Hi @pekupeku I'm not sure what to make of it either to be honest...

Hi @pekupeku

I'm not sure what to make of it either to be honest but here are a few thoughts:

1) Total consideration is a minimum of $3m cash over the next 5 years plus $1.5m worth of cancelled shares at current prices, so $4.5 million in total.

2) Although the Cord Blood business is not very profitable, it provides lots of cash because customers mostly pay upfront for 20 yrs of storage. Current EBITDA runrate for the division is about $0.4m to $0.5m per anum so $4.5m looks like a good deal for CTE especially as they could not compete effectively with Cell Care which has 70%+ market share.

3) Andrew Kroger will own 35% of the company following the transaction

4) CTE will have a market cap of $6m at current prices and will have cash of between $4.2m - $4.7m. Assuming the remaining business is profitable (which I think it is) then in five years cash will be higher than the current market cap simply from the earn-out payments assuming no capital returns or growth investments.


5) Clinical trial logistics contributed 400k EBITDA in H1. Will profitability be reduced by group overheads that were previously allocated to cord blood? Will capex spend fall and by how much? Annualised group earnings could now be $0.3m to $0.5m?

6) Whilst this makes the stock very cheap on an EV/E basis, is this relevant given how small the company is? Does it make sense for such a small company to be listed? I guess as long as the dividends keep flowing then it doesn't really matter.

7) Clinical trials revenue has consistently been in the $4.5m to $5m range since 2013 and I would not be interested in owning any stock until the business shows significant and consistent growth. I think this would require the CEO situation to be resolved which has been dragging on for a couple of years now. However, it is hard to see how you could fail to make money at these prices as long as you are prepared to wait.