GEO Investing

REPR engages in the design, manufacture, and marketing of proprietary medical devices primarily for emergency medical applications and ambulatory infusion therapy worldwide.  We have been tracking REPR since 2009.  Since then shares have  traded in a range between $0.10 and $0.40.  Although the company has maintained profitability since 2009 it has not grown its bottom line. We believe this is because the company is reinvesting into its marketing initiatives.

The company has also been altering  its distribution model which results in higher sales but lower  gross margins.

Reasons we are tracking: (Fiscal year ends February)

  • Its product has been around since 1994.

  • No debt, current ratio of 6.9, positive non-GAAP EPS of $0.02 for FY 2014 and cash flow positive.

  • The number of pumps shipped has steadily increased since 2009

  • 2009 -2300
  • 2010 – 3000
  • 2011- 4300
  • 2012- 4800
  • 2013- 5600
  • 2014- 6300

  • We interviewed the company several years ago where management stated that their product was safer, more reliable and cheaper than competing products.  Specifically, the company claims that its pump creates consistent pressure as opposed to competing electric pumps where pressure can vary , potentially causing harm  to the patient.

“For the home care patient, FREEDOM60® is an easy-to-use lightweight mechanical pump using a 60ml syringe, completely portable, cost effective and maintenance free, with no batteries to replace and no cumbersome IV pole. For the infusion professional, FREEDOM60® delivers accurate infusion rates and uniform flow profiles providing consistent transfer of medication. The FDA approved a Form 510(k) Pre-market Notification for initial design of the FREEDOM60® as a Class II device in August 1994.

With the respect  competition:  the patient is at risk from damaging pressures or not receiving the medication required.”

  • Furthermore, the company claims that its safety/alarm mechanism is superior, reducing cases of false alarms which can result in the infusion therapy powering down.

  • Its flagship product, Freedom 60 seems to have found a permanent place in its market. Company revenues in 2003 were around $1.5million and have been gradually increasing over time, finishing at $8.7million in 2014. The company achieved profitability in 2009 when it earned EPS of $0.03.

  • Revenues are continuing to increase in Q1 2015, increasing 41.1% to $2.65 million.
  • Just announced appointment of COO, which could help build investor confidence in the story

  • Medicare  reimbursement code change has been  favorable for the company.

“The new code significantly increases the reimbursement for the FREEDOM60® for billable syringe pump application approved by Medicare.”

Caveat: We need to interview management again to become more familiar with

  • regulatory environment

  • product expansion goals

  • customer expansion goals

  • Need to perform industry analysis

  • Although the company does not indicate it needs to raise money, I am not ruling  this possibility out until we speak to management.

  • The company has not grown EPS for several years, but have hovered around $0.02 or $0.03 since 2009

We have patiently owned this stock for a few years.

We urge interested investors to read the company’s 10K filings that do an excellent job detailing product advantages and its marketing opportunities. The company does not indicate that it needs to raise money in liquidity and capital resource segment in its 10K.

Trading at an EV/Sales of  0.7, I think that given that the company is profitable and growing revenues, the EV/Sales multiple could expand.