The Polynovo Ltd (ASX: PNV) share price closed at $2.10 yesterday – which caps off a huge run for the stock over the past week.
Last Thursday, PNV shares were going for $1.59 so yesterday's closing price represents a 32.1% gain since then. What's more – Polynovo hit a new all-time high this morning of $2.22 before pulling back to the end of day price. If you were lucky enough to buy PNV shares at the start of this year (at 60 cents), you would have tripled your money and then some!
Why has Polynovo been shooting the roof this week?
Well, it comes down to the earnings that Polynovo released last week covering the 2019 financial year (FY19). The company reported revenue of $13.68 million – a 128% increase from the previous year. The company still reported a loss, but at $3.2 million, it was 46.6% smaller than the previous year.
In a highly encouraging sign, sales of Polynovo's flagship product – Novosorb – increased by 435% compared to the previous year. NovoSorb is a synthetic polymer tissue that is used to treat severe burns and other skin ailments. The company claims that "surgeons continue to be impressed with the robust nature of NovoSorb BTM, evident by recurring and increasing sales". During FY19, the company also gained approval to sell NovoSorb to the US Department of Defence and Veterans Affairs – another positive sign of momentum for the product.
What's next for Polynovo shares?
With this set of results, Polynovo has firmly cemented itself as a promising healthcare growth stock. In my opinion, the market has already factored in years of crushing revenue and earnings growth – evident by the fact that this is a loss-making company with revenues of $13.68 million, but with a market capitalisation of $1.39 billion on yesterday's prices. To give the company credit, it has an ambitious pipeline of research and development projects (including hernia, ulcer and diabetes-related treatments) and aims to "transform from a dermal focused device company to a multi-focused medical device manufacturer and marketer".
Polynovo is expecting to become profitable in FY120 while expanding both production and available markets.
Foolish Takeaway
Polynovo is clearly a company with a lot of promise and potentially a very bright future. For any investors who are interested in medical stocks or small-caps in general, this company might be well worth some further research.
