Sedana – Beating Growth by 27%, Excellent Gross Margin

  • Sedana Medical is a pioneer medtech and pharmaceutical company dedicated to making inhaled sedation a standard therapy in intensive care.
  • Sedana is down 70% in last 12 months as investors sold the stock in anticipation that the end of Covid would harm Sedana´s revenues
  • The concerns that caused the share price sell off were exaggerated – Sedana delivered excellent results today
  • Revenues increased 27% vs Pareto forecasts and Gross Margin increased to 72%.

Sedana share price benefited from the Covid era. Investors sold off the stock heavily after Covid end not realising, that the Covid did help the company to increase its sales reach – Covid helped Sedana to establish itself at the market and gain new clients. Strong Q4 revenues evidence the trend.

Share price and Market capitalization graph by Tradingview

Pareto main highlights from the report:

Solid sales and strong gross margin

  • Sales SEK 35.8m, some 27% above PASe
  • Gross margin at 72% thanks to positive pricing and lower freight costs
  • Opex slightly above our forecasts, but included one-time charges of SEK 4m, mainly related to organizational changes and the uplisting
    to Nasdaq main list.
  • SM ended 2022 with SEK 608m vs PASe of SEK 639m
  • Germany, still the largest market, by far but Other Direct Markets performed strongly with only a slight y/y decline
  • Distributor markets, mainly Latin America, still suffers from major stocking effects related to Covid-19
  • US trials proceeding according to plan
  • Slight delay in the Spanish reimbursement process. However, the Spanish intensive care society, SEMICYUC, has issued new treatment
    recommendations for sedation and delirium, recommending Isoflurane as first line option, on the same level as propofol, for moderate and
    deep sedation.
  • The process in the UK continues to puzzle us. NICE issued a positive guidance document in early 2022, and SM submitted Sedaconda for
    approval two years ago. The latest turn in this soap opera is that the UK authorities will come back with an update at the end of
    February/early March.
  • ISCA-study published, concluding no improved clinical outcomes with inhaled sedation in Covid-19 related ARDS. This retrospective trial
    was conducted under very tough circumstances, and much indicates that inhaled sedation was started in sicker patients, who are more
    likely to have worse outcomes. However, the treatment was considered feasible and safe, while reducing requirements for other sedative
  • We will probably make limited changes to our forecasts, mainly related to a higher base coming into 2023 and Fx adjustments.
  • We have a Buy recommendation and a TP of SEK 50

Our family office position

We have a small position in the stock. We are analyzing the stock further and may increase our holdings.

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The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.

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