LeMaitre Vascular, Inc. develops, manufactures, and markets medical devices and implants for the treatment of peripheral vascular disease worldwide. The company provides angioscope, a fiber optic catheter used for viewing the lumen of a blood vessel; carotid shunts to temporarily divert or shut blood to the brain during the removal of plaque from the carotid artery in a carotid endarterectomy surgery; and powered phlebectomy devices that enable less invasive removal of varicose veins. It also offers embolectomy catheters to remove blood clots from arteries or veins; occlusion catheters that temporarily occlude blood flow; and perfusion catheters that temporarily perfuse blood and other liquids into the vasculature. In addition, the company provides radiopaque tape, a medical-grade tape applied to the skin and provides interventionists to cross-reference between the inside and the outside of a patient’s body, and allows them to locate tributaries or lesions beneath the skin; and remote endarterectomy devices to remove severe atherosclerotic blockages from the arteries of the leg. Further, it offers valvulotomes for use as a bypass vessel to carry blood past diseased arteries to the lower leg or the foot; vascular grafts to bypass or replace diseased arteries; vascular patches used in conjunction with carotid endarterectomy, remote endarterectomy, and other vascular reconstructions; vessel closure systems that allows surgeons to attach vessels to one another by deploying titanium clips in place of suturing; and laparoscopic cholecystectomy devices to inject dye into the cystic duct during laparoscopic cholecystectomy. LeMaitre Vascular, Inc. markets its products through direct and indirect sales force, as well as distributors. The company was formerly known as Vascutech, Inc. and changed its name to LeMaitre Vascular, Inc. in April 2001. LeMaitre Vascular, Inc. was founded in 1983 and is headquartered in Burlington, Massachusetts.
(Summary) (Company) (Chart)
26 July 2016
1yr Target $18.79
Payout Ratio 39.13%
1yr Cap Gain 30.39%
1yr Tot Return 31.63%
EPS (ttm) $0.46
EPS next yr $0.57
Forward P/E 25.15
EPS next 5yr 18.50%
1yr Price Support $10.54
Market Cap $263.70 Mil
Revenues $79.70 Mil
Earnings $8.60 Mil
Profit Margin 10.79%
Quick Ratio 4.10
Current Ratio 5.90
1yr RevGR 10.20%
2yr RevGR 10.17%
3yr RevGR 11.24%
4yr RevGR 7.95%
1yr EarnGR 98.16%
2yr EarnGR 55.65%
3yr EarnGR 43.97%
4yr EarnGR 37.93%
1yr DivGR 14.28%
2yr DivGR 15.47%
3yr DivGR 16.77%
4yr DivGR 18.92%
The Peripheral Vascular Device Market
Based on industry statistics, it's estimated that peripheral vascular disease affects more than 20 million people worldwide and that the annual worldwide market for all peripheral vascular devices is approximately $4 billion. The disease encompasses a number of conditions in which the arteries or veins that carry blood to or from the legs, arms, or organs other than the heart become narrowed, obstructed, weakened, or otherwise compromised. In many cases peripheral vascular disease goes undetected leading to life-threatening events including stroke, ruptured aneurysm, pulmonary embolism or death. It's also estimated that the peripheral vascular disease market will grow due to the increase in the incidence and diagnosis rates of peripheral vascular disease, a shift by doctors to prescribing higher-priced endovascular devices, and the adoption of western healthcare standards by the developing world. LeMaitre's strong brands, established sales force, evolving suite of peripheral vascular device offerings, and broad network of vascular surgeon customers positions the company to capture an increasing share of this large and growing market.
Clinical studies have identified several factors that increase the risk of peripheral vascular disease, including smoking, diabetes, obesity, high blood pressure, lack of exercise, coronary artery disease, high cholesterol, and being over the age of 65. Demographic trends suggest an increase in the prevalence of peripheral vascular disease over time, driven primarily by rising levels of obesity and diabetes and an aging population.
It's estimated that there are more than 2,500 board-certified vascular surgeons and several thousand general surgeons who perform vascular procedures in the US and more than 3,000 vascular surgeons in Europe, Asia and the Pacific Rim. Vascular surgeons perform both conventional open vascular surgeries and endovascular procedures. Conventional open vascular surgery involves opening the body, cutting vessels, and suturing. Endovascular procedures typically are minimally invasive, catheter-based procedures involving repairing vessels from within using real-time imaging technologies. The company estimates that in 2015, 80% to 90% of their net sales were from devices used in open vascular procedures.
