Several analysts have recently weighed in on BioTelemetry, Inc.(NASDAQ:BEAT), issuing notes to Dougherty & Co. Charley Jones of Equity Research reiterated their Buy rating on the stock on September 21, 2015 with a $20.00 price target, or 14.93% upside to the last closing price.
Boston Scientific announced an investment and distribution agreement with Preventive for its cardiac monitoring product. We have not been able to find any data that suggests the system is equivalent to MCOT from BEAT and, if it had market share changing data, we believe it would have presented it. Eventually, the Preventive product may be competitive, but MCOT is a single-digit fraction of the volume of diagnoses and its a service business that BEAT is currently the best at. Frankly, we believe the technology will prove to be inferior just as the loop recorder from MDT will prove to be. We believe the loop recorder from MDT will be seen as a Medicare issue a year or two out. We strongly believe MCOT is the best diagnostic tool to use for difficult to identify AF and we believe the data will show that over time.
As a reminder, BEAT’s technology is 100% sensitive and specific when any AF occurs for more than seconds. It is the only company out there that is able to say this and it has patents around algorithms that give it the high level of accuracy. We expect BEAT to continue to demonstrate and validate its accuracy against competitive modalities (event, loop recorders). We believe BSX’s entrance into the market is validation of the market, however, we continue to believe MCOT is the most accurate and efficient arrhythmia detection tool on market and we continue to believe 2017 EBITDA will be well over $50 million; this is a reasonable likelihood it is closer to $55 million plus. This EBITDA level is still not in the stock, in our opinion, as current estimates are closer to $37 million as the impact from CMS and BCBS and accelerating potential of the patch products are not in estimates. We believe investors continue to have a stock level that is extremely attractive long-term.
We are expecting BEAT to report in-line results and believe the company is on track to achieve its 2015 goals. The stock has outperformed its peer group since reporting its first quarter and we expect the stock to continue to outperform by a very significant margin as the company has a number of very powerful growth drivers on a very lever gable business. We expect BEAT to move into the mid-teens by the end of the year and, if 2016 is as we hope, it could be that 2016 EBITDA estimates approach $45 million to $50 million. If BEAT is able to achieve $50 million in EBITDA, we would expect the company to trade around our price target of $20.
Our 2015 and 2016 revenue, EPS and EBITDA estimates are relatively in-line with consensus estimates, which currently are $184.3 million, $0.40, and $32 million, respectively, and $203.7 million, $0.51, and $36.2 million, respectively. If the CMS increases reimbursement as expected, it would add about $5 million in EBITDA and if 20%-50% of its commercial carriers follow suit as they typically do, we would expect the rate increase to have an additional $1-$3 million in revenue and profit for the commercial insurers. We estimate the remaining Blue Cross members and ancillary benefit of having all insurers covering the technology will add another $25-$40 million over the next 2-3 years with a contribution margin well into the 15%-20% range and probably higher over time.
Biotelemetery Inc (NASDAQ: BEAT) formerly known as CardioNet, Inc., is the leading wireless medical technology company focused on the delivery of health information to improve quality of life and reduce cost of care. The Company currently provides cardiac monitoring services, originalequipment manufacturing with a primary focus on cardiac monitoring devices and centralized cardiac core laboratory services.
On October 6th, 2015 Biotelemetry Inc (NASDAQ:BEAT) annouced that the Honorable Juan R. Sanchez of the Eastern District of Pennsylvania has issued an October 2, 2015 Order finding MedTel24, Inc. (“MedTel”) in contempt of a Consent Judgment previously issued by the Court. The previously issued Consent Judgment declared all five asserted BioTelemetry patents valid, enforceable and infringed by MedTel. The Consent Judgment also declared that MedTel is permanently enjoined from further infringement and is required to deliver to BioTelemetry all software, source code, hardware, and documentation relating to the Heartrak ECAT system.
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