Profound Medical can play a supportive role in COVID-19 crisis, says Raymond James

Profound Medical (Profound Medical Stock Quote, Chart, News TSX:PRN) and its TULSA-PRO technology can fill a niche in the US healthcare system, says Raymond James analyst Rahul Sarugaser, who in a note to clients on Tuesday reiterated his “Strong Buy 1” for the stock.

The current COVID-19 crisis has impacted daily life in innumerable ways but one of the most egregious could be resultant delays in the treatment for other diseases due to shortages in healthcare resources during the pandemic.

Sarugaser points to just such a case in his note, referring to a bladder cancer patient profiled recently by the media group Politico whose treatment has been put on hold due to a lack of personal protective
equipment (PPE) for healthcare workers and then, as the patient’s cancer advanced, had his surgery postponed due to a federal requirement that elective procedures take a back seat to COVID-19 concerns.

On top of that, patients are now required to get a COVID-19 test prior to admission for surgery, a difficult thing to get in the US where testing resources are at a premium.

Sarugaser thinks that PRN’s TULSA-PRO, a non-invasive technology for the ablation of prostate tissue which the company is now commercializing in the US, could prove valuable in the current healthcare context which involves three features, namely, a shortage of PPE, the deferral of elective surgical procedures and a dearth of COVID-19 testing country-wide.

As the Raymond James analyst pointed out, TULSA-PRO procedures are incision-free and thus require limited PPE; the company is currently focusing on installations at imaging centres, not hospitals, and thus won’t be impacted by the deferral of elective surgeries federal mandate; and being conducted in privately-held imaging centres means these centres can self-elect whether COVID-19 testing is a requirement.

“For all these reasons, it is our opinion that — at least for the existing installed base — PRN is unlikely to see a major hit in procedure rate. And, whatever reduction in volumes PRN does experience, we expect to come roaring back, and then some, once self-isolation measures are eased.”

“For now, we watch closely the performance of PRN's currently installed devices in FL and GA, plus those going in at RDNT sites around Los Angeles,” he said.

For PRN, Sarugaser is forecasting revenue and EBITDA in fiscal 2020 of $8 million and negative $25 million, respectively, and in fiscal 2021 of $20 million and negative $24 million, respectively.

Profound Medical last reported earnings in early March where its fourth quarter and full-year 2019 financials showed revenue of $2.8 million for the Q4 and $5.5 million for the year.

The company recorded a net loss of $5.2 million for the Q4 and a loss of $20.2 million for the year. As of December 31, 2019, PRN had cash of $19.2 million, while post year-end the company raised US$36.7 million in funds. (All figures in Cdn dollars expect where noted otherwise.)