LeMaitre Vascular has grown by using a multi-pronged strategy: focusing on the vascular surgeon call point, competing for sales in low rivalry niche markets, and expanding their growth platform through a worldwide direct sales force as well as acquiring and developing complementary vascular devices.
Focused call point. The company has historically directed their product offering and selling efforts toward the vascular surgeon, and estimates that in 2015 approximately 80% of their sales were to this type of customer. In contrast to other medical specialists, such as interventional cardiologists and interventional radiologists, vascular surgeons are uniquely positioned to be able to perform both conventional open vascular surgeries as well as minimally invasive endovascular procedures. This presents the company's core customer with an opportunity to gain market share against competing specialists while offering LeMaitre the ability to sell devices in both the open and endovascular markets to the same end user.
Low rivalry niche segments. The company seeks to build and maintain leading positions in specific niche product segments. They believe that the relative lack of competitive focus on these segments by larger competitors allows them to establish both higher selling prices and higher market share gains in these markets. In addition the company has been selling complementary products such as the Omniflow biosynthetic graft in those larger and more competitive market segments, particularly when the company believes that their product offerings in that segment are highly differentiated.
Direct sales force expansion. The company sells their products primarily through a direct sales force in North America, Europe, Asia and the Pacific Rim. Since 1998 they have built their sales force from zero to 86 direct sales representatives. They intend to continue to expand their sales force in 2016. They also believe that direct-to-hospital sales build closer customer relationships, allow for higher selling prices and gross margins, and are not subject to the risk of customer loss related to distributor turnover.
Addition of complementary products through acquisitions, research and development. The company intends to further expand and diversify their product offerings and add new technology platforms. Their significant experience in acquiring and integrating product lines and businesses is one of their competitive advantages. They evaluate the potential acquisition of additional product lines and businesses that are complementary to their product offerings, refine their current product lines, develop new applications for our existing technologies, and obtain regulatory approvals for their devices in new segments and geographies in order to further access to the broader peripheral vascular device market.
Medical Devices and Products
LeMaitre Vascular has a portfolio of 14 product lines, most of which are designed for use in open vascular surgery and address various anatomical areas including the carotid, lower extremities, upper extremities (for vascular access), aorta and other areas. In 2015, the carotid and lower extremities product lines comprised more than 10% of revenues. In 2015, the lower extremities product lines were 53% of revenues, while the carotid product lines were 29%. In 2014, the lower extremities product lines were 51% of revenues while the carotid product lines were 28% of revenues. In 2013 lower extremities product lines were 51% of revenues while the carotid product lines were 27%. The average selling price of valvulotomes, which are included in the lower extremities product lines, increased significantly in 2015 with the introduction of our 1.5mm HYDRO LeMaitre Valvulotome. No single product line accounted for more than 25% of our revenues in 2015, 2014 or 2013.
Angioscopes. The LeMaitre Disposable Angioscope is a fiberoptic catheter used for viewing the lumen of a blood vessel. It also provides direct visualization of valves during in-situ bypass procedures.
Balloon Catheters for Embolectomy, Occlusion and Perfusion. The LeMaitre line of embolectomy catheters are used to remove blood clots from arteries or veins. The company manufactures single-lumen latex and latex-free embolectomy catheters as well as dual-lumen latex embolectomy catheters. The dual-lumen embolectomy catheter allows clot removal and simultaneous irrigation or guide-wire trackability. Occlusion catheters temporarily occlude blood flow to allow the vascular surgeon time and space to complete a given procedure. Perfusion catheters temporarily perfuse blood and other fluids into the vasculature. The Pruitt line of occlusion and perfusion catheters reduces vessel trauma by using internal balloon fixation rather than traditional external clamp fixation.
Carotid Shunts. The Pruitt F3, Inahara-Pruitt, Flexcel and polyurethane carotid shunts are used to temporarily shunt blood to the brain while the surgeon removes plaque from the carotid artery in a carotid endarterectomy surgery. The Pruitt F3, Pruitt-Inahara, and polyurethane shunts feature internal balloon fixation that eliminates the need for clamps, thereby reducing vessel trauma. Our Flexcel shunt is a non-balloon shunt offered for surgeons who prefer to secure their shunt with externally placed clamps.
Powered Phlebotomy Devices. The TRIVEX powered phlebectomy system is comprised of capital equipment and disposables that enable less invasive removal of varicose veins. In this procedure, an illuminator is inserted through a small incision in the leg, enabling visualization of varicose veins. A second instrument removes the veins. Compared to conventional hook phlebectomy, this surgical procedure is faster and results in more complete vein removal through fewer incisions.
