G Medical Innovations Holdings (ASX:GMV) – Dual listing sought on Nasdaq

Article written by Pitt Street Research. For the full report click here

NASDAQ listing would enable valuation comparison with true peers

G Medical Innovations Holdings (ASX:GMV) is commercializing mobile vital signs monitoring systems that enable remote monitoring of patients. GMV’s products have to potential to substantially lower healthcare costs and to improve patients’ overall wellness and mobility.

On 2 October, G Medical Innovations Holdings Limited (ASX:GMV) announced its intention to seek a dual listing for the company on the Tech heavy
Nasdaq stock exchange in the United States. The minimum requirement for this dual listing is a US$ 75M market capitalization upon listing. The company has already retained an advisor/underwriter in New York to facilitate the process. GMV anticipates the listing process may take 4 to 5 months but cautions that there is no certainty the dual listing will proceed.

Assuming that GMV will be successful in listing on Nasdaq, we believe this would enable investors to draw realistic valuation comparisons with GMV’s
true peers, not other ASX-listed Tech and/or Medical Devices companies.

As we illustrated in our initiating research report on GMV, which can be found HERE, we believe GMV’s true peers are Biotelemetry (Nasdaq:BEAT) and iRhythm (Nasdaq:IRTC). These companies are trading at an average EV/Revenue multiple of 8.1x and 6.5x respectively for FY19 and FY20 GMV generated revenues of US$ 1M during 1HY18 (June end), mostly from
its US-based call center, or Independent Diagnostic Testing Facility (IDTF).

This is a long way off from revenues generated by BEAT (US$ 273.5M in FY17) and IRTC (US$ 98.5M in FY17). However, GMV has only been operating this IDTF since late 2017. And GMV’s small assembly facility in Israel has been producing the Prizma and G Medical Patch in very low volumes since early June.
GMV is awaiting CFDA approval of its Chinese manufacturing facility. This regulatory approval is expected in the current quarter and will allow the company to start ramping up production of the Prizma and G Medical Patch very significantly. In other words, if CFDA approval is indeed received in the near term and the company can start to fill orders previously received, we expect 2019 will be the first year in which investors will get a true sense of the company’s longer-term revenue potential. In turn, the US peer group’s relative valuation multiples can then be used to ascertain
a valuation for GMV.

Chinese FDA approval is the nearest term share price catalyst

As illustrated in our previous Flash Note, dated 14 August, approval of GMV’s production facilities in China is the single most important share price catalyst in the near term. CFDA approval will enable the company to ramp up mass production of the Patch and Prizma in China and will also enable GMV to start fulfilling the previously received orders.

Given this near-term potential for GMV we reiterate our Speculative Buy rating for GMV shares

Please note, the usual disclaimers apply – click here

Pitt Street Research work is commissioned by the listed companies it covers, and Pitt Street Research has received or will receive payment for the preparation of such work. Please refer to the bottom of the research notes as published on Pitt Street Research’s web site for risks related to the companies being covered, as well our General Advice Warning, disclaimer and full disclosures. Also, please be aware that the investment opinion in this report is current as at the date of publication but that the circumstances of the company may change over time, which may in turn affect our investment opinion.

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