VYCO: Summary and Investment Opportunity • $1B+ Market

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Jun 26, 2012 at 2:36 PM

VYCO: Summary and Investment Opportunity
• $1B+ Market Opportunity - First Real Treatment for Stroke-Related Vision Loss
Vycor's NovaVision helps victims of stroke and traumatic-brain injury permanently regain a
key portion of lost vision-field. This is the first treatment for what has been considered a
permanent and irreversible condition, and is backed by a strong scientific team, 15 years of
research and 20 clinical studies. It is FDA 510(k) cleared, has a strong patent portfolio, and
addresses a very large market in the United States, Europe, and around the world. Although
we believe it will take NovaVision several years to penetrate a big percentage of this market,
its multi-billion dollar size makes this product line a potential blockbuster for Vycor.
• ViewSite Helps Neurosurgeons Address "Inoperable" Cases and Improves Outcomes
The transparent ViewSite Brain Access System (VBAS) dramatically reduces the damage
caused by "retractors" that surgeons now use to reach sub-surface areas of the brain. It also
provides these surgeons with superior visibility during surgical procedures. The net effect of
this is improved clinical outcomes, shorter surgeries, and shorter recovery times; in some cases
this product's superior attributes have allowed brain surgeons to successfully perform surgeries
that would have otherwise been considered inoperable. The VBAS is protected by a strong
patent portfolio, and we believe its clinical superiority and cost savings will lead it to become
the de facto standard in surgical devices for neurosurgery over the next few years.
• The Company Should Enter Hyper-growth During the Next Two to Three Years
Vycor's ViewSite is already making good inroads into the relatively small neurosurgery
market, both in the U.S. and overseas, and we expect sales to grow robustly beginning in early
2013. However, we are most excited about the long-term potential of the NovaVision
subsidiary, as its products have no real competition and address a global market that could be
up to $20B in size. Although NovaVision's products could require several years to achieve
market penetration of even 5%, this would still equate to a huge win for a company of this size.
Both NovaVision and ViewSite have strong patent protection and backing from the scientific
community, and both are FDA 510(k) cleared for sale in the United States.
• We Believe an Investment in Vycor is Somewhat Risky but Has Exceptional Potential
Based on solid near-term growth prospects and extreme upside in potential in 2013 and
beyond, we are initiating coverage of Vycor with a Strong Buy rating and a target price range
of $0.05 per share. Assuming the Company executes on its plan over the next 12-18 months,
we believe its current valuation multiple of just 4.2x our 2013 revenue forecast is far too low,
and believe a multiple in the 12x to 15x range is more appropriate. Furthermore, we see upside
to our estimates if NovaVision is able to achieve market penetration more quickly than we
foresee.
Market Data (closing prices, April 30, 2012)
Market Capitalization (mln) 15.6
Enterprise Value (mln) 17.4
Basic Shares Outstanding (mln) 837.5
Fully Diluted Shares (mln) 1,224.4
Avg. Volume (90 day, approx.) N/A
Insider Ownership 65%
Exchange OTCQB
Balance Sheet Data (as of December 31, 2011)
Shareholders’ Equity (mln) 875
Price/Book Value (as of 10/11/11)
Cash (000s) 951
Net Working Capital (000s) (367)
Long-Term Debt (000s) 1,636
Total Debt to Equity Capital 1.87x
Company Overview
Vycor Medical has two product lines that
represent legitimate medical breakthroughs
in their respective fields. The
NovaVision system is the first to provide
permanent (albeit partial) restoration of
vision lost due to stroke or brain injury,
potentially helping millions of sufferers
worldwide. The Company's ViewSite Brain
Access System (VBAS) improves brain
surgery outcomes and reduces overall
costs, and in some cases allows
"inoperable" procedures to be performed.
Both address large markets with new and
unique technologies that have the potential
to revolutionize their respective fields. The
Company is based in Boca Raton, FL, and
trades on the OTCQB under the symbol
VYCO.
Company Contact Information
Investor Contact:
Jay Goth
Capital Market Relations
www.capitalmarketrelations.com
Direct: (951) 676-6509
Mobile: (951) 704-6792
Company Contact:
Lenny Sorin
(561) 558-2000
lsorin@novavision.com
P&L (000s) FY'10A Q1'11A Q2'11A Q3'11A Q4'11A FY’11A FY’12E FY’13E
Revenues 316.5 145.1 142.3 231.3 452.6 971.4 2,856.0 5,312.0
y/y Growth n/a 126% 90% 225% 282% 207% 209% 86%
Gr. Margin 85% 85% 75% 84% 82% 80% 75% 77%
Op. Income (1,723) (911) (1,805) (1,110) (800) (4,628) (2,221) (459)
Op. Margin n/a n/a n/a n/a n/a n/a n/a n/a
Net Income (1,984) (935) (1,835) (1,149) (859) (4,778) (2,381) (659)
Dil. EPS (0.003) (0.001) (0.002) (0.001) (0.001) (0.006) (0.003) (0.001)
Dil. Shs 663.2 726.7 780.8 802.6 830.0 785.0 892.5 95

Vycor Medical Inc. (VYCO) Stock Research Links

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