NVTR - Nuvectra

[Gregmal]

Not sure the reasons but you don't really need to know them at this point to know that it aint good given where this company is in terms of its development cycle. I sold a while ago and frankly think this company runs a very big risk of just becoming another perpetual money losing share issuer.

[701 LV]

Been an absolute bloodbath the last year, especially last 6 months. Unfortunately I've ridden it all the way down. Avg cost is still in the mid 6s....Obviously in hindsight, execs jumping ship should have been a bigger red flag and shouldn't have rationalized away the concerns so easily. Now add in Virtis not being approved in '19, rep turnover and a supposed charging issue and here we are. The market has to be pricing in that they may not even hit their quarterly minimum revenue covenant of $12M. Still has $69M in cash, with a burn of $12M last Q. Also filed a $100M mixed shelf offering a few weeks back. Anyone else watching this or have any insights?

[Gregmal]

Ive kept an eye on it, but unfortunately I think this one is a doughnut.

[701 LV]

Nuvectra Exploring Strategic Options to Enhance Shareholder Value

Options included full sale or merger of company.

Thoughts are mixed. While I fully agree this company would be better off being absorbed by a bigger player, sucks they're having to do it at these price levels. My cost average of 6's will probably never to be fully made whole - let alone the lost profits from not selling my shares at $25+ levels...
Also probably means they do not think they will be able to satisfy their minimum revenue loan covenants...

Overall, I guess final lesson to be learned is to always trim winners on the way up - even if you believe their LT potential is much higher, as nothing is guaranteed...

[701 LV]

Per latest 8-k.

Cutting 20-25% of workforce. Expects related costs of $0.6M in Q3. Savings expected to be around $1.2M in '19 and $5.8M in '20.

[InelegantInvestor]

Chapter 11 filing last night was... unexpected.

[Gregmal]

This one was definitely fun...good exercise in active management and having to stay on your toes...

[701 LV]

Gotta say I'm amazed on how this one ended up playing out. Never thought it would be the best player in the SCS space, but I definitely thought it had room to be a niche player, that would eventually get scooped up by a major. Can someone help me decipher the 8-k filed today, that states only $10M of principal due?

[Gregmal]

Gotta say I'm amazed on how this one ended up playing out. Never thought it would be the best player in the SCS space, but I definitely thought it had room to be a niche player, that would eventually get scooped up by a major. Can someone help me decipher the 8-k filed today, that states only $10M of principal due?

At quick glance I would assume that is the face amount of the issue relating to whatever defaults were triggered. The company may have multiple lines of credit, and may also have enough cash on hand to cover most of them + some operating expenses. I would guess they are putting a hold on things until the strategic review process concludes. Not that it is something I'm doing, but this could be worth a speculative stab on the basis that net debt isn't huge and the assets do have some uniqueness to them.

[Spekulatius]

When the rock star CEO departed after aggressively ramping up sales force, it was a tell tale red flag. I'm glad I immediately exited then around $12-13 levels. Medtech is a tough business with an oligopolistic structure at suppliers end (3-4 major players in many categories), a few hundred key hospitals, and maybe a few thousand influential key docs. Breaking into it while also trying to pay a salesforce that is used to earning substantially from commissions is very hard as NVTR found out (you are bleeding cash for years!). They had a few thousand installations but the innovations they took 10 years to develop were either copied easily or less important and they just didn't have clinical testing data (unlike some peers) to really ramp it up fast before they run out of cash.

I never bought this, but been involved in other medtech spinoffs , I can definitely state that this is a tough business for investors. From my experience, many startups manage do get some product in the market and some revenue trajectory, but often the costs outrun the revenues and the increased cash burn does them in.