DNB Markets – Episurf Medical: Covid-19 to affect procedures

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On 24 April Episurf Medical reported solid Q1 earnings, especially bearing in mind that EpiSealer procedures are typically elective and hence among the areas where healthcare organisations globally have lowered activity levels in the wake of Covid-19. This effect should be even more pronounced in Q2. Overall, we believe the company is moving in the right direction and its stable financial situation is a big benefit in the volatile times ahead due to the Covid-19 pandemic. We calculate a fair value of SEK1.4–4.1 (previously SEK1.6–4.3).

Q1 affected by Covid-19 and impact set to increase in Q2. The company reported sales of cSEK1.5m in Q1 and an operating loss of cSEK17.9m. The loss was larger than last year, but below our expectation given the increased activity in the US IDE trial. Covid-19 started to affect order intake in February/March. As EpiSealer procedures are typically elective in nature, we were not surprised to see an impact on the back of hospital organisations around the world reorganising to focus on extending ICU capacity and scaling back (in some cases substantially) elective procedures. As the Covid-19 pandemic hit Europe in March the impact on Episurf Medical should be even more pronounced in Q2 we believe.

More and more clinical outcome data available, which should drive sales. As the acute effects of the pandemic start to abate and healthcare operations in Europe and the US return to normal, we expect sales growth for the company to return. As we have stated before, we believe that strong clinical data is imperative for good traction in the market and that this data is being rapidly accumulated. This year, we should see several publications with data from longer-term use of the EpiSealer implant.

Strong start to the year. As mentioned in the CEO’s comments in the Q1 report, orthopaedic surgeons who have gained experience of the implant system continue to drive use, which points to a positive experience with the system.

Forecasts adjusted for Covid-19. We have adjusted our forecasts down due to the impact from Covid-19 seen at the end of Q1 and the impact we expect in Q2. We still see large demand for the company’s implant system in patients too old for any biological treatment to have an effect and too young for total knee replacements. Our new fair value is SEK1.4–4.1 (previously SEK1.6–4.3).

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Best regards 


Patrik Ling |
DNB Markets | Equity Research | Senior Analyst Healthcare

Regeringsgatan 59 | Stockholm | Sweden



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