Nexstim H2 on Tuesday: A record-breaking end to the year

Translation: Original comment published in Finnish on 2/21/2024 at 7:41 pm EET

Nexstim will publish its H2 report on Tuesday, February 27. The company issued a profit warning early in the year, saying that full-year EBITDA would be negative (guidance: Positive EBITDA). H2 revenue level of 4.5 MEUR (H2’22: 2.7 MEUR) is already known thanks to the profit warning. Revenue is the best in the company’s history, excluding H1’22 supported by one-off license income. Our EBIT forecast of 0.3 MEUR indicates a significant improvement from the comparison period.

System order pile-up in late 2023

Nexstim’s H2 revenue was around 4.5 MEUR (H2’22: 2.7 MEUR). Revenue was supported by active system sales in the last weeks of the year. Nexstim announced 16 system sales in H2, which is close to the record season of H2’21 (18 releases). However, not all transactions are necessarily publicly disclosed, so the exact number of systems sold won’t be known before the H2 report. We believe the revenue level also indicates a record number. We also estimate that the average price of systems has increased, as demand has shifted from slightly more affordable therapy systems to more expensive NBS combination systems. At this stage, it is still unclear whether sales are driven by trend growth or by the delayed demand caused by increased inflation and interest rate levels in 2022-2023 is being dissolved.

Savings program supports the result

Our H2 EBIT forecast is 0.3 MEUR (H2’22: -1.5 MEUR). In addition to the increase in revenue, EBIT is supported by a cost-saving program that generated 0.6 MEUR in savings last year Nexstim’s profitability guidance was positive EBITDA throughout 2023. According to the update early in the year, EBITDA will be 0.3-0.6 MEUR negative. For H2, this means a profit of 0.5-0.8 MEUR at EBITDA level. Our H2 EBITDA forecast is 0.5 MEUR. In addition to the result, we pay particular attention to the cash flow, which is likely to be partially recognized in H1’24 for sales made in late 2023. We expect the total cash flow from operating activities and investments to be roughly zero in H2.

Expectations for 2024 elevated with the expansion of the NBS6 system and clinic network, as well as the start of the licensing period

This year, we are interested in the sales development of the FDA-approved and CE-marked NBS6 system. So far, the system has only been approved for therapeutic applications, but approvals for diagnostic applications should be granted in 2024. Nexstim also recently announced the expansion of its network of partner clinics in New Jersey and we expect more news on this during the year. A third important theme is the possible start of the licensing period, which depends on when commercialization of Magnus Medical’s system starts. Magnus Medical has indicated that sales would start this year but so far this is still uncertain. Sales starting would trigger a five-year licensing period, during which Nexstim and Magnus Medical expect licensing fees of approximately 15 MUSD to Nexstim.