Nexstim H1 on Friday: Savings sought early in the year

Translation: Original comment published in Finnish on 8/16/2023 at 6:06 am EEST.

Nexstim publishes its H2 report on Friday, August 18 at around 9 am EEST. We expect net sales of EUR 3.0 million and an operating loss of EUR -0.9 million. We forecast a clear year-on-year decline in net sales, as last year the figures were boosted by a one-off license income of EUR 3.5 million. The cost-saving program targets achieved early in the year support the operating result. Nexstim's guidance for 2023 profitability at EBITDA level assumes a bullish rest of the year for the company.

Our net sales expectations are moderate

Our H1 net sales forecast is EUR 3.0 million, a significant decrease compared to the same period last year. Last year's figures were positively impacted by a one-off license signing fee of EUR 3.5 million. Nexstim has reported five hardware sales during H1, which is in line with the number reported in the comparison period. However, not all transactions may be publicly disclosed, so the exact number of units sold won’t be known before the H1 report. It is difficult to accurately forecast the net sales of equipment sales because equipment can generate revenue immediately or in the longer term if it is leased. Recurring revenue growth is increased when more equipment is sold. On the other hand, in the H2'22 report, continued net sales came in below our estimate, which is now tempering our expectations. For the full year, we forecast net sales of EUR 6.8 million. Expectations for a stronger H2 are based on expected sales of the recently launched NBS6 and the expansion of the network of partner clinics during H2.

Savings program supports the result

Our EBIT estimate is EUR -0.9 million. EBIT is supported by the cost saving program implemented by the company in H1r, which has resulted in savings of EUR 0.6 million. This program also supports Nexstim's goal of achieving profitability at EBITDA level for the full year of 2023. According to our own EBITDA forecasts, a slightly loss-making result is expected for the full year.

Expectations for the rest of the year up with NBS6 and the expansion of the clinic network

During the rest of the year, we will follow with interest the developments related to the sale of the FDA-approved and CE-marked NB6 device during the spring. Initially, the device is only approved for therapy applications, but we expect approvals for diagnostic applications to follow. We expect this limited approval so far to lead to a modest initial sales uptake, but we expect the multi-purpose modular NBS6 to remain the only device in the range over time. The company has also recently announced loan financing for growth investments. We estimate that these investments will be linked to the expansion of the network of partner clinics, but this is not yet certain.