This week, molecular diagnostics company CardioDX (CDX) is expected to take its company public with a 5 million share initial price offering. The company has "game changing" technology in the diagnostics market for patients with coronary artery disease symptoms. With new international sales, tests to expand its product offering, and a positive benefit from the Affordable Care Act, shares will see strong interest and should be considered in your portfolio.
CardioDX is selling five million shares at a price range of $14 to $16. After the offering, there will be a total of 17.1 million shares outstanding.
The company's main product is the Corus CAD, a blood based gene test for non-diabetic patients to determine if they have a high risk of coronary artery disease. The test saves costs and risks by ruling out patients who aren't likely to have CAD. The test measures 23 messenger RNA strands and creates a score 1 to 40 based on the likelihood of CAD, based on sex and age. The test is easy with a single blood draw and delivers results in 48 to 72 hours.
The Corus CAD became available in 2009, but the company did not see strong sales until 2012 when it received Medicare Part B coverage. In the last nine months, 14,104 tests were sold, an increase from the 8118 in the prior year's comparative time. In 2012, 9900 tests were delivered. Since the test became commercially available, over 41,000 have been delivered.
From its prospectus, CardioDX gives their commercialization strategy as:
· Broadening payer coverage and reimbursement
· Expanding out sales presence
· Increasing market awareness
· Expanding our clinical and economic utility data
· Pursuing relationships with commercial partners
Future growth plans call for:
· Product line extensions or enhancements
· New product development in other areas of CVD
· Technology platform development to increase efficiency and lower costs in our testing
CVD is the leading cause of death in the world, killing 30% of people. Coronary artery disease is one of the main causes of death in the United States. With the Corus CAD, CardioDX is able to save insurers and patients' money by diagnosing patients better. The company believes that $108.9 billion is spent on tests, labor, and other items associated with coronary artery disease. CardioDX believes it can save billions of dollars by giving its test to people and determining who does not need CAD tests.
In the last nine months, CardioDX saw $5.1 million in revenue and a net loss of $27.9 million. In 2012, revenue hit $2.5 million, an increase from the prior year's $1.5 million. In May of 2013, CardioDX started sales in India, which should be beneficial to the rest of 2013 and 2014 revenue totals.
Fierce Diagnostics, a respected medical website, named CardioDX one of its "Fierce15" winners for 2012. The company is bullish on CardioDX and believes it will be one company to benefit from Affordable Care Act, aka Obamacare. From Fierce, "CardioDx launched Corus CAD in 2009 and is pursuing an IPO just as the Affordable Care Act becomes fully operational. With its focus on controlling costs and boosting the efficiency of care, the company frames its test as being ideally positioned to take advantage of the controversial healthcare reform law." Fierce also calls a new partnership with Core Diagnostics in India a great step.
With its ability to save insurers money, CardioDX could see expanded use of its tests. Any announcement of expanded coverage and reimbursement could send shares soaring. I believe Fierce is right that this IPO is coming at the perfect time. If shares price under $18, I would suggest accumulating a small portion and taking a ride with this "game changer".
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.