Creo Medical Group plc (AIM: CREO), expects trading in the near-term to be slower than original management expectations. But with cash at bank of £78m, looks well capitalised to weather this COVID-19 induced slowdown.
Whilst progress during 1Q20 for regulatory approvals for a further four devices has been in-line with management expectations, with significant growth in commercial orders for its ‘Speed boat’ device over the long term, the roll out of its Clinical Education Programme has been impacted by the ongoing travel restrictions and social distancing policies put in place by governments across the world to limit the spread of COVID-19.
Therefore, initial revenues from the early adoption of Speedboat are likely to be lower in the near-term than originally expected.
However, due to savings as a result of the slow-down, EBITDA and cash are likely to be better than expected for the period.
Furthermore, following the Company's £51.9 million fundraising in December 2019, cash reserves at the end of February were £78m and are more than sufficient to secure the business activities and staff through the current situation and beyond.
Consensus estimates for FY20e are currently £1.1m with a loss at the EBITDA level of approximately £21m with cash outflow from operations expected to be £22m. Given cash resources at the end of February 2020 of £78m, the Company appears well capitalised to survive this COVID-19 induced slowdown. Shares in Creo are trading up 5% following this announcement.
Craig Gulliford, Chief Executive Officer of Creo, commented: "Whilst COVID-19 will have a short term impact on the roll-out of our clinical training programme, the medium and longer term prospects for our business remains undiminished. We have a very strong cash position offering us the security needed to gain regulatory clearances and to successfully commercialise our wider range of endoscopic surgery products."