Nemaura Medical (NMRD) is a medical technology company focused on bringing diagnostic medical devices to the market. Its sugarBEAT is a continuous glucose monitoring device for patients with Type 1 and Type 2 diabetes. Let’s take a look at the company’s financial performance and what has changed in its key risk factors that investors should know.
Nemaura Medical Risk Factors
According to the new Tipranks Risk Factors tool, Nemaura’s main risk category is Finance & Corporate, which accounts for 37% of the total 35 risks identified. The next two major risk factor contributors are Tech & Innovation and Legal & Regulatory at 20% each. Since March, the company has removed one risk factor and did not add any.
Let’s look at the key risk factor that the company has changed under Finance & Corporate category. The company acknowledges that the COVID-19 pandemic may adversely impact its business and financial condition. Until now, the pandemic situation has had little impact on the productivity of its employees and did not cause any business interruption.
While Nemaura continues to monitor the situation, it notices that it is unable to predict the impact of COVID-19 on its operations going forward.
The U.S. Food and Drug Administration (FDA) notified Nemaura that its premarket approval (PMA) application for sugarBEAT will be delayed due to the higher priority given to COVID-19 related applications and resource activity.
Despite the PMA review being resumed in April, Nemaura was notified that the process may take longer in light of the FDA’s current workload.
Moreover, key suppliers have been inaccessible to the company throughout the COVID-19 pandemic. The company noted that it was flexible in its priorities and responded favorably to the challenges.
Financial Performance
Now let’s dive into the company’s financial performance for Fiscal Year 2021. As Nemaura nears the commercial launch of sugarBEAT, its R&D expenses have decreased to $1.5 million from $2 million a year ago. It expects a further decrease in R&D expenses.
Its general and administrative expenses increased to $3 million from $2.8 million a year ago. As the business transitions to a different cost structure to support sales, marketing, and other product commercialization efforts, these expenses are expected to further increase in the future.
Owing to a $2 million interest charge booked in fiscal 2021, in relation to debt funding, the company’s net loss widened to $6.3 million in fiscal 2021 versus a net loss of $4.2 million in fiscal 2020. This debt was taken on by Nemaura to propel its growth plans and become revenue-generating in fiscal 2022. (See Nemaura Medical stock chart on TipRanks)
CEO of Nemaura Dr. Dewan Fazlul Hoque Chowdhury said, “As the world’s first non-invasive, needle-free CGM, sugarBEAT is uniquely positioned to target the underserved $80 billion market for people with both Type 1 and Type 2 diabetes, as well as prediabetes and the consumer metabolic health space.”
Furthermore, Nemaura has received positive feedback on the soft launch of sugarBEAT in the UK, which resulted in a purchase order for 200,000 sugarBEAT sensors and a rolling purchase order forecast for 2 million sensors over the next two years. Nemaura is also in talks with several third parties for regional and global partnerships for sugarBEAT.
It launched BEATdiabetes.life, a digital healthcare subscription service, in the U.S. with a target market of 25 million people with Type 2 diabetes and 88 million people with pre-diabetes.
Bottom Line
Compared to the sector average Finance & Corporate risk factor of 28%, Nemaura is at 37.1%. This indicates that owning the stock is risky versus the broader sector. The expected commercialization and product volume increase are reflected in Nemaura’s shares, which have gained 144.6% so far this year.
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