M

Mentice AB
STO:MNTC

Watchlist Manager
Mentice AB
STO:MNTC
Watchlist
Price: 25 SEK 0.4% Market Closed
Market Cap: 639.3m SEK
Have any thoughts about
Mentice AB?
Write Note

Earnings Call Analysis

Q4-2023 Analysis
Mentice AB

Company Reports Strong Sales Growth and Order Book

The company ended the year on a high with record order intake, exceeding 100 million in a single quarter, marking a 15% increase from Q4 of the previous year, and a 25% growth in net sales for the full year. Despite a slight EBITDA decrease to 2.3 million due to one-time costs like the Biomodex acquisition, they achieved an impressive order book growth, with orders scheduled for 2024 growing over 20%. The Americas region was highlighted for robust growth, driving both order intake and net sales. Operational cash flow for Q4 was impacted by the acquisition but remained positively strong for the entire year. With the FDA approval for Ankyras and a reinforced order book of over 100 million, including 110 million specifically for software and perpetual licenses, the company anticipates a promising 2024, especially as net sales grew organically by 19.4% and profitability significantly improved.

Mentice Finishes 2023 with Strong Order Intake

Mentice ended the year impressively, surpassing 100 million in a single quarter for the first time in the company's history, marking a robust 15% increase from the previous year's fourth quarter. This sustained growth, especially after a solid start to the year, highlights the company's ability to maintain momentum. Total year-over-year sales growth stood firm at 25%, lifting net sales to a figure approaching 300 million. The Americas drove this exceptional performance with over 50% growth in order intake and a significant 40% in net sales. The EBITDA for the year reached 24.2 million with an 8.8% margin, reflecting a substantial enhancement from the preceding year, and pointing to a significant leap in the company's profitability.

Diversification and Acquisition Catalyze Growth

Mentice's growth has been fueled not only by the Americas but also through its stronghold in the medical device industry – about 80% of its business – contributing to the increase in both orders and sales. The acquisition of Biomodex bolstered this trajectory, adding critical intellectual property and consolidating the company's footprint in the physical flow model market. Additionally, the FDA's approval of Ankyras is set to catalyze growth in the U.S., where significant opportunities with major medical device companies are anticipated.

Financial Strengths Underpin Future Success

The financial details of 2023 reveal a clear growth trend over the past four years. System sales exhibited an increase of over 60% for the year, indicating a positive shift in product mix. Mentice reported an order book of over 100 million, slated to contribute to 2024 revenue, with a healthy portion in software and perpetual licenses. The annual recurring revenue faced a minor dip, but software licenses achieved growth, adding 9 million to the year's total revenue. The operational cash flow remained positive despite weaker cash flow from operating activities due to delayed payments shifting into 2024.

Market Leadership Amidst Competitive Disarray

Mentice has solidified its status as a market leader with its strategic additions of technologies such as endovascular simulation and Ankyras, proving valuable to a spectrum of clients in the healthcare industry. With very few direct competitors and market instability leading to competitor divestment, Mentice's position as a frontrunner is confirmed. Coupled with a more than twofold increase in orders and net sales since 2020, the company's improved market position and financial health are undeniable.

Expectations for Recovery and Stabilization

Looking to the future, Mentice anticipates gradual recovery in the U.S. healthcare systems affected by the pandemic, and potential improvement in the Chinese market, although it remains uncertain. The U.S. operations are strategically pivotal, influencing global business due to the presence of leading medical device company headquarters. Amidst this, the uneven seasonality observed in 2023, where order intake was more evenly dispersed rather than backloaded, is not guaranteed to continue into 2024.

Earnings Call Transcript

Earnings Call Transcript
2023-Q4

from 0
Operator

Hi, and welcome, everyone. Mentice recently released its Q4 2023 report, and I have the pleasure of introducing the company's CEO, Goran Malmberg; and the CFO, Ulrika Voksepp. Thank you so much for being here today.

G
Göran Malmberg
executive

Thank you so much. Nice to be here. So I'm here -- Goran Malmberg, I'm the CEO, together with Ulrika. So he will help me with the presentation. So I'm going to start with some highlights --overview of the quarter and the full year.

