AlphaSituations-Event/Catalyst Driven Research, AlphaSituations

Robert Sassoon

AlphaSituations-Event/Catalyst Driven Research

AlphaSituations

Since its establishment, AlphaSituations has delivered a track record of outperformance with a hit rate of winners of more than 70% of its portfolio of ideas generating annualized average returns of 20%. In January 2022, AlphaSituations was contracted by Water Tower Research, an investor engagement and stakeholder communication platform to provide coverage of Special Situations

Event-Driven

<a href="https://www.smartkarma.com/entities/bausch-health-companies-inc" target="_blank" data-smartkarma-citation="entities:941:1" rel="noopener">Bausch Health Companies (BHC US)</a> recently announced that it intends to split-off via an IPO  its highly profitable and fast growing  medical aesthetics business, Solta Medical, adding to the proposed spin/split-off of its eyecare business, Bausch &amp; Lomb (B&amp;L , which it announced a year ago. At the same time, BHC continues to make progress  in reducing its large debt pile, the legacy of the company's aggressive expansion during the first half of the last decade under the aegis of the management team. Although the share price has climbed ~60% since we published in August 2020 our insight - SpinTalk: Why Bausch Health Companies' Planned Eye Care Spin-Off Promises a Major Value Re-Rating -  the BHC share price appears to have hit a value wall in recent months and has so far struggled to make a sustainable breakthrough the $30 barrier. Indeed since our last update,  ActivistTalk: Why We Think There Is Even More Value In Bausch Health Companies Pending Restructuring, published on March 18, 2021, BHC has lost ~12% of its value  vs a ~9% drop in the <a href="https://www.smartkarma.com/entities/spdr-s-p-pharmaceuticals-etf" target="_blank" data-smartkarma-citation="entities:32128:1" rel="noopener">SPDR S&amp;P Pharmaceuticals ETF (XPH US)</a> while the broader market as represented by the <a href="https://www.smartkarma.com/entities/spdr-s-p-500-etf-trust" target="_blank" data-smartkarma-citation="entities:763:1" rel="noopener">SPDR S&amp;P 500 (SPY US)</a> has risen ~14%.Our insight below discusses why BHC's share price momentum has stalled in recent months and why we believe this represents an opportunity to pick up the considerable value still left on the table.

Bausch Health Companies (BHC US) recently announced that it intends to split-off via an IPO  its highly profitable and fast growing  medical aesthetics business, Solta Medical, adding to the proposed spin/split-off of its eyecare business, Bausch &amp; Lomb (B&amp;L , which it announced a year ago. At the same time, BHC continues to make progress  in reducing its large debt pile, the legacy of the company's aggressive expansion during the first half of the last decade under the aegis of the management team. Although the share price has climbed ~60% since we published in August 2020 our insight - SpinTalk: Why Bausch Health Companies' Planned Eye Care Spin-Off Promises a Major Value Re-Rating -  the BHC share price appears to have hit a value wall in recent months and has so far struggled to make a sustainable breakthrough the $30 barrier. Indeed since our last update,  ActivistTalk: Why We Think There Is Even More Value In Bausch Health Companies Pending Restructuring, published on March 18, 2021, BHC has lost ~12% of its value  vs a ~9% drop in the SPDR S&amp;P Pharmaceuticals ETF (XPH US) while the broader market as represented by the SPDR S&amp;P 500 (SPY US) has risen ~14%.Our insight below discusses why BHC's share price momentum has stalled in recent months and why we believe this represents an opportunity to pick up the considerable value still left on the table.

