WHITEFISH,MT / April 22nd, 2014 / OxySure Systems, Inc. (OTC: OXYS), developer of innovative oxygen-from-powder devices used to dispense emergency medical oxygen, recently reported robust fiscal year 2013 financial results. Revenue surged 566% to over $1.8 million, gross margins jumped from 46.8% to 72.8%, SG&A expenses were down 3%, and the balance sheet sported a healthy 1.88x current ratio.
In this article, we’ll take a look at the core drivers behind the improved operational performance and why 2013 could be just scratching the surface.
Growth Drivers Gain Footing
OxySure Systems’ strong financial results were driven primarily by growth in domestic revenues in FY 2013, but management has set the stage for significant revenue growth internationally in FY 2014.
Looking at domestic growth, the company continues to achieve strong organic growth, as demonstrated by unit cartridge shipments exceeding base unit shipments. Management also strategically expanded its product line to include AEDs and other complementary products in order to provide customers and distributors with a single source for emergency preparedness solutions.
Looking at international growth, the company signed a number of new international distributors, including Medizon B.V. in the Netherlands, Belgium, and Luxembourg; Aero Healthcare in Australia and the U.K.; Pacific Medical Systems in Hong Kong and Macau; and Python in Chile. Sales in the European Union should also receive a significant boost in FY 2014 given the recently awarded CE Mark approval.
Balance Sheet Gets Stronger
OxySure Systems has made great progress in de-risking its balance sheet, which is always a key concern for micro-cap growth companies.
Looking at assets, the company’s cash position grew from $13,513 to $657,673, current assets reached nearly $1.6 million, and total assets grew to over $2.35 million. Improvements to operating performance could help the company move closer towards a cash flow breakeven point towards the end of FY 2014, especially if U.S. military revenues recover quickly following the budget indecision.
Looking at liabilities, the company significantly reduced its current liabilities by cutting operational expenses, reducing deferred revenue, and cutting its note payable down 26.3% to $349,975. The reduced liabilities helped boost working capital to a $747,473 surplus, increased shareholders’ equity to $2,339,709, and brought its current ratio to a healthy 1.88x level.
Numerous Upcoming Catalysts
OxySure Systems has numerous upcoming catalysts that suggest FY 2013 may be just scratching the surface of its long-term potential.
In April 2014, the company announced that it secured CE Mark approval for its OxySure Model 615. The approval represents a key milestone in commercializing its unique technology in 30 countries across the European Union. With distribution partners already in place in many parts of the E.U., the company could see near-term revenues start to come in Q2 2014 from these regions.
Management also plans to expand its U.S. sales efforts by increasing the number of sub-distributors and sales agents selling its products. On the marketing side, the company plans to implement a strategy designed to create market demand and sales through increased market awareness and education. These efforts mark an expansion from primarily, safety-related media and trade shows in the past.
Potential Investment Opportunity
OxySure Systems represents an attractive potential investment opportunity given its strong FY 2013 financial results and numerous catalysts for FY 2014. Despite the bullish financial performance, the stock is trading about 2% lower so far this year compared to a 3.7% gain in the iShares Dow Jones U.S. Medical Device ETF (NYSE: IHI) and 0.92% gains across the wider SPDR S&P 500 ETF (NYSE: SPY).
Investors in the medical device space may want to take a closer look at the stock given these dynamics. In particular, AED manufacturers like Johnson & Johnson (NYSE: JNJ) produce a very similar product. While OxySure Systems is much smaller and riskier than companies like Johnson & Johnson, the company has greater upside potential and some of the risks could be mitigated through diversification.
To learn more, see the following resources:
Company Website - http://oxysure.com/
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SOURCE: OxySure Systems, Inc.