This MedTech manufacturer is disguising its weakness via sales to a related-party company owned by the wife of a board member. That company now accounts for 28% of sales, having grown 185% in three years, compared with 10.6% growth for third-party sales.
We believe the weakness behind these related-party sales relates to patient dissatisfaction. Almost a decade ago, an activist alleged that the company hides deaths and injuries from its devices. As the stock continued to rise, no one paid much attention. But adverse incidents have continued. We track some of them in our research inside the pay wall.
The company is beset by years of injuries and deaths of users, device recalls, and customer complaints. Meanwhile, it is piling more and more into capital assets that make little sense. Now trading at half its high of one year ago, we think the stock is set to halve again.