Heart monitoring equipment specialist LiDCO (LID: AIM) has impressed the market with its latest trading update, sending the shares up 7.6% to 12.38p. The revenue growth rate far exceeds analyst forecasts on an annualised basis, making it a prime candidate for earnings upgrades in the near term if it can sustain this level of new sales.
The four months to June saw a 33% rise in revenue. FinnCap analysts had forecast 18% revenue growth for the full year. While it is too early for them to upgrade their earnings estimates for the year as a whole, the performance to date is highly encouraging.
LiDCO reckons it will be cash generative and profitable this year. FinnCap's numbers put the pre-tax profit figure at £300,000. This compares to a £259,000 pre-tax loss for the year to 31 January 2013.
The company's machines aim to boost recovery times by monitoring blood flow around the body to ensure vital organs are suitably oxygenated. One factor behind the company’s growth has been the adoption of its technology by the NHS for the first time.
The UK accounted for 68% of its turnover last year and these sales were significantly up in the first four months of the year with 59 monitors installed compared with 16 during the same period a year ago.
LiDCO also sells surgical disposable instruments where sales increased 83% year-on-year. Management are targeting growth in the US after expanding its sales team in the country and holding discussions with several potential distribution partners.
The company is to launch its LiDCOrapid v2 device into the $650 million US market after it was approved by the Food & Drug Administration (FDA) earlier in the year (26 Mar). The machine is the first to be designed for several uses, monitoring anesthesia and fluids during high risk operations.