Medical Device Co. Completes Merger in Q1/23
Research Report

Ra Medical Systems Inc. (RMED:NYSE) "accomplished several key milestones in Q1/23," reported Ladenburg Thalmann analyst Jeffrey Cohen in a June 7 research note.

Noteworthy Possible Return

Cohen pointed out that Ra Medical warrants a US$7 per share price target. This figure represents a significant 519% potential upside from the company's current share price of about US$1.13.

The company is a Buy.

Acquisition Completed

Until Q1/23, Ra Medical Systems' core business was the development and manufacture of excimer lasers and catheters used in the treatment of certain vascular diseases. However, it expanded its medical device portfolio when, in early Q1/23, it acquired Catheter Precision, a corporation specializing in cardiac electrophysiology, Cohen reported.

During Q1/23, Catheter Precision added five direct salespersons and many field clinical personnel to support the U.S. launch of VIVO, its noninvasive cardiac imaging system. Also, it introduced another product, LockeT, a device for closing catheter insertion sites.

Revenue, Opex Increases

Thanks primarily to Catheter Precision's VIVO and other products, Ra Medical notably grew its revenue in Q1/23, highlighted Cohen. Totaling US$85,000, this amount was 844% higher than in Q1/22.

Given the merger and related restructuring, Ra Medical's Q1/23 selling and general and administrative expenses were 345% higher year over year (YOY), Cohen wrote. This resulted in a 93% higher YOY operating expense of US$10.4 million ($10.4M).

On the other hand, the company's research and development expenses in Q1/23 were down YOY, by 92%, for a total of US$0.2M. This was due to Ra Medical shifting its focus to VIVO.

Overall, for Q1/23, the medical device firm posted a net loss of US$66.4M.

Other Accomplishments

Cohen noted some of Ra Medical's other Q1/23 operational highlights.

For one, the company secured US$8M in new financing.

Also, the company addressed some of its open executive positions. It appointed David Jenkins as its interim chief executive officer as the previous CEO, Will McGuire, resigned. Ra Medical hired Steve Passey as its new chief financial officer.

Important Disclosures:

1. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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Disclosures for Ladenburg Thalmann, Ra Medical Systems Inc., June 7, 2023

ANALYST CERTIFICATION I, Jeffrey S. Cohen, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report, provided, however, that: The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon various factors, including the volume of trading at the firm in the subject security, as well as the firm’s total revenues, a portion of which is generated by investment banking activities. Additional information regarding the contents of this publication will be furnished upon request. Please contact Ladenburg Thalmann, Compliance Department, 640 Fifth Avenue, 4th floor, New York, New York 10019 (or call 212-409-2000) for any information regarding current disclosures, and where applicable, relevant price charts, in regard to companies that are the subject of this research report.

COMPANY BACKGROUND Ra Medical Systems manufactures the DABRA excimer laser and catheters for the treatment of certain vascular diseases. DABRA has been cleared by the FDA for crossing chronic total occlusions in patients with symptomatic infrainguinal lower extremity vascular disease and has an intended use for ablating a channel in occlusive peripheral vascular disease. In addition, DABRA has been granted CE mark clearance for the endovascular treatment of infrainguinal arteries via atherectomy and for crossing total occlusions.

VALUATION METHODOLOGY We believe that Ra Medical Systems, Inc. should be valued in comparison with other innovative healthcare companies. The company should be valued more specifically on multiples to revenue at some time in the future. We have assembled a list of other comparable companies and measured their current revenue multiple valuations with anticipated revenues out three years. Based on our Comparable Company Valuation table, we believe that it is appropriate to value the company based on its representative peers and as such we have determined that the company's valuation should be 4.25 times our FY-2026 revenue estimate discounted by 11.0% for 2.25 years yielding a price target of $7.00.

RISKS In addition to normal economic and market risk factors that impact most all equities, we believe that the primary risks to our recommendation and price target of an investment in Ra Medical Systems shares include, but are not limited to: Management and Board Stability: Significant loss of key personnel could prove to be damaging toward the operational efficiencies and further growth of the company. The departure of key personnel could materially affect the overall performance and strategy of the company going forward. The company is highly dependent on the services of its current management team and board. Regulatory / Development Risks: Modifications or future iterations of the company’s products are subject to FDA and other regulatory body requirements in the United States and similar agencies in other countries. Products under current development may require extensive testing, studies, data submission and/or clinical evaluation prior to granting of proper licenses to sell in various geographies. If the company fails to comply with applicable regulatory requirements the FDA and other regulatory bodies could deny marketing clearance or approval, withdraw approvals, or impose civil penalties, including fines, product seizures or product recalls and, in extreme cases, criminal sanctions. Commercialization: There are no assurances that the company will be able to execute a commercial strategy and generate our estimated revenues. There is the possibility that similar products will be developed or sold which could compete with Ra Medical’s current and anticipated offerings and take market share and revenues from our currently anticipated projections. Competition & Adoption: As is the case within the healthcare industry, there exist various innovative and highly competitive corporations. The company could be negatively impacted by current and future competitive products into the marketplace. There can be no assurances that the existing product candidates will continue to be an attractive product as compared with other potential technologies or drug therapies which exist or are developed. Potential current and future market share and market acceptance of the company’s products will depend on its ability to demonstrate that its products represent an attractive alternative as compared with traditional offerings. Intellectual Property: It may be possible that the company’s patents be called into question or determined to infringe on their portfolio. Likewise, the company could become engaged in legal disputes among other entities. Any potential litigation could negatively impact the company with regard to their freedom to operate, product limitations and/or could result in costly and lengthy litigation. The future expiration of the existing patents could also pose as a problem for the company’s technology as well as its growth strategies.

COMPANY SPECIFIC DISCLOSURES Ladenburg Thalmann & Co. Inc. intends to seek compensation for investment banking and/or advisory services from Ra Medical Systems, Inc., electroCore, Inc., Helius Medical Technologies, Inc. and STRATA Skin Sciences, Inc. within the next 3 months. Ladenburg Thalmann & Co. Inc received compensation for investment banking services from Ra Medical Systems, Inc. within the past 12 months. Ladenburg Thalmann & Co. Inc had an investment banking relationship with Ra Medical Systems, Inc. within the last 12 months. Ladenburg Thalmann & Co Inc. acted in an advisory capacity for Ra Medical Systems, Inc. in the last 12 months. Ladenburg Thalmann & Co Inc. acted as warrant inducement agent in a securities offering for the subject company in the last 12 months. Ladenburg Thalmann & Co Inc. acted as placement agent for a securities offering for the subject company in the last 12 months. Firm/Employee is a beneficial owner of 1% or more of any class of common equity shares of .the subject company.

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