Medit Corp. Valuation Report

Foreword

You may find our company’s disclaimer on the insightsZ website. Nevertheless, we want to make it clear that we are sitting on neither side of the wall. That is, we neither try not to wear the rose-tinted glasses when performing the valuation exercise, nor we walk on the line of underestimating the company’s growth potential.

This document represents our version of the company’s growth story, and may differ from another market research, equity research and investment bank’s version of the valuation estimates.

Why did we pick Medit Corp. for our valuation analysis?

1. The blue-eyed boys of major PE and investment groups - Medit Corp. and Overjet – share little in common on the surface. However, once you scratch the surface, you realize quickly that both company’s founders share the MIT heritage.

2. While the flagship brand in the category (iTero) grew by 91% YoY in FY 2021 – a relatively young brand portfolio of Medit Corp’s IO scanners grew high double digits during the same period of time (85% YoY).

3. There are few companies in the dental space wherein PE and investment groups showed the level of enthusiasm close to Medit Corp’s last funding round in FY 2020. The company witnessed outstanding level of enthusiasm among major investors in the private markets.

4. The company’s success is strongly dependent on its customer acquisition rates, innovation cycle and ground breaking equipment + software. This helped Medit Corp’s to catapult its growth trajectory – previously thought unachievable in the category.

Q1 2022 Medit Corp. Update

Fast forward to Q1 2022, the global intraoral scanning category has witnessed slight erosion – which is nothing out of expectations in face of global macroeconomic factors including, but not limited to:

• Rising global inflationary pressures negatively impacting ASP and margins, coupled with poor consumer sentiment.

• Covid-19 lockdown in Mainland China cities like Shanghai, Shenzhen among others.

• Russia-Ukraine conflict in Eastern EU – negatively impacting consumer confidence.

• Disruption of global supply chains – compromising production capacity at major intraoral scanner manufacturers.

• Emergence of other entry level challenger brands waiting to enter global markets, pending RA approvals.

Meanwhile, the Korea based Medit Corp. continues to challenge the status quo. In recent 3 years, the company’s workforce has doubled from 150 employees in FY 2019 to more than 300 strong workforce in Q1 2022.

Not just that, both the company’s speculators and loyalists continue to be wowed by the brand’s innovation cycle whose speed puts any other major brand to shame.

In one of our recent articles, we have analyzed how the company has incorporated the principles of design for value – enabling the manufacturer to preserve margins and exceed CX journey expectations.

insightsZ Valuation Approach

In our current analysis, we rely on a combination of Precedent Valuation and Relative Valuation techniques to value Medit Corp. We will neither propose any discounted cash flow model, nor will we point out any explicit multiples – although we will talk about the company’s expected growth rate and operating margins towards the end of this version of the report.

In addition to this, we will analyze and focus on other related M&A deals to propose a value, by:

1. Identifying other similar companies and transactions - and finally obtaining a value for these companies.

2. Converting these values into standardized values – establishing price multipliers.

Our rationale for the above approach is based on our study of valuations performed by the largest equity research companies globally in FY 2021. That is, the world’s top equity research and investment banks did NOT rely on entirely on DCF valuation, but instead Relative Valuations, which formed the backbone of any DCF valuation.

FY 2022 Challenges & Performance of newly launched brands

1. How Medit Corp. will meet its manufacturing targets in the current FY 2022, especially in the wake of global supply chain disruptions and supplier bottlenecks?

2. How fast will Medit Corp. be able to address the ongoing quality issues?

3. How the company’s new intraoral scanner brands (i600 + i700 Wireless) will perform in the remaining year. We are closely following the post-launch activities and continuously revising our internal projection, with focus on:

a. Exiting user trade-up: How many existing i500 & i700 users will trade-up to the new Medit i700 Wireless?

b. New user acquisition:

• How many users will switch from their existing competitive intraoral scanner brand to either i500 & i700 Wireless in current FY?

• How many non-users will adopt Medit’s IO scanners as their first intraoral scanner?

c. User leakage: How many existing i500 users will drop the intraoral scanner for a competing brand?

d. Brand Repositioning: How successfully will i600 and i700 Wireless be able to perform commercially?

To read the complete report, please refer to our Research section here (available for registered members only). If you will like to become a client, please contact us.