Tissue Regenix: On pathway to sustainability

Hardman & Co

Tissue Regenix Group plc (LON:TRX) is focused on the development and commercialisation of two proprietary processing technologies for the repair of soft tissue (dCELL) and bone (BioRinse). It has a broad portfolio of commercial regenerative medicine products for the biosurgery, orthopaedics and dental markets. 2021 results contained the early benefits of TRX’s strategic activities over the past two years – the focus on commercial relationships, capacity expansion, restructuring to service demand and recovery in elective surgeries. On the basis of continued sales progression, TRX is forecast to become EBITDA-positive in fiscal 2022 and cash-generative in 2023.

  • Strategy: Tissue Regenix is building an international regenerative medicine business around its proprietary technology platforms, underpinned by compelling clinical outcomes. Phase 1 of its manufacturing capacity expansion programme came on-stream in 2021 to satisfy demand from distribution partners for its innovative products.
  • 2021 results: Sales in fiscal 2021 were marginally ahead of our forecasts, at $19.75m, up 20% from $16.47m in 2020. The leverage effect of a strong BioRinse sales performance (+33%) saw a marked reduction in EBIT losses in 2H’21. Gross cash at the period-end was $7.7m.
  • Outlook: The 2021 performance was achieved despite the continuing impact of COVID-19 and some unforeseeable headwinds; this augurs well for the future. Progress is forecast to continue in 2022, resulting in 22% sales growth, which will drive margin expansion towards profitability by the end of 2022.
  • Risks: Early signs of recovery in the number of elective surgeries in the US were dented by the delta variant, and the emergence of another variant remains a possibility. Forecasts suggest that TRX is nearing profitability and cashflow breakeven, which would eliminate any lingering concerns about the need for a capital increase.
  • Investment summary: Tissue Regenix has a broad portfolio of innovative regenerative products that are in demand from surgeons. Completion of Phase 1 of its capacity expansion programme has comforted distribution partners and provided positive momentum. We believe TRX is well-positioned to deliver strong sales growth, which will drive margin expansion and highlight the low rating of the shares. An EV/sales multiple of 4x 2023E sales generates a valuation of $120m/£92m.


You might also enjoy reading  Oakley Capital Investments: Capital Markets Day 2022 – let the sun shine
Find more news, interviews, share price & company profile here for:
Hardman & Co

Good news travels fast (but only if you make that happen):

Share on twitter
Share on linkedin
Share on facebook
Share on email
Share on reddit

AIM All Share Index