I contacted the company to clarify the reference to improving scale in the Medivet side of the business. They are looking to promote the lab services side of the business more than has traditionally been the case. New veterinarians coming on board using Medivet technology need not invest in the equipment to do the harvesting of stem cells in-house. Instead they would only extract the fat and send to the central lab operated by Medivet for the harvesting of the stem cells (which are then sent back to the vet for subsequent injection). After a period of time when the vet has performed a few procedures they might then look to make the investment in the equipment to do it all in-house.
The investments made now in R&D for Medivet are obviously for the longer term. The investments made in sales staff from are probably a more shorter to medium term proposition. Judging by the comment in the 4C about the Medivet revenue in the quarter being “encouraging” it looks like they are starting to make a difference.
It's around this time that budgets and business plans for the next financial year are being finalised. A couple of months ago the board dangled an equity carrot to Darryl to try and attain a $2.5 million profit. Hopefully this number has made its way to the bottom of a spreadsheet marked FY2016 at MLA headquarters in Lidcombe.
Hopefully when the profit becomes this large we’ll see the company turn cashflow positive too!
MLA Price at posting:
8.0¢ Sentiment: Buy Disclosure: Held
