Incident: Recently, the company announced its 2022 results, achieving revenue of 406 million yuan (-2.3%), and losses attributable to owners of the parent company -1.06 billion yuan (183.1%).
The pandemic affected the number of surgeries throughout 2022, and net profit losses increased. The epidemic prevention and control affected patient visits and doctors' guidance, and had a clear negative impact on the release of TAVR products. Annual revenue fell 2.3% compared to 2021.
By business, the revenue of VenUSA series products was 358 million yuan (-11.7%), accounting for 88.1%; Venusp-VALVE's revenue was 408.67 million yuan (10.1%), and other businesses were 7,528 million yuan (-28.4%), accounting for 1.8%. The gross profit margin remained stable at 77.2% in 2022 (78% in 2021). On the cost side, sales expenses in 2022 were 260 million yuan (+20.5%), mainly due to increased investment in overseas market development; R&D costs in 2022 were 527 million yuan (+104.2%), mainly due to the completion of the Cardiovalve acquisition, which led to a corresponding increase in R&D expenses. Management expenses in 2022 were 192 million yuan (+49.5%), mainly due to the completion of the Cardiovalve acquisition, which led to an increase in overseas administrative expenses and related mergers and acquisitions expenses. Other expenses in 2022 were $558 million (+43.3%), mainly due to the company's depreciation losses totaling $416 million on certain intangible assets and goodwill. The company will close the business of Keystone Heart Ltd and its subsidiaries, while suspending product listing applications submitted by TriGuard3 in NMPA in November 2022. Net profit loss for the full year of 2022 increased further to -1.06 billion yuan (183.1%).
The TAVR business has begun to recover, and there have been many breakthroughs in internationalization. According to Frost&Sullivan's forecast, the number of TAVR surgeries in China is expected to reach 42,000 cases in 2025, and the industry's factory scale is expected to reach 5 billion yuan, and the industry is rapidly expanding. With Venusa-PRO's launch in May 2022, the company is the first domestic company with three TAVR products, with a clear first-mover advantage. Looking at channels, by the end of 2022, the company had a sales team of more than 260 people (an increase of about 40 people over the end of 2021), covering 400 tertiary hospitals. The total number of TAVR implants in 2022 was about 3,500, and the terminal market share was about 50%. It has an absolute leading edge and a stable position. The company's internationalization strategy also achieved many breakthroughs in the first half of the year. Among them, Venusp-Valve obtained European MDR certification in April. Through expanding its global direct sales and distribution network, it has entered the markets of 14 countries including the United Kingdom, Ireland, and Germany. In addition, it was approved for listing by NMPA in July. As the first TPVR product approved for listing in China, it filled the gap in clinical demand. It was approved for listing in Argentina in the same month, and has now entered more than 20 countries and regions including the United Kingdom, Italy, Spain, Denmark, Greece, France, Germany, Poland, Switzerland, etc.
Research pipelines are abundant, and business boundaries are continuously expanding from valvular disease to renal artery ablation. The company has maintained high investment in research and development in recent years, with in-depth deployment of TAVR, aortic valve repair, TPVR, TMVR/TTVR, surgical valves, renal artery ablation, etc. Among them, 1) TAVR's research and reserve products include Venus-powerX (self-expanding valve, in FIM clinical practice), Venus-Vitae (bulbous dilated valve, approved for sale in Argentina after December 2022, and clinical trials will also be carried out in China in the future); 2) Leaflex, an active valve repair product, is in FIM in China, and CE has entered the clinical trial stage; 3) TPVR products have been marketed in Europe and China, and clinical trials are planned to begin in the US and Japan at the same time; 4) TPVR products have been marketed in Europe and China, and clinical trials are planned to begin in the US and Japan at the same time; 4) Ovalve's TMVR/ TTVR products have undergone multi-center clinical trials in the US and Europe, while accelerating clinical development and registration in the Chinese market; 5) RDN products are currently in the animal research stage, and Professor Martin B. Leon, an international giant in the RDN field, and his team have been hired as global PI; 6) 144 exploratory clinical trials of Liwen RF, an innovative device for treating HCM, have been completed. In August, Liwen RF radiofrequency ablation system passed the NMPA innovative medical device special approval application and was approved for the special review process; 7) The venus-Neo surgical dry valve is currently in the FIM phase. The company has rich R&D pipelines, and its subsequent advantages have been continuously strengthened.
Profit forecast: Revenue for 2023-2025 is expected to be 63,960 million yuan, 1.57 billion yuan respectively, and net profit of the mother is -2.9, -0.9 and 240 million yuan respectively. The revenue side will continue to grow at a high level.
Risk warning: Product volume falls short of expectations, risk of R&D failure, risk of policy control, and increased competition.