pigmented lesions, as well as hands-free medical aesthetic products that target a range of procedures, such as skin tightening, fat reduction, and muscle stimulation.

InMode Ltd. Fundamentals Summary

How do InMode's earnings and revenue compare to its market cap?
INMD fundamental statistics
Market CapUS$2.99b
Earnings (TTM)US$172.43m
Revenue (TTM)US$404.18m

17.4x

P/E Ratio

7.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
INMD income statement (TTM)
RevenueUS$404.18m
Cost of RevenueUS$64.51m
Gross ProfitUS$339.68m
Other ExpensesUS$167.25m
EarningsUS$172.43m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)2.08
Gross Margin84.04%
Net Profit Margin42.66%
Debt/Equity Ratio0%

How did INMD perform over the long term?

See historical performance and comparison