Thursday, 6 March 2008

LMS - Money In The Bank

LMS Medical Systems (LMZ: TSX/AMEX)

Shares-Issued: 25.8 million / Fully Diluted: 30.7 million

LMS announced today that it closed a $2 million Private Placement, which on the surface isn't a lot of money and may make one wonder, "why such a small placement?”

The fact is LMS has recently undergone a major reorganization, shifting its focus from Research and Development to a sales & marketing model. Over the last few months, LMS has made notable strides, slashing expenses by almost $300,000 per month and focusing its energy on signing up new hospital and insurance clients for its predictive obstetrics technology tools. LMS has also publicly stated that it has its sights set on near term break even and then quickly moving to profitability.

Here are the facts:

  • This recent private placement has seen a few major funds take on significant positions of LMS.

  • By the end of F08 (Mar. 31) LMS is expecting its software to be in 100 hospitals.

  • LMS' major U.S. partner being McKesson, recently made its Horizon hospital information management system containing LMS' embedded technology available to its client base of 900 hospitals. Every Horizon deal nets LMS a six figure licensing fee and an ongoing annual recurring revenue stream.

  • LMS is undertaking a very aggressive sales and marketing strategy, which it expects will provide the company with significant and sustained growth.

To read the press release on the closing of the private placement, click here.

When one checks LMS' stock chart it won't be the prettiest picture as it's been in a year long decline, which very much coincides with delays in getting certain technologies market as well as delay in McKesson launching its new Horizon technology.

However, we throw out the comment that if the company is indeed on the doorstep of breakeven and profitability with a growing recurring revenue stream, could there be a disconnect between what's happening in the business and the stock price?

To view a new highlight overview of LMS Medical click here.