So first, as you might have noticed, we finished the year strong on the order intake. First time in the Mentice -- in Mentice history where we exceeded 100 million in a single quarter. And that's up 15% from the last year's fourth quarter. But as you have seen us commenting during the year, we had a really strong performance during the first part of the year. So the fact that we continue to grow in Q4 is something that I want to point out.

Net sales as well above last year, just slightly above, but still above last year, again, given the profile we had in the year with less seasonality. I think this is something that we want to point out. Slightly larger delta between net sales and order intake, as you have noticed, which obviously build value for 2024. So that should be noted.

We see slightly higher cost in Q4. Part of that was the Biomodex acquisition and also other onetime adjustments. So we want to be clear that this should not be considered as higher running cost. This is a onetime situation for the fourth quarter. So this then resulted in an EBITDA of 2.3 million, slightly lower than last year, but related to what I just talked about in terms of costs and net sales.

As well related to the cost levels, the operational cash flow in the fourth quarter was negative. But again, we're building account receivables for next year, as well as a much stronger order book. And again, the cash flow obviously was impacted by the Biomodex acquisition.

Net income for the -- net income for the period, minus 2.8 million compared to slightly positive last year. And then consequently, the earnings per share also slightly negative.

So looking at the full year, up 25%. I would consider that a very strong performance from a net sales point of view. You should remember that we passed 200 million in 2021, and we're now up close to 300 million, just basically 2 years after. So that's something we are very pleased with. Order intake as well up over 20% from 252 million last year. I think that also is something to note.

The order book -- we have been continuing building the order book, where we now have over 100 million, which is planned for 2024. So the order book has increased with more than 20% as well compared to last year. The Americas region has been the driving force for the growth here over the last couple of years. But this year, we -- or 2023, we have a really, really strong performance, both from an order intake and from a net sales point of view, with 55.8% on the order intake and 40.8% on the net sales. So that's clearly something to be noted. EBITDA for the year is 24 million -- 24.2 million, a considerable improvement from last year, 8.8% in margin. And as we note later, I mean, it's a considerable change in our performance overall as a company.

And net [ income ] slightly negative, but also a significant improvement compared to last year. Cash flow as well improved, almost 40 million for the full year, compared to about 15 million for last year. And then earnings per share for the year, slightly negative, but also a significant improvement from last year.

So, as a summary then, from the year, the key points for us is that we have a solid sales growth, 25% year-over-year. But really, what we want to point out, we compare to a year ago or, say, 15 months ago where we started the initiative to make sure that we can improve the productivity, we have improved the -- with just the main KPI that we're using the revenue per person, that has improved with over 30% compared to last year.

So we go into the financial summary here. Again, strong overall top line performance, both order intake and net sales, and a more even distribution this year compared to the typical year. I cannot say that this is a new trend. I mean, we had a couple of really large orders in the first half of the year. And we cannot say that, that will happen, this for next year. But this has clearly impacted the profile for 2023, which you will see later.

Again, repeating the productivity improvement more than 30% compared to previous years. And then overall, I think as -- resulting really from the productivity improvement, we have improved the operational cash flow and the cash at hand. While we see in Q4, the acquisition of Biomodex, but also some onetime adjustments that impacted the quarter. Again, it should not be seen as a new base point. This is unique for the fourth quarter.

So a couple of points on the business side. Again, growth driven by Americas, as I said, but also by the medical device industry. We have a very large part of our business, about 80% of our business comes from medical device industry, mainly U.S., but we also see from the rest of the world. We have a couple of larger orders from the APAC region in the end of the year, but also Europe is significantly contributing. We've seen the APAC region impacted by the slower business in China. But you also see that we had a good distribution of opportunity from the rest of that region.

The medical device opportunities. I mean, you can see, have we reached the limit there? Can we continue to grow? I mean I'm confident that we can continue to grow in that space, and we see opportunities of building during last year and continue to build into this year. So we are confident that we can continue to grow based on the medical device side.

The Biomodex acquisition was, I think, a very, very interesting one and adds significant to our IP and the opportunities. I mean this is really consolidating the physical flow model side, where Biomodex, even if they were small from a revenue point of view, really was seen as one of the technology leaders, and they have significant customer interaction and partnerships. So this is really, I would say, us consolidating that market as well. So that's really, really positive for us.

