Our last post focused on the rise and fall of Trans 1. Ironically, on the day that TSB posted skepticism surrounding the future of this venture, OTW shot off a report that Mike Matson, Senior Analyst of Wells Fargo, raised his projections for this fledgling company from $24.9 million to $26.7 million For a stock that had a 52 week high of $8.74 and closed at $3.45, blue skies are not yet visible on the horizon. So let's go to the video replay.
In QI of '09 TSON finished with revenue of $8.7 million, QII '09 revenue was $7.9 million, QIII revenue was $6.9 million, QIV revenue was $6.3 million, QI '10 revenue was $6.7 million. I'll save our readers the fancy charts, we believe everyone can get the picture. Regardless of the growth in '09 in comparison to '08, it seems this company has taken three steps back to attempt to go one step forward. The potential investor must ask why? To quote every NBA player that is interviewed, "no doubt about it" reimbursement is the major issue. Yet, when one looks at the history of this company, something seems amiss. There doesn't seem to be continuity in the management team. 2010 has been a year of wholesale changes. TSON actually hired someone from Smith and Nephew to run sales. As Bart Simpson would say, Wazz up with dat? Then TSON hires a new President and COO, then a new CFO. If things are going so well, why the change? But the bigger question must be asked, "Why from SNN?" At best SNN has been a mediocre player that dabbles in spine with mediocre management.
Yet, Matson's job is to spin, sell, and make sound suggestions to the investment community on what to buy. I mean has anyone heard an industry's "go to guy" ever say that this stock or company is a dog at best, until some real revenue issues are resolved? That's not the nature of the Street, and maybe Mad Money Cramer would be the only one to comment, but when it comes to spine he doesn't know jack. TSB is sure that the smoke and mirrors behind Mike's (you don't mind if I call you Mike) call is to convince potential investors that this is a great technology to invest in, a stock worth buying, and a company with a stable management team.
TSB does not believe that QII sales will grow exponentially to offset the last three quarters. This pony isn't NuVasive. Unless there is an act of God (let me spell that with a capital G) don't expect sales to jump drastically in QII, with the summer on the horizon, TSB sees a summer slump due to the nature of the season. $26.7 will be a stretch but it can be achieved if the stars align themselves. So let's keep our eyes and ears on this company, and assess whether a remodeled management team can actually sustain, execute, and generate more revenue while it attempts to address a daunting task of resolving their reimbursement issue. One must wonder whether the infamous partnership between TSON and Life Spine is really going to pay off. At best Life Spine is just another "me too" company.
Wilmington, is a nice place to visit, especially in the summer. TSB must ask our readers will this company succeed or will TSON hobble along?