Installed base is 25000 machines as of today. Life is 5 yrs (lease is 5 yrs and mgt alaso indicates life is 5yrs) but lets assume 6 yrs. We know the installed base since 2019 (its in your first deep dive) and till 2022. So we can easily model the pure replacement value from 2025 onwards - just installed base/6 starting from 2019. Even if INMD does not sell a single new machine from 2025 onwards, and as long as patients still want the procedures and doctors need the product, they will replace it every 6 yrs. I modelled that (just took 10 mins) and assumed a 35% Net Profit Margin and a 10X exit multiple ins 2029. I got EV of 870 million at 12% discount rate. Would love to see what you get. Its a very quick calculation.
The main questions are - will proceedure demand remain, what will competition do and what happens to INMD supply chain due to the war. If these three are fine, I think there is value here
Further to this, we really need to understand the demand for these procedures in depth. What is the target market size and how many of them have already taken the procedures ?
Thank you for your analysis. The replacement cycle was also a big part of my thesis. But during the latest earnings call, management is less focused on this. The question is: What is the true lifetime of their devices? I'm going to do some scuttlebutting to find out
I understood "share premium" in their Consolidated statement of changes in equity to mean shares outstanding. It went from 374,992 on 6/30/23 to 417,923 on 6/30/24. Happy to be corrected if I am wrong. Not used to looking at financials from outside the USA.
Thanks for the due diligence! Here are the worldwide numbers:
Q1 2023 consumables is 20M
Q2 2023 consumables is 21.6M
Q3 2023 consumables is 17.9M
Q4 2023 consumables is 20.5M
Q1 2024 consumables is 22.5M
Q2 2024 consumables is 21M
The Seasonality is normal, but it would be better if the number continues to increase. It does show however that the majority of the downturn is in the United States.
Thanks. It's true their 6K shows the purchase, but not the impact on diluted number of shares. It would be weird not to cancel them though. I suppose it's a matter of time, maybe to be reflected in the annual report of the full fiscal year. I'll send a message to investor relations, but haven't received a reply to my answers in the past.
Adyen is known for being very conservative with Stock Based Compensation and they do not need to raise capital. Where did you get the data? Finchat shows a pretty stable share count at 31.1M shares. (0.5% increase yoy)
I sold InMode to add to Applovin , Uber , Duolingo and to Global-e . In a two year and a half time frame they shoul perform great in my view from the price level of late July , early August .
To me it sound like a “MOAT” problem INMD moat is thinning and hasn’t been that wide before.
If there products are as good as they should be they shouldn’t have a problem with the Korean competitors during 2026 and forwards.
Also, they seem pretty cyclical, which changes things a lot and you should question yourself if the recent two years of blobal events have been the reason behind the “Growth” problems…
Thank you Anton. You raise some great points. I do not think the company itself has changed over the past years. The problem is this is the first time it is being tested by a market with less demand and high lease rates. Will it still earn cash in the future? Probably. Will it earn loads of cash like in the past. No. A rerating is going on. The million dollar question: Has the rerating been priced in or not? What I learned from Inmode is that every company is cyclical. But you need a big enough time frame to actually see it 😉
Kevin you are more bold than I am being 100% invested at a moment in history where seemingly everything is in a bubble. Imode seems to be cheap PE 9, have diversity in its products and offerings. I don't know too much about their machines/products, but non invasive procedures and products seem like a long term trend. Company has 10%+ insider ownership. I don't know the business that well. So I guess it is one I can't really understand at this moment in time. This is where a person really has to understand the industry to make an intelligent bet on it. Perhaps spending hours on the website, talking to doctors or other owners about it. Buying businesses sometimes requires a lot more than glancing at charts and numbers. Understanding the leadership, management and listening to them expound on the business may be a place to start.
Great advice! I wish I had more time to do some actual scuttlebutting, and talk to customers etc. I might just add a couple of phone calls in my research. It doesn't need to take hours and hours.
Kevin, I think INMD has value. My analysis :
Installed base is 25000 machines as of today. Life is 5 yrs (lease is 5 yrs and mgt alaso indicates life is 5yrs) but lets assume 6 yrs. We know the installed base since 2019 (its in your first deep dive) and till 2022. So we can easily model the pure replacement value from 2025 onwards - just installed base/6 starting from 2019. Even if INMD does not sell a single new machine from 2025 onwards, and as long as patients still want the procedures and doctors need the product, they will replace it every 6 yrs. I modelled that (just took 10 mins) and assumed a 35% Net Profit Margin and a 10X exit multiple ins 2029. I got EV of 870 million at 12% discount rate. Would love to see what you get. Its a very quick calculation.