The FDA approval for Ankyras is a very important milestone, means that we can start selling that product in the U.S. region. And that's obviously where the larger medical device companies in that space have their headquarters. So we have already have multiple meetings and discussions on that in U.S. and it's something that we're really looking forward for this year.

And really, our focus is continue to generate positive operational cash flow and a relevant EBITDA level. I mean not that we did not have a positive cash flow in Q4, but that's clearly our intention for the coming quarters.

We see on the healthcare side, [ Strategic Alliances ], I mean the pandemic situation also, we are past the pandemic. But we've seen that the U.S. health system have struggled significantly. We believe the opportunity is for still there, and we believe we can execute. And it's a significant upside on the U.S. side. Looking at the Chinese situation, we know there will be challenges in the Chinese market, but that's still one of the largest opportunities in the world. So we believe we continue working these opportunities across the globe. This will be a significant upside for us for future. Nothing have changed there.

All right. Going into the financial details a bit, I will do the order intake slide, and then I will ask Ulrika to jump in on the details of net sales and others. I think we should note, if you look at the graph here to the right, it is showing the last 4 years, basically, that we have a very clear growth trend, obviously, for the year, but also going back all the way back to 2020. So I think this is something to be noted. And it's a clear, clear positive trend for us.

I mean, strong overall intake in Q4, obviously, despite really, really good performance for the rest of the year. Medical device up, with 50% for the quarter, mainly driven by the U.S. market, as I said, healthcare systems mainly related to U.S. and the situation in China. The healthcare business from the European market has been fairly steady. I mean, slightly down from last year, but still very steady. So the main areas we need to improve on in 2024 is U.S. and part of APAC.

Strategic Alliance is really tied to the hospital market. So that's followed the same trend, really. I will let Ulrika do the following slides.

U
Ulrika Voksepp
executive

Thank you, Goran. So to start talking about net sales, I want to emphasize the shift in sales per quarter that we've seen in 2023 compared to previous years. If you look at the graph at the right-hand upper side, you will see this -- the different profile that we have for the year. And as Goran has mentioned earlier today, as well as when presenting the Q3 report, we did anticipate this -- to look like this in Q4 this year.

So looking at the different regions. The Americas region is presenting a very strong growth this year. And what might seem like a slowdown in Q4 is mainly related to the very strong growth during Q1 to Q3. We -- for the EMEA region, we have a stable growth throughout the year and definitely in Q4 as well. And the APAC region is presenting a significant growth in the fourth quarter. And for the full year, it has been affected by the slow start of the year, as Goran also mentioned.

Looking at the business segments, I want to highlight the very strong growth we are having in system sales with an increase of over 63% in the quarter and over 60% in the year, which is really positive for the product mix for us.

The order book is strong as Goran mentioned, and we really see a very strong part of the order book being on software and perpetual licenses. And of this strong order book, we have 110 million scheduled for 2024.

And to comment a bit about the annual recurring revenue. With the graph that you see, you can see a slight decrease in growth. However, I want to highlight the very good growth that we have related to software licenses with 9 million for the full year of 2023.

And the financial summary, with a net sales increase during the year of 25.5%, of which 19.4% is organic growth. The gross margin remains more or less the same as for 2022. And we have, for the fifth quarter in a row, a positive EBITDA result and a positive EBITDA result for the full year 2023.

To mention the cost levels, Goran mentioned it, and I want to mention it as well. We see during Q4 onetime costs and costs related to the acquisition of Biomodex, so I also want to stress, this is not an increased run rate level of other OpEx, which I think is important to understand.

The cash flow has been -- the operational cash flow for the year has been positive. And looking at the cash flow from the operating activities was -- amounted to 38 million, a bit more than SEK 38 million. And we see that we have a part of due unpaid invoices being postponed into 2024, and that's part of the reason why there is a weaker cash flow from operating activities. Over to you, Goran.

G
Göran Malmberg
executive

Thank you. So a bit of summary then. So a bit about the business again and the market situation. So if we look at the business and financial side overall, again, last 5 quarters, profitable growth that has really generated a strong cash position and an improved productivity, something I can't focus on enough, I think.

