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Small Company Update: QCOR rises as IS, MS, and (maybe) NS, prove not to be BS

|Includes: Mallinckrodt PLC (MNK)

On Friday Money McBags promised he would get to QCOR's spankrific Q today and with the market quieter than dark matter or Tim Tebow's bedroom (wink wink) due to QE2, he finally found the time to do so.

For those of you new to the award winning When Genius Prevailed, first of all, where the fuck have you been?  Secondly, Money McBags has written about this company extensively as it is more under the radar (or was) than the lovely Hayley Atwell, has two potential growth markets (one is currently growing faster than Christine O'Donnell's bush, and yes that is the third Christine O'Donnell bush joke in three days but it is the gift that keeps on giving, like comedy herpes, and the other is still in its early stages but could double the company's revenue), has an unbelievably clean balance sheet, generates more cash than an Aimee Teegarden kissing and blumpkin stand, is well run, treats a bunch of diseases that aren't going away, and is made from a pig pituitary so won't have any generic competition unless someone figures out how to clone Rosie O'Donnell.


For the full story, throw it in to the search engine above and you will see the voluminous work Money McBags has put up about this company ever since it was trading at less than half of its current price (so if you're keeping score at home, Money McBags gives you unfiltered macro analysis, original dick jokes, real fundamental research, and well performing stock picks, all in one place.  So speak kindly of him when you get fired for using your work computer to guess the NSFW muffs about which he told you).

As for this Q from QCOR, here are some highlights:

1.  Net revenue was up to $31.3MM driven by a 123% increase in MS sales.  MS sales are now ~55% of revenue up from <20% just a short time ago.  That said, sequentially MS sales were only up 6% so that is a tad bit worrisome, though not as worrisome as the fact that we may one day have to drink recycled pee.

2.  EPS of $.18 which beat Money McBags estimates of $.15 due to lower operating costs driven by ~$800k lower R&D expense and ~$1.5MM lower SG&A expense.  The SG&A is a bit puzzling to Money McBags, like the concept of underwear (or tone) to Brittney Spears.  They doubled their sales force to 77 from 38 (well doubled it plus 1) so Money McBags juiced up their SG&A by $2MM which apparently was a bit fucking high.  On the call they said they expect expenses in Q4 to be higher and if Money McBags understood them correctly, they expect the sales force to add ~$12MM of incremental costs so ~$3MM per Q which should start to hit more in Q4.  It was a bit confusing, like pension accounting or the success of that show The View, but that is Money McBags' best interpretation of what management said (his second best interpretation is simply "costs are going up materially before revenues hit, dingbat," but whatever).

3.  They only have penetrated ~9% of the 4,500 MS doctors (which is fewer penetrations than Nick Manning did all of last month, and just slightly less invasive), so there is more room to grow than in a pair of Hammer pants.  Doubling the sales force will certainly help.

4.  They hired their first full time NS salesperson with 3 to 4 more on the way.  This is the next huge area of growth for QCOR and they will be presenting NS data on 11/20 at the American Society of Nephrology's annual meeting in between topics such as "There is nothing cute about Acute Renal Failure," "The kidney, neither kid nor knee.  Discuss," and "At least we're not urologists."  The point is, in time this could double QCOR's revenue if they are able to grow this business and Money McBags has it as ~$0 in his model right now.

5.  They have a shitload of cash (~$114MM) and their second priority for it after investing in the business is returning it to shareholders.  Now it doesn't take $114MM to grow an MS and NS platform,....READ MUCH MORE....

Disclosure: No Position