Shares of Biolase Inc. (BIOL) are up about 22% since its consensus-beating Q2 results on August 12. Biolase’s dental laser systems enable various minimally invasive dental procedures. It also provides consumable products and accessories for its systems.
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Let’s take a look at the latest financial performance of the company and see what has changed in its key risk factors that investors should know.
Biolase’s net Q2 revenue jumped 211% year-over-year to $9.1 million as more dental practices opened amid easing of pandemic restrictions, along with a robust addition of new customers in the U.S. During this period its Laser system sales jumped 424% and Consumables and other revenue jumped 173% as compared to a year-ago period. The triple-digit jump in revenue helped Biolase beat consensus by $828,000.
Furthermore, favorable revenue mix and higher average selling prices helped Biolase expand its gross margin by 1,200 basis points to 44%. These factors, along with a $3 million gain due to forgiveness of a Paycheck Protection Program (PPP) loan, helped the company narrow its net loss per share to $0.02 versus $0.08 a year ago, beating consensus by $0.01. (See Biolase stock chart on TipRanks)
The President and CEO of Biolase, John Beaver, said, “Our focus on educating and training dental specialists on the benefits of our lasers is already leading to increased adoption across these large and untapped markets. In fact, this momentum is giving us greater visibility into Q3, and we feel comfortable providing guidance regarding expected significant year-over-year improvement across our key performance metrics, including revenue and gross margin.”
Looking ahead to Q3, which is seasonally a weak quarter, Biolase estimates revenue to be significantly above the previous year’s third quarter, owing to high demand for its dental lasers.
On August 11, Colliers Securities analyst Kyle Bauser reiterated a Buy rating on the stock with a price target of $2. Consensus on the Street is a Strong Buy based on 3 unanimous Buys. The average Biolase price target of $2 implies 167.7% upside potential.
Now, let’s look at what has changed in the company’s key risk factors.
According to the new Tipranks’ Risk Factors tool, Biolase’s main risk category is Finance & Corporate, which accounts for 38% of the total 37 risks identified. Since June, the company has added one key risk factor under Debt & Financing category.
The company highlights that non-compliance with the criteria of the PPP loan could negatively impact its business. Biolase had availed a PPP loan of $2.98 million under the CARES Act. This loan was forgiven in full by the Small Business Administration (SBA) in June 2021 but is subject to review for a period of six years following forgiveness.
In the future, if it is determined that Biolase was ineligible to receive the loan then it may be required to repay it completely. Such an event could negatively impact Biolase.
The Finance & Corporate risk factor’s sector average is at 29%, compared to Biolase’s 38%.
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