It's started. PositiveID Corporation (OTC:PSID), the developer of an ingenious diabetes management device called iglucose, has turned the key on the revenue engine. The company announced this morning that it is now accepting pre-orders for the iglucose monitoring system, and expects them to start shipping by the end of the quarter.
It's a milestone moment simply because PSID hadn't been in a position to drive any product revenue. Now it is in that position, and with one broad stroke, PositiveID Corporation became a very real company to investors. That's a big part of the reason the stock's up more than 10% today.
While the press release was clearly good news for the company it didn't include the juiciest of the details... the numbers expected from the wireless-monitoring device's sales. To gain that perspective, we have to go back to our original February 6th analysis, in which we actually laid out the fiscal numbers associated with all of its projects. The iglucose math worked out quite attractively.
Based on the assumption that the device itself would sell for a very affordable $90, that the wireless data transmission service (through AT&T) would generate $10 per month in revenue, and that the test strips would sell for $0.05 each, even a modest 10% market penetration into the U.S. diabetes market (25 million Americans suffer from the disease) would translate into net annual revenues of $660 million for PositiveID Corporation. At a 25% market penetration rate, the top line opportunity swells to well over $1 billion per year.
That's huge. For perspective, the company has a market cap of only $9 million right now... a pittance compared to the kinds of dollars it will be generating even if the launch of the FDA-approved device only achieves a market penetration of 1% (which isn't likely, given the obvious value of the iglucose portable glucose testing meter).
No, the company won't get there overnight. The company may not even technically book its first iglucose revenue until Q3, depending on when the device's production line makes iglucose available in bulk quantities. As was noted though, PSID is looking for an official rollout sometime before the end of the current quarter.
Bottom line: The ball is rolling. The iglucose news itself is enough to inspire an investment, but it's not even the whole story. PositiveID is also working on two-related items, called the Easy Check and the GlucoChip. The former is a breath-based glucose tester (goodbye pin-pricks), and the latter is an in-vitro glucose monitoring system. GlucoChip is in development, while Easy Check is currently in clinical trials. The revenue opportunity for both of those devices is on par with the iglucose device. Point being, there's a whole lot of potential upside with PSID if investors can just be a little patient.