The main questions are - will proceedure demand remain, what will competition do and what happens to INMD supply chain due to the war. If these three are fine, I think there is value here
I am still holding my small position
Further to this, we really need to understand the demand for these procedures in depth. What is the target market size and how many of them have already taken the procedures ?
Thank you for your analysis. The replacement cycle was also a big part of my thesis. But during the latest earnings call, management is less focused on this. The question is: What is the true lifetime of their devices? I'm going to do some scuttlebutting to find out
I understood "share premium" in their Consolidated statement of changes in equity to mean shares outstanding. It went from 374,992 on 6/30/23 to 417,923 on 6/30/24. Happy to be corrected if I am wrong. Not used to looking at financials from outside the USA.
Hi Kevin
Thanks for your inputs, I share your thoughts. But INMD was never a 100 bagger.
The solution: https://substack.com/@roguefunds/note/p-148576985
I agree. Thanks for pointing me to that article. I'll take a look!
Hi,
What is your E-mail?
Cordially,
Anton Gonzalez Sundewall
"What’s more important is the drop in consumables (30% YoY)."
Am I missing something? In the report it says:
"Quarterly revenues from consumables and service of $21.0 million, a decrease of 3% compared to the second quarter of 2023."
Never mind, found it in the call. 30% drop in US consumables.
Thanks for the due diligence! Here are the worldwide numbers:
Q1 2023 consumables is 20M
Q2 2023 consumables is 21.6M
Q3 2023 consumables is 17.9M
Q4 2023 consumables is 20.5M
Q1 2024 consumables is 22.5M
Q2 2024 consumables is 21M
The Seasonality is normal, but it would be better if the number continues to increase. It does show however that the majority of the downturn is in the United States.
Thanks Kevin!
I always have thought than INMD catalyzer should be begin to apply return to shareholders (nonexistent until now).
Now, with buybacks it seems to appear, but I think the company didn´t cancel still the bought shares.
This is a concern from my perspective, I don´t know the reason.
Thanks. It's true their 6K shows the purchase, but not the impact on diluted number of shares. It would be weird not to cancel them though. I suppose it's a matter of time, maybe to be reflected in the annual report of the full fiscal year. I'll send a message to investor relations, but haven't received a reply to my answers in the past.
Excellent write-up. Inmode is a tough one. I've never owned it, but considered it multiple times.
Thank you! I bought Inmode in 2020 and road it to the top. After the downturn, I got back in, but this time is different...
Nice write-ups. One concern with Adyen is it looks like shares outstanding were up 11.5% year over year.
Adyen is known for being very conservative with Stock Based Compensation and they do not need to raise capital. Where did you get the data? Finchat shows a pretty stable share count at 31.1M shares. (0.5% increase yoy)
I sold InMode to add to Applovin , Uber , Duolingo and to Global-e . In a two year and a half time frame they shoul perform great in my view from the price level of late July , early August .
Thank you for sharing!
Hi Kevin,
To me it sound like a “MOAT” problem INMD moat is thinning and hasn’t been that wide before.
If there products are as good as they should be they shouldn’t have a problem with the Korean competitors during 2026 and forwards.
Also, they seem pretty cyclical, which changes things a lot and you should question yourself if the recent two years of blobal events have been the reason behind the “Growth” problems…
Cordially,
Anton Gonzalez Sundewall
Thank you Anton. You raise some great points. I do not think the company itself has changed over the past years. The problem is this is the first time it is being tested by a market with less demand and high lease rates. Will it still earn cash in the future? Probably. Will it earn loads of cash like in the past. No. A rerating is going on. The million dollar question: Has the rerating been priced in or not? What I learned from Inmode is that every company is cyclical. But you need a big enough time frame to actually see it 😉
I hodl INMD 🙈
I feel your suffering 😉
Kevin you are more bold than I am being 100% invested at a moment in history where seemingly everything is in a bubble. Imode seems to be cheap PE 9, have diversity in its products and offerings. I don't know too much about their machines/products, but non invasive procedures and products seem like a long term trend. Company has 10%+ insider ownership. I don't know the business that well. So I guess it is one I can't really understand at this moment in time. This is where a person really has to understand the industry to make an intelligent bet on it. Perhaps spending hours on the website, talking to doctors or other owners about it. Buying businesses sometimes requires a lot more than glancing at charts and numbers. Understanding the leadership, management and listening to them expound on the business may be a place to start.
Great advice! I wish I had more time to do some actual scuttlebutting, and talk to customers etc. I might just add a couple of phone calls in my research. It doesn't need to take hours and hours.