Optos sees profits rise as it expands

Optos's full-year results beat consensus estimates, driven by increased sales geographically and helped by the roll-out of its latest Daytona device.

For the full year ended September 30th it delivered pre-tax profits of $23.4m (2011: $22m) on revenues of $193.2m (2011: $143.3m) - excluding an additional $3.2m income from the extension of previously-recognised finance leases. This was ahead of consensus estimates of $22.7m in pre-tax profits and $188m in turnover.

Helped by a growing direct and indirect sales force its two geographic segments both delivered double digit increases, with North American sales growing 26% to $147.8m and International sales growing 85% to $48.6m.

For the next financial year, Chief Executive Officer, Roy Davies stressed: "...our priority will be to execute on Daytona and continue our expansion into the ophthalmology market with the 200Tx device."

Still, progress has been made. There was $21m in revenues from Daytona, its next generation desktop retinal imaging device, with 329 devices installed this year. However, the timing of manufacturing scale up of Daytona contributed to a fall in gross margin from 64% to 57%. The year also saw accelerated growth in ophthalmology, with over 320 200Tx devices installed globally.

Given that its business model has changed from a pay-per-patient rental model to that where customers now acquire their devices outright or through finance leases it is hardly surprising that this is reflected in the sales mix. Outright sales of devices were $64.2m (2011: $37.6m) and new sales under finance leases of were $64.1m (2011:$37.6m). Revenues from operating leases fell to $52.5m (2011: $81.2m). With more customers entering into service contracts, recurring revenues from service and warranty grew to $15.6m (2011: $4.7m).

The results certainly pleased Panmure Gordon analyst Savvas Neophytou, who has reiterated his 'buy' recommendation and 320p price target.

CM