And should be noting again that for 2023, we had significantly less backloaded seasonal profile where we typically have 35% to 40% of our business in the fourth quarter, which was not the case in '23. To say that is really not a guarantee for the future, but that's the situation we had in 2023.

And just reflecting that we have more than doubled our top line, both orders and net sales over the last 3 to 4 years, or since 2020, with a significant improvement of profitability, something that we want to point out.

So on the market side, we can see that with the -- adding technologies we have added to our portfolio over the last 4 years or so with first endovascular simulation back in 2020, Ankyras in 2021 and then now Biomodex in last year, we have a really clear confirmation looking at the client we have both on the hospital side and the industry side -- in those areas really confirm that this is a really valuable combination of products. I mean we will have a discussion or presentation in the Capital Market Day we introduced -- we're going to have in March -- where we will have a physician from U.S. presenting exactly how he uses all of our technology in his daily clinical practice. So that's really, really important for us, and that's what we have talked about for many years, how we want to really develop our image-guided therapy solution set, which is really what we are doing.

I think it's clear that there's very few direct competitors in this market. It's clear that we -- Mentice is the market leader. But we can also see over the year that the competition is fairly unstructured. I mean we see the -- one of the largest competitors that divested over the years, CAE, the kind of Canadian flight simulation company, they sold their healthcare division over the year. So that would leave us another player that in principle will disappear from the market.

So that's also -- we can also see that the market is difficult. I mean I think we at Mentice have been able to grow significantly over the last 3, 4 years, while we see a lot of smaller players that have trouble. So obviously, I think this makes us even more proud of what we are doing.

So I think, overall for me, I mean, I'm really pleased with the year 2023. And I think we have positioned us very well for 2024 and the future. So with that, I would open for questions.

Operator

Thank you so much for the great presentation. [Operator Instructions] Now to start with, talking a little bit more about the order intake, as you already presented both for the quarter and the full year, MDI was very strong. Healthcare systems a little bit weaker. Can you elaborate a little bit more on when can we, for example, expect a recovery in healthcare systems? Or do you just take the opportunities as they are presented to you, so to speak?

G
Göran Malmberg
executive

Yes, it's really hard for me to say exactly when. But I mean, I think we had some specific situation. I mean, the U.S. healthcare market have significant issues in the wake of the pandemic and a lot of health systems that need to focus on repairing what happened, you know, in pandemic. So I think some of that will probably get back to more normal this year. I think we also need to -- from the sales side, have more focus on the U.S. healthcare market. So I think we can see some immediate recovery there for next year.

China is in other large area where we had a lower level of results during last year. I hope that we can recover for that -- last year. It looks probable, but I can't really say yet. It's too early to say.

Operator

And we also got a viewer question regarding Americas and the U.S. specifically. Can you elaborate a little bit more on the difference between the industry and the hospital market there in terms of demand and the developments you're seeing?

G
Göran Malmberg
executive

Well, I mean, we know that the world's leading medical device companies have headquarter in U.S. A lot of those companies obviously dominate the rest of the world. I mean I think it's upwards of 50% of the world's medical device products that are produced or at least owned by U.S. companies. So that's -- whatever we do in U.S. will have an effect on our business in the rest of the world.

We can see some of the larger clients we had in U.S. We generate initial contract in U.S., but then maybe half of our revenue comes from the rest of the world. So that's why it's so important for us to build those relationships in U.S. with the headquarter because that will have a significant impact on our business in all other regions.

Operator

Now you already mentioned that 2023 was a little bit unusual because you had a lot more even seasonality than in usual years. And you also said that you can't really predict whether 2024 is going to be the same or the same as previous years. So can you elaborate a little bit more on -- during 2023, what were the main reasons that you got many orders in the first half? Was it just random, so to speak? Or are there underlying factors in the industry, for example, that made orders come in that specific time frame, so to speak?

G
Göran Malmberg
executive

Yes. No. But really, we had -- as you saw from our press releases in Q2 mainly but also in Q1, we had a handful, 3, 4 really large orders from device industry coming in, in the first half year and one significant one in mid-second quarter for almost 3 million. Those handful of orders -- 2, 3 orders -- are really the main explanation for that change of the profile. If we can get similar orders this year, first half year, great, we will have a similar profile. If we don't, then we will probably -- the underlying business is still season -- has still a large degree of seasonality.

