If you had invested $ 10,000 in Zomedica a year ago, this is what you would have today


About a year ago Zomedica‘s (NYSEMKT: ZOM) the financial situation was a little gloomy. The shares were trading for less than $ 1 a piece – and they were facing a possible delisting from the New York Stock Exchange. The veterinary diagnostics company had also seen years of growing losses and falling cash levels.

But some investors hung on or bought stocks. Why? Because Zomedica was coming at a crucial moment. It had reached the final stages of the development of its Truforma diagnostic platform. Now the company plans to launch the system in about a month. During that one-year period, Zomedica’s stock has more than recovered, jumping over 1,800%. So if you were an early believer, you have seen your investment skyrocket. Let’s do some math and find out exactly how much.

Image source: Getty Images.

Trading at $ 0.13

A year ago, shares of Zomedica were trading at $ 0.13. So with $ 10,000 you could have bought 76,923 shares. Today, this investment would be worth more than $ 176,900. This is a victory for investors who have taken a big risk at such a difficult time for Zomedica.

Stocks didn’t rise for no reason, however. Zomedica’s situation has progressed and the product launch is fast approaching.

First, from a stock market listing perspective, Zomedica recently announced something very positive. NYSE American LLC has told Zomedica it is no longer at risk of delisting. The exchange can withdraw a stock if it closes at less than $ 1 for more than 30 consecutive days. This is no longer the case for Zomedica.

Then Zomedica’s cash levels improved. The company reported cash levels of $ 52 million in September, up from $ 510,586 as of December 31, 2019.

ZOM Cash and Equivalents Chart (Quarterly)

ZOM Cash and equivalents (quarterly) by YCharts

The company increased its liquidity through fundraising activities. In the first nine months of last year, proceeds from the sale of Zomedica shares totaled more than $ 56 million. And this year, Zomedica raised $ 173.5 million as part of a takeover bid.

The first product on the market

There is a good reason for this fundraiser. Zomedica will use the money to help her launch Truforma. And that’s the big news here. This represents Zomedica’s first product to market – and a path to revenue and eventual profitability.

Truforma is a toaster-sized device that tests for thyroid and adrenal disease in dogs and cats. Zomedica plans to sell the platform and the tests to veterinarians for in-office use. The company will launch Truforma along with three tests in a limited geographic area starting March 30. The goal is then to add two tests and extend the geographic scope later in the year.

Zomedica tests deliver accurate point-of-care results in less than 20 minutes. Of course, Zomedica is not the only player in the field of veterinary diagnostics. Competitors include Siemens Healthineers SA (OTC: SMMNY) and IDEXX Laboratories (NASDAQ: IDXX). But the demand for such tests makes me optimistic about Zomedica’s chances. The pet diagnostics market, worth $ 1.8 billion last year, will reach $ 3 billion by 2025, according to a Markets and Markets report.

Now what about the risk? The big question ahead is, will vets choose Truforma or will they continue to use current systems? Any disappointment in Truforma’s sales could seriously hurt Zomedica’s share price. This is Zomedica’s only potential product – at least for now – and more tests to run on the system are in development. Everything depends on the acceptance by veterinarians of this new product.

But while Truforma is winning over vets, Zomedica’s growth story has only just begun. We might expect revenue this year and then more growth once the company expands deployment and adds testing. In this case, I would expect more share increases on the road. This means that investors who believed in Zomedica at the start may have more to gain in the future.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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