Monday, July 03, 2006
Opthalmic Imaging Systems (OISI) update
OISI (sec) Opthalmic Imaging Systems. Diagnostic equipment for retina problems. Total available market is estimated at around 1,000 units sold per year. OISI makes a system (probably a PC + hardware + software) which essentially turns normal analog cameras into digital cameras by connecting to OISI's "WinStation". There are 5 companies which make fundus cameras, with a total of 22 models (9 current and 13 legacy). OISI has designed optical and electronic interfaces for each of them to connect to the WinStation.
My fear with this company is that the market could change drastically such that the camera makers or someone else comes out with a total system that's already digital. I have no idea if this is likely.
From the 2005 10-K:
Revenues have been climbing year over year.
2005: $13.6 million (gross margin=58%, net margin=12.9%, no taxes)
2004: $11.3 million (gross margin=58%, net margin=15.1%, tax benefit)
2003: $10.3 million (gross margin=56%, net margin=13.9%, tax benefit)
The net margin decline is due to earlier tax benefits as well as R&D and some SG&A increases.
Balance sheet is strong, but AR is climbing. Half equity. There's some related party stuff going on.
Free cash flow matches earnings fairly well.
16 million shares on Feb 22, 2006. 2.1 million options outstanding on Dec 31, 2005. Assume 20 million totally diluted shares.
I'd say the stock might be worth $1.10 based on the 10-K.
16.1 million shares on May 10, 2006.
AR is going down.
Revenues are $3.65 million vs $3.00 million in prior year. Gross margin is 57%.
13.3% net margin.
2.43 cents per totally diluted share.
Cash flow from operations is more than double earnings due to the AR decrease and liabilities increase. Capex is tiny but slightly more than depreciation (all very good).
Valuation about the same, $1.10 per share. The stock is trading around $1.90.