{ "docId": "019dd923-622c-750b-8b9a-ad0811d3e80d", "docSlug": "dfcef8f28a20", "documentTitle": "Accelerate Diagnostics (AXDX)", "authorId": "61_White_Diamond_Research", "authorName": "White Diamond Research", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-09-16 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 25, "pageCount": 41, "prevPage": 24, "nextPage": 26, "slideType": "villain_critique", "function": "diagnose_problem", "density": "dense", "nDataPoints": 0, "notes": "The slide uses a bearish investment research tone, highlighting risks to the company's business model and clinical validation.", "elementsJson": [ "paragraph", "headline_text", "quote_block" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-ad0811d3e80d/25", "deckHref": "/decks/019dd923-622c-750b-8b9a-ad0811d3e80d", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-ad0811d3e80d.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-ad0811d3e80d#slide-25", "components": [ { "bbox": null, "kind": "callout", "text": "It seems to us that the lease model may quickly become a huge liability if one of the following occurs: (i) AXDX depletes its cash reserve; (ii) negative clinical data about the Pheno system are published; (iii) a new strong competitor comes in a picture; (iv) hospitals will underutilize installed Pheno systems.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-78b4-70ad-b3a1-9878da9bd7a5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.22, "w": 0.78, "x": 0.11, "y": 0.19 }, "kind": "paragraph", "text": "AXDX is investing significant money into its lease model by covering the cost of leased Pheno systems, free diagnostic kits for hospital validation studies and training/support of hospital lab personnel during instrument installation. Yet, there is very little guarantee that the future reagent revenues will pay back for these initial expenses. It seems to us that the lease model may quickly become a huge liability if one of the following occurs: (i) AXDX depletes its cash reserve; (ii) negative clinical data about the Pheno system are published; (iii) a new strong competitor comes in a picture; (iv) hospitals will underutilize installed Pheno systems.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "037c4c7e-022f-4f2c-90f0-9b1d51f7dd2a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.78, "x": 0.11, "y": 0.79 }, "kind": "paragraph", "text": "We agree with Mehren's above statement, but we don't expect the Mayo-UCLA study to show a significant improvement in LOS or morbidity.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "575ccf4d-fb96-4b63-a33f-369cbcb32ae3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.54 }, "kind": "paragraph", "text": "Investors eagerly wait for results of the Mayo-UCLA study to be revealed in October during IDWeek. If successful, this study may improve Pheno system adoption. Length Of Stay (LOS) improvements at the hospital is the most important factor for Pheno system adoption. In the Q119 earnings call, Mehren stated:", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "63facd8b-971f-4eb3-941f-6fd48432e928", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.09 }, "kind": "paragraph", "text": "to decide on the target test volume later on after the internal validation phase. The hospital can return the Pheno system to AXDX any time with no penalties. Finally, AXDX doesn't make any revenue from validation studies, while providing free reagent kits for hospital.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9b8daf67-1bc3-487f-a86e-6831396ba5c0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.65 }, "kind": "quote", "text": "\"You will recall that length of stay is among the most important return on investment considerations for hospital administrators as it represents an opportunity to reduce non-reimbursed costs, while also freeing up beds more quickly for the next reimbursed patients.\"", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "762c6e86-e291-4e1d-ab12-ed5bb2975725", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"You will recall that length of stay is among the most important return on investment considerations for hospital administrators as it represents an opportunity to reduce non-reimbursed costs, while also freeing up beds more quickly for the next reimbursed patients.\" — Mehren (Q119 earnings call)", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-78b4-70ad-b3a1-9e518428c3f6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.44 }, "kind": "title", "text": "The Mayo-UCLA Study Likely Won't Show improvement in LOS (Length Of Stay) and mortality rate, both critical for Pheno system adoption", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ae17ea16-2713-4c3f-9e5d-78e6790c0647", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }