Originally Posted by
MAC
Yep I follow that thanks, and concede too that by pure definition and the precise accounting of costs, COGS will include lab staff and the manufacture of the test kits but not the field sales staff or distribution costs (well postage and handling).
I'm not sure Edison are using a strict apportionment of what should be inside or outside of COGS either actually, they seem to have at FY16 anyway, too little inside and too much outside, COGs in the first year of profitability shouldn’t quite yet be 86%.
It is my confusion though with an apology, perhaps Edison’s also, but on that understanding and through the apportionment of overall holistic costs more precisely, it should be more like;
FY19 $100M revenues, $80M gross profit, $75M EBITDA, $50M NPAT
I’m comfortable with that.
Do note though Winner that the only significant capital outlay would be at FY20 for a lab extension, Pacific Edge have a purchase option on the second half of the floor within the building they occupy in the US, that’s an ambitious sign in itself.
They do need as I understand additional lab equipment for every 40,000 tests when ramping up, but that's sundry capital, thousands, definitely not millions, it's a very very low capital model indeed.
Not much to depreciate on that basis either then, the US lab cost $6M to establish in 2013.