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Retractable Technologies Inc.: Order For COVID-19 Vaccine Syringes Is A Game-Changer


  • Retractable Technologies Inc. reported Q1 earnings highlighted by strong sales growth and firming profitability.
  • The company announced a major order for its specialty auto-disable syringes by the U.S. Department of Health and Human Services related to the COVID-19 pandemic.
  • RVP is up by 490% since its low in March with strong momentum following the government contract announcement while also supported by overall solid fundamentals.
  • We rate shares as a buy based on a still reasonable valuation and a positive long-term outlook in terms of organic growth opportunities.
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Retractable Technologies Inc. (NYSE:RVP), with a market cap of $205 million, designs and manufactures specialty medical syringes, needles, and related blood collection devices. The products feature a patented retractable safety mechanism designed to eliminate exposure to contaminants, bloodstream infections, and needlestick injuries. The company recently announced a major order by the U.S. Department of Health and Human Services. The expectation is that the government will utilize RVP syringes for a future COVID-19 vaccination program. Indeed, the stock is up an incredible 490% from its low in March, which is also supported by a trend of firming profitability over the past year. We think the stock has value at current levels with solid fundamentals and an overall positive outlook.

(Source: finviz.com)

Q1 Earnings Recap

Retractable Technologies reported its Q1 earnings on May 18th with a net income of $322,773 representing an EPS of $0.0045. The result reversed a loss of $129,221 or negative $0.01 per share in Q1 of 2019. Revenues of $11.2 million increased by 41% year over year.

(Source: Company IR)

While the U.S. domestic market represents about 75% of total sales, the international segment has been a growth driver with sales up 60% y/y in the last quarter. Demand has been strong for the company's "VanishPoint" syringe which comprises 85% of the total company sales. Other technologies including the "EasyPoint Needles" and blood collection sets utilizing similar retractable mechanisms have gained a share within the product mix. In the 2019 annual report, it was mentioned that recent modifications to the company's syringe and needle designs have extended the patent protection to between 2028 and 2032.

On a trailing-twelve-months basis, the operating margin has reached 8.1%, while EPS is positive at $0.095. The company has a strong balance sheet position, ending the quarter with $7.6 million in cash against $2.3 million in long-term debt. It's worth noting

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This article was written by

Dan Victor, CFA profile picture

15 years of professional experience in capital markets and investment management at major financial institutions. 

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Analyst’s Disclosure: I am/we are long RVP. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (10)

P Johnson profile picture
Congrats--looks like your target price was already reached, thanks to the news about the BARDA funding.

What doesn't make sense is why the government is investing--and risking--so much on a small company, and one with minimal manufacturing capacity in the US? 83% of their products come from China. In the meantime, the contracts awarded to BDX--the world leader in syringes, and a company 400 times larger than RVP--are actually smaller . Very strange.
Dan Victor, CFA profile picture
It's not that RVP is a small company.. it's just that this is their one focus area "syringes".. BDX has many other products/ segments. so in terms of filling this contract, RVP is "big enough" and have the expertise to do it.. i'd guess the size of the contract is based on the aspect of "retractable" safety needles which is appealing for the mass vaccination requirements and represents an advantage over BDX.
P Johnson profile picture
Did anyone listen to the annual meeting which was held virtually today? Looks like investors were disappointed with whatever was said.
Dan Victor, CFA profile picture
i cant find a transcript of it hasn't been published yet.. I'm guessing it was a "sell the news" type of trade, but the stock is fine.. the amazing run can continue
Pioneer.Valley profile picture
Great article - never heard of this stock. Will look into.
Great article. RVP was actually a stock pick of the month in The Bowser Report. I was invested under $2.0
Your article failed to mention there are accrued dividends of over $12 million dollars that have yet to be paid.
Your article failed to mention the CEO makes 5% royalties on gross sales. That means even if RVP's costs go up, the CEO gets paid on his royalties. Shaw made more in royalties last qtr. than the shareholders.
Your article fails to mention that the contract with HHS has very small margins.
You article fails to mention that patents started to run out in 2020, and the Chinese produce 80% of their production.
Dan Victor, CFA profile picture
so.. you're short the stock or something? how are you gonna argue about their Q1 result with 41% revenue growth (before the HHS deal>).. you're wrong about the patents as they were updated with a new technical design that runs through 2028. its mentioned in their Q4 earnings release. the royalty that goes to the CEO is not an issue IMO.. just another expense on the income statement that nets out to the gross profit. companies that have huge "below the line" executive stock comp are worse. we'll see how it plays out.. good luck
The royalty that goes to the CEO is not an issue? What about the $50 million in revenue that Shaw has received from the company fot the past 20 years, while the shareholders received nothing. Shaw uses this company as his own ATM. Where did the $100 million go that RVP won in their lawsuit back in 2000? if this company has revenue of $140 million in the nest year, I'll be the first one to come back on this site to apologize. Granted they do make a good syringe, but they have been blocked from doing business in the hospitals since the company was founded. Full disclosure: I am not short the stock but may in the future.
Blocked in hospitals? By whom? You failed to mention your inside information. They are being used in hospitals and nurses love them.
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