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Invuity Inc (NASDAQ: IVTY) Has ‘Opportunity’ Under New CEO: Long Cast Advisers

Long Cast Advisers, a Brooklyn, New York-based investment firm led by Avram Fisher, believes that Invuity Inc (NASDAQ: IVTY) has opportunity under the new CEO “to market, distribute and sell in a much more capital efficient manner than his predecessor.” The firm made this comment in its Q1 Investor Letter (you can download a copy here) in which it also discussed Cynergistek and Sify Technologies. Let’s take a look at Fisher and his firm viewpoint about Invuity, which is a medical technology company focused on developing advanced surgical devices.

Here is what the investment firm said about IVTY:

This is a bet on a basket of new products that we hear terrific things about. The company makes lighted devices that illuminate surgical cavities in minimally invasive operations. In targeted markets (breast, gyn, thoracic and orthopedic) these products enable smaller incisions, reduce surgical times, reduce risks of infection and lower risks that patience need to return to hospitals for follow up.

The company trades for less than 2x revenues in an industry where takeout valuations tend towards +2x-10x range. The company also has a new CEO focused on capital allocation. Despite the negatives (see below), the company continues to grow unit sales and accounts. We believe the company has opportunity under the new CEO, to market, distribute and sell in a much more capital efficient manner than his predecessor.

Long Cast also talked about challenges to its thesis. The firm noted:

Cash flow negative. Some products have experienced manufacturing variances. Products are expensive to the doctors and not reimbursable. They haven’t figured out the right “go-to-market” strategy, but new CEO is testing many low-cost solutions.

Invuity Inc (NASDAQ: IVTY) is a medical technology company that develops advanced surgical devices to allow physicians to perform minimal access surgery through smaller and hidden incisions. The company’s patented Intelligent Photonics technology offers enhanced visualization. Its clinical applications include women’s health, encompassing breast cancer and breast reconstruction surgery, gynecology and thyroid surgery.

In February this year, Invuity announced the appointment of Scott Flora as interim president and CEO. Flora, who replaced Philip Sawyer, has served as a member of Invuity’s board of directors since November 2017. His prior roles include: president, CEO and a director of OmniGuide; global business unit president for the surgical device division of Covidien plc, and numerous executive positions at Smith & Nephew plc.

beerkoff/Shutterstock.com

beerkoff/Shutterstock.com

For the first quarter of 2018, the company reported revenue of $9.5 million, up 5.3% from revenue of $9.0 million in the same quarter of 2017. The net loss for the quarter was $11.2 million, or $0.62 loss per share, versus a net loss of $13.2 million, or $0.78 loss per share, for the 2017 quarter. Total operating expenses were $17.0 million, compared to $17.3 million in the prior year period.

Meanwhile, Invuity Inc (NASDAQ: IVTY) isn’t a very popular stock among hedge funds tracked by Insider Monkey. As of the end of the fourth quarter of 2017, there were only eight funds in our database that held IVTY in their portfolio.

Disclosure: none