Believes stock is worth at least four times current trading levels
- Believes stock is worth at least four times current trading levels -
- Prospects of bankruptcy are remote -
- Allegations of massive channel stuffing are overblown -
BATON ROUGE, La., Jan. 8, 2019 /PRNewswire/ --
- MDXG has zero debt and a highly flexible cost structure, which should allow it to easily generate enough liquidity to overcome recent challenges.
- Our research indicates that a majority of MDXG’s reported sales are legitimate and sustainable. Only a small portion of revenue appears to have been attributable to end-of-quarter channel stuffing, while we found zero evidence of widespread bribes and kickbacks.
- According to doctors and former employees, MDXG’s products are some of, if not the best, in an industry where competitors generate hundreds-of-$millions of revenue. Given this, the claim that MDXG’s sales are largely fraudulent appears far-fetched.
- Any future regulatory fines are unlikely to push MDXG into bankruptcy. DOJ and SEC fines have been considerably dialed-back under the current, more corporate-friendly administration. Furthermore, regardless of administration, the government almost never kills companies due to the resulting negative impact on shareholders.
Prescience Point Capital Management (“Prescience Point”), a private investment manager that specializes in deep investigations and analysis of public companies, today published an extensive research report supporting its long position on MiMedx Group Inc. (OTC: MDXG). Following a five-month in-depth investigation, which included speaking with large MiMedx customers, former employees, competitors and industry and legal experts, Prescience Point believes that MiMedx shares offer one of the most attractive investment opportunities we have ever identified. Based on conservative assumptions, we estimate that MiMedx shares are worth at least $8, roughly 4x the current share price. Over the long-term, we believe MDXG’s price can eventually retake or even exceed its all-time high of $18.25.
Our research indicates that the chances of MiMedx filing for bankruptcy are remote. We project that the company should have ample liquidity to cover ongoing operating expenses, regulatory investigations and possible fines, as it currently has no debt on its books, had $33 million of cash as of 12/31/2017, and has a highly flexible cost structure that allows it to generate robust FCF even at significantly lower revenue levels.
We believe that the extreme negative market sentiment regarding the company, amplified by vocal critics, is unwarranted. We do not dispute that MiMedx is a troubled company, and its critics have been instrumental in bringing to light alleged wrongdoing at the company. However, we disagree as to the extent of that wrongdoing and, through our research, we believe that the majority of MiMedx’s sales are legitimate and sustainable.
The legitimacy and sustainability of MiMedx’s sales is evidenced by the strength of its allograft products which are some of, if not the best, in the industry. We note a report from the Buffalo News in October that quotes Dr. Kathryn Bass, a pediatric surgeon and head of the trauma department at Oishei Children’s Hospital on the effectiveness of MiMedx’s products.
“‘We’re getting great results’” with amnion tissue supplied by the MiMedx pharmaceutical company, Bass said, particularly with children who suffer burns to the face, chest and connective tissues.”
We expect MiMedx to not only survive, but to once again thrive. When the current crisis clears, we believe the company will return to growth given its industry-leading products, attractive end markets, and promising pipeline of late-stage clinical trials for its Amniofix Injectable product.
“While current market conditions regarding MiMedx reflect some of the most extreme negative sentiment we have ever witnessed toward a public company, we believe the chances of bankruptcy are remote and that the company is taking corrective measures to determine the extent of prior wrongdoing, restate its financials, resolve any associated legal ramifications, and reset its corporate culture,” said Eiad Asbahi, Founder and Portfolio Manager of Prescience Point.
Mr. Asbahi continued: “Right now, MiMedx stock trades as if it is headed for bankruptcy. We strongly disagree with that view and believe recent instances of negative news have created an attractive entry point on a risk/reward basis.”
Click here to download Prescience Point’s full report on MiMedx.
About Prescience Point Capital Management
Prescience Point Capital Management is a private investment manager that employs forensic investigative techniques to unearth significant mispricings in global markets. The firm specializes in extensive investigations of difficult-to-analyze public companies in order to uncover significant elements of the business that have been overlooked or ignored by others. Their publicly-available research focuses on exposing corporate wrongdoing and has been followed by resignations of auditors, CEOs and CFOs, earnings restatements, SEC investigations and stock delistings.
Prescience Point manages private funds on behalf of clients and principals and takes positions both long and short in support of their research. The firm invests across a broad set of equities that they believe have abnormally large disparities between what their underlying businesses are intrinsically worth and what their securities sell for.
The firm was founded by investor Eiad Asbahi in 2009 and is headquartered in Baton Rouge, LA. Prescience Point Capital Management is a registered investment advisor with the State of Louisiana and a member of the Financial Industry Regulatory Authority, CRD number 152721.
Disclaimer
THIS RELEASE EXPRESSES SOLELY PRESCIENCE POINT CAPITAL MANAGEMENT’S OPINIONS. Use Prescience Point’s research opinions at your own risk. This is not investment advice nor should it be construed as such. You should do your own research and due diligence before making any investment decisions with respect to the securities covered herein. Forward-looking statement and projections are inherently susceptible to uncertainty and involve many risks (known and unknown) that could cause actual results to differ materially from expected results. You should assume we have a long position in MiMedx stock and therefore stand to realize significant gains in the event that the price of such instrument increases. Please refer to our full disclaimer located on the last page of our research report (linked herein).
Prescience Investment Group, LLC is a member of the Financial Industry Regulatory Authority, CRD number 152721.
View original content:http://www.prnewswire.com/news-releases/prescience-point-capital-management-issues-positive-report-on-mimedx-group-inc-otc-mdxg-300774444.html
SOURCE Prescience Point Capital Management
Company Codes: OTC-PINK:MDXG, OTC-QB:MDXG
