Summary
- MiMedx Group is in the early stages of a sales recovery, after a turbulent last 2 years.
- 90% of management are new faces, and the new growth strategy dovetails to include commercialization, R&D focus and supply chain integration.
- Their amniotic hypotheses have high commercial potential, and the potential to create a remedial breakthrough and fulfil unsuccessful treatment voids.
- The AmnioFix segment has over $1.5 billion commercial opportunity by our analysis, in the conservative osteoarthritis treatment market.
- We see a fair value of $7.30 and believe further upside is likely on the back of recent fundamental momentum.
Investment Summary
We believe that MiMedx Group (OTCPK:MDXG) is in the early stages of a sales recovery after a healthy Q3 exit and key drivers in place to fuel revenue volumes over the coming periods. MDXG has re-listed on the NASDAQ on November 4th, after a turbulent last 2 years. Investors no doubt will welcome this news, alongside additional works in the pipeline that if converted, represent immense earnings potential in complex treatment domains. The amniotic hypotheses are gaining traction, and with key readouts planned for next year, there are several inflection points investors must consider over the next 12 months.
Data Source: Author's Bloomberg Terminal
Shares have gained ~13% upside YTD after a huge drop off in the middle of the year, and a new picture has been painted in the outlook for investors. Here we will discuss some of the pointers investors must consider before opening a position, and link this to valuation and the drivers in the growth engine, which may add torque to MDXG's flywheel over the coming periods.
Drivers In The Growth Engine
1). Osteoarthritis
Management have a 3-pronged strategy to move the needle on the growth-speedometer. The focus dovetails to focus on commercial strategy, R&D prioritization and supply chain integration. Of importance to MDXG's operative-bastion, is the vertical integration of the supply chain to overall operations. Via this setup, the company is able to reduce distribution costs, and increase the breadth of the portfolio, by leveraging these cost savings to expansion opportunities. As such, MDXG has distributed over 2 million allografts since inception via their proprietary Purion Process, and have recovered over 75,000 placentas to date, which add into the key differentiators within the company's flywheel.