Radiopaque Tape. The VascuTape Radiopaque Tape is a flexible, medical-grade tape with centimeter or millimeter markings printed with our proprietary radiopaque ink that is visible both to the eye and to an x-ray machine or fluoroscope. VascuTape Radiopaque Tape is applied externally to the skin and provides interventionalists with a simple way to cross-reference between the inside and the outside of a patient’s body, allowing them to locate tributaries or lesions beneath the skin.
Remote Endarterectomy Devices. The EndoRE line of remote endarterectomy devices are used to remove plaque from arteries in the leg in a minimally invasive procedure requiring a single incision in the groin. Our EndoRE devices are used to separate the plaque from the vessel, cut the far end of the plaque to free it for removal, and then withdraw it from the vessel.
Valvulotomes. The 1.5mm HYDRO LeMaitre Valvulotomes, Over-The-Wire LeMaitre Valvulotomes, Tru-Incise valvulotomes, and LeMills Valvulotomes cut valves in the saphenous vein, a vein that runs from the foot to the groin, so the vein can function as an artery to carry blood past diseased arteries to the lower leg or the foot. Valvulotomes reduce costs for hospitals by enabling less invasive bypass surgery to be performed with several small incisions rather than one continuous ankle-to-groin incision, thereby reducing the length of hospital stays and the likelihood of wound complications.
Vascular Grafts. The AlboGraft woven and knitted vascular grafts are collagen-impregnated polyester grafts used to bypass or replace diseased arteries. They are available in both straight tube and bifurcated versions. The company's LifeSpan ePTFE Vascular Graft is an expanded polytetrafluoroethylene (ePTFE) graft used to bypass or replace diseased arteries and to create dialysis access sites. They are available in both regular and thin wall options and with an optional full or partial external spiral support. The stepped and tapered LifeSpan models are designed to reduce the risk of steal syndrome and high cardiac output, complications that may arise in dialysis access grafts. The Omniflow II Biosynthetic Vascular Graft is a composite of cross-linked ovine collagen with a polyester mesh endoskeleton. It is used to bypass or replace diseased leg arteries, and to create dialysis access sites.
Vascular Patches. The XenoSure Biologic Vascular Patch is made from bovine pericardium. In 2008, we obtained exclusive rights to distribute this product under our “XenoSure” brand in the United States, and in 2012, we exercised our option to acquire this product for worldwide distribution. The AlboSure Vascular Patch is a polyester patch. Vascular surgeons use patches in conjunction with carotid endarterectomy, remote endarterectomy, and other vascular reconstructions.
Vessel Closure Systems. The AnastoClip AC and AnastoClip GC vessel closure systems allow surgeons to attach vessels to one another by deploying titanium clips instead of sutures. These vessel closure systems create an interrupted anastomosis which expands and contracts as the vessel pulses, which we believe improves the durability of the anastomosis.
Other Products. In some hospitals, vascular surgery procedures are performed by general surgeons. The company also sell general surgery devices, primarily laparoscopic cholecystectomy devices. The leading general surgery product is the Reddick Cholangiogram Catheter, which is used to inject dye into the cystic duct during laparoscopic cholecystectomy. In this procedure, the gall bladder is dissected and removed through small punctures in the abdomen. LeMaitre also offers a laparoscopic accessory used in laparoscopic gall bladder removal.
As a medical device company, this is a very small company. But it's also a company very focused on a specific medical procedure - vascular surgery - that continues to increase as the population continues to age. This becomes not only a life saving procedure, it's often performed as a preventive procedure for patients experiencing vascular disease.
Looking at the fundamentals above it's obvious that this is a great company producing great results. If there's a blemish at all it's the price. I would love to buy these shares at a price near $12 but I don't think that's going to happen. As recent as early July it sold for less than $14 per share so that could be considered about the best price I can expect to get. A high P/E or PEG can be expected with most medical products companies, and this is no exception. This is also a small company increasing its fundamentals at a pretty good pace and the investing community often affords a higher P/E to these companies.
Looking at the numbers above revenues are increasing approximately 10-11% per year pretty consistently. Earnings are increasing a little faster than that but it's a little skewed by 2015's earnings almost doubling. Up until that year earnings were increasing approximately 22% per year on a pretty consistent basis. Dividends are also pretty consistent, increasing in the mid to upper teens. With an expected five year estimated earnings growth rate of 18.5%, I would expect that dividends will continue to be increased at a similar rate.
As a result, this company looks like it could be a very addition to my portfolio. I currently have no exposure to the medical device companies and this could be a nice company to start with. I expect to start a position in this company at this current price level and then add to that position on any subsequent pullback. I'll also use dividend reinvestment and the sale of call options to increase my position.