SpinTalk:Bausch Health Companies- Restructuring Broadens,Considerable Value Still Left On The Table

Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

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<li>
<a href="https://www.smartkarma.com/entities/classys" target="_blank" data-smartkarma-citation="entities:29688:1" rel="noopener">Classys (214150 KS)</a> reported solid performance in 2Q23, with revenue and operating profit growing 40% and 52%, YoY, respectively, mainly driven by consumables sales in both domestic and overseas markets.  </li>
<li>Despite increase in advertising and R&amp;D expenses, operating profit margin expanded 370 basis points to 50.4%. Net profit increased 34% YoY to KRW18.6 billion.</li>
<li>With 1H23 revenue of KRW84.9 billion, Classys is on track to meet 2023 revenue guidance of KRW170 billion, representing year-over-year increase of 20%.</li>
</ul>



Classys (214150 KS) reported solid performance in 2Q23, with revenue and operating profit growing 40% and 52%, YoY, respectively, mainly driven by consumables sales in both domestic and overseas markets.  
Despite increase in advertising and R&amp;D expenses, operating profit margin expanded 370 basis points to 50.4%. Net profit increased 34% YoY to KRW18.6 billion.
With 1H23 revenue of KRW84.9 billion, Classys is on track to meet 2023 revenue guidance of KRW170 billion, representing year-over-year increase of 20%.


Classys (214150 KS): Beautiful Growth Story Continues; No Sign of Slowing Down

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<li>
<a href="https://www.smartkarma.com/entities/classys" target="_blank" data-smartkarma-citation="entities:29688:1" rel="noopener">Classys (214150 KS)</a> reported solid performance in 1Q23, with double-digit revenue growth, driven by expansion of domestic consumables sales for Shrink Universe and growth in overseas device and consumables sales.</li>
<li>Operating profit increased 19% YoY to KRW 19.9 billion, leading to 380 basis point margin expansion to 51%. Net profit increased 46% YoY to KRW 18.8 billion.</li>
<li>Classys continues to strengthen its competitiveness through product line and geography expansion. The company has reiterated 2023 revenue guidance of KRW170 billion, representing year-over-year increase of 20%.</li>
</ul>



Classys (214150 KS) reported solid performance in 1Q23, with double-digit revenue growth, driven by expansion of domestic consumables sales for Shrink Universe and growth in overseas device and consumables sales.
Operating profit increased 19% YoY to KRW 19.9 billion, leading to 380 basis point margin expansion to 51%. Net profit increased 46% YoY to KRW 18.8 billion.
Classys continues to strengthen its competitiveness through product line and geography expansion. The company has reiterated 2023 revenue guidance of KRW170 billion, representing year-over-year increase of 20%.


Classys (214150 KS): Strong 1Q23 Result Lifted by Overseas Performance and Consumables Sales

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<a href="https://www.smartkarma.com/entities/lutronic-corp" target="_blank" data-smartkarma-citation="entities:2250:1" rel="noopener">Lutronic Corp (085370 KS)</a> recorded its highest ever revenue and operating profit in 2022, driven by strong performance of overseas business, which contributed 88% of revenue and grew 62% YoY.</li>
<li>Overall, business has recovered with the reopening of the dermatology clinics and resumption of elective procedures globally. In addition to product sales, sales of consumables and services are steadily increasing.</li>
<li>Despite stellar performance in 2022, ongoing lawsuit against U.S.-based competitor remains an overhang on Lutronic’s overseas growth aspirations, especially in the U.S.</li>
</ul>



Lutronic Corp (085370 KS) recorded its highest ever revenue and operating profit in 2022, driven by strong performance of overseas business, which contributed 88% of revenue and grew 62% YoY.
Overall, business has recovered with the reopening of the dermatology clinics and resumption of elective procedures globally. In addition to product sales, sales of consumables and services are steadily increasing.
Despite stellar performance in 2022, ongoing lawsuit against U.S.-based competitor remains an overhang on Lutronic’s overseas growth aspirations, especially in the U.S.


Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential

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<li>
<a href="https://www.smartkarma.com/entities/inmode-ltd" target="_blank" data-smartkarma-citation="entities:29005:1" rel="noopener">InMode Ltd (INMD US)</a> reported record-high quarterly revenue of $134M in Q4, up 21% YoY, mainly driven by the strong demand for its innovative, energy-based, minimally invasive product platforms. </li>
<li>However, quarterly revenue growth is deteriorating since Q3 2021. Q4 2022 revenue growth of 21% is the lowest in last two years or eight quarters.</li>
<li>Demand for aesthetic procedures in the U.S., which is the core market for InMode is expected to deteriorate in next 6–12 months due to macroeconomic headwind.</li>
</ul>



InMode Ltd (INMD US) reported record-high quarterly revenue of $134M in Q4, up 21% YoY, mainly driven by the strong demand for its innovative, energy-based, minimally invasive product platforms. 
However, quarterly revenue growth is deteriorating since Q3 2021. Q4 2022 revenue growth of 21% is the lowest in last two years or eight quarters.
Demand for aesthetic procedures in the U.S., which is the core market for InMode is expected to deteriorate in next 6–12 months due to macroeconomic headwind.


InMode Ltd (INMD US): Decelerating Growth & Unfavorable Macro Environment Are Major Concerns

United States

InMode Ltd. develops medical devices. The Company manufactures and markets platforms that harness novel radio-frequency based technology for both the patients and the practitioners. InMode serves customers worldwide.

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Inmode (INMD US)

SpinTalk:Bausch Health Companies- Restructuring Broadens,Considerable Value Still Left On The Table

Although the share price has climbed ~60% since we published our first insight on this corporate restructuring event, the BHC share price has lost...

Robert Sassoon

Classys (214150 KS): Beautiful Growth Story Continues; No Sign of Slowing Down

Classys reported strong 2Q23 performance, with revenue and operating profit growing 40% and 52% YoY, driven by consumables sales. The company...

Tina Banerjee

Classys (214150 KS): Strong 1Q23 Result Lifted by Overseas Performance and Consumables Sales

Since publishing this insight, Classys shares gained 26%. Investors can book partial profit and hold core position, as more upside is seen, due to...

Tina Banerjee

Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential

Lutronic recorded its highest ever revenue and operating profit in 2022, driven by strong performance of overseas business. However, litigation...

Tina Banerjee

InMode Ltd (INMD US): Decelerating Growth & Unfavorable Macro Environment Are Major Concerns

InMode’s Q4 sales growth of 21% is the lowest in last 2 years. For 2023, InMode guided for 16–17% sales growth, slower than 27% in 2022. Demand is...

Tina Banerjee

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

SpinTalk:Bausch Health Companies- Restructuring Broadens,Considerable Value Still Left On The Table

Although the share price has climbed ~60% since we published our first insight on this corporate restructuring event, the BHC share price has lost...

Robert Sassoon

Classys (214150 KS): Beautiful Growth Story Continues; No Sign of Slowing Down

​Classys reported strong 2Q23 performance, with revenue and operating profit growing 40% and 52% YoY, driven by consumables sales. The company...

Tina Banerjee

Classys (214150 KS): Strong 1Q23 Result Lifted by Overseas Performance and Consumables Sales

Since publishing this insight, Classys shares gained 26%. Investors can book partial profit and hold core position, as more upside is seen, due to...

Tina Banerjee

Lutronic Corp (085370 KS): Record-High Performance in 2022; Litigation May Limit Upside Potential

Lutronic recorded its highest ever revenue and operating profit in 2022, driven by strong performance of overseas business. However, litigation...

Tina Banerjee

InMode Ltd (INMD US): Decelerating Growth & Unfavorable Macro Environment Are Major Concerns

InMode’s Q4 sales growth of 21% is the lowest in last 2 years. For 2023, InMode guided for 16–17% sales growth, slower than 27% in 2022. Demand is...

Tina Banerjee

Classys reported strong 2Q23 performance, with revenue and operating profit growing 40% and 52% YoY, driven by consumables sales. The company...