Operator

Understood. Also, I wanted to talk about APAC and specific China. Obviously, the Chinese market has been relatively weak recently. Do you see any signs right now of China potentially recovering? Or do you think it's going to remain relatively weak during the foreseeable future?

G
Göran Malmberg
executive

No, I think that China will recover. I mean I was in U.S. last week and talked to many of our device clients. I asked every one of them of the view of China, and there is a love and hate relationship. You know you have to be there, but you know you're going to face issues.

It's the fastest-growing market in the world. Next to U.S. is the largest single market in the world. You -- in my mind, you have to be there. And that's the same as all of our large medical device companies say. All of the big ones are there. They know they need to invest in the market. We know we're going to run into issues with the government programs, change of price structures and what have you, requirements for local-produced products, all of that will happen.

Still, it's the second largest market in the world, and they're one of the largest growing markets in the world. It's a massive development on medical device. I mean it's probably upwards to 100 new device company in start-up mode in China that's focusing on the domestic Chinese market. So clearly, we will be there. We want to be there and we want to compete for that business.

Operator

Another detail regarding sales mix. It seems like recurring system sales and service sales faced a notable decline. Can you just elaborate a little bit on the underlying reasons for that?

G
Göran Malmberg
executive

No. I mean I think it's seasonal -- I mean, obviously, the recurring business is related to -- largely year related to the hospital business. We had slightly lower hospital -- degree of hospital business during the year, which impacted the recurring revenue. I am hopeful that we can get a better balance this and next year, and that will also have a positive impact on the kind of recurring side.

While we're also working on step-by-step converting the medical device market to a kind of recurring model, but that will probably take a couple of years.

U
Ulrika Voksepp
executive

And to build on it, we also see that we have a growth in system -- sorry, software recurring revenues and a decline in system sales, but we also see that we have the increase in perpetual system sales. So I think they are kind of offsetting each other a bit.

Operator

And we got a related viewer question, and you may have partly answered it already, but the question was basically about, can you talk more about the size of your leasing portfolio? And who is the typical customer and from which country is a leasing customer?

G
Göran Malmberg
executive

Well, there are -- I mean it's not a clear trend, but I mean on the -- it's mainly on the on the medical device side, there are -- some of the larger clients -- again, I can't mention the names that prefer OpEx -- so we're running cost per year rather than CapEx. For those customers, we have provided solutions where they can rent systems on a 2- or 3-year scheme rather than buying them upfront. So that's -- it's not the general trend, but as I said, some of the device companies are moving into that direction.

Operator

Now you already mentioned that during Q4, you had some notable one-off costs. Can you talk a little bit more about in the coming quarters, do you still expect that there will be some related one-off costs until you recover to, so to speak, normal run rate OpEx or what should we expect?

U
Ulrika Voksepp
executive

I think the Q4 one-off costs are related to mostly the acquisition of Biomodex, so they are related to Q4. So without making any forecast, I think we will see a different run rate going forward.

G
Göran Malmberg
executive

But I mean also add to that. If you look at the underlying cost, I mean, the personnel cost has increased slightly over the year, and we're looking at the running cost per month. I mean it's growing but not as fast as the top line. So the underlying level is in a controlled way, same thing with other costs.

I mean we're now obviously going into an investment phase, you would say, in 2024, where we are now starting recruiting again on a slightly larger scale. So we will clearly increase the cost base, but that's obviously always monitored with the expectation on the top line, and we need to be very careful.

I mean it's clear, the clear directive to us is to make sure that we are cash flow positive in every quarter, and we manage our costs, we can have relevant profitability for the full year. So that is the clear -- or clear directive from the Board. Grow as much as you can, but you need to make sure you have positive cash flow.

Operator

Now you just mentioned the Biomodex acquisition, which is obviously very interesting. In your press release, you stated that the toll turnover for 2022 was about EUR 2.2 million, if I remember correctly. But the price you paid was EUR 200,000. So that was obviously pretty cheap. Can you elaborate a little bit on the underlying reasons why you were able to pick up these assets for an optically very cheap price?

G
Göran Malmberg
executive

Yes. I think that -- I mean, this is a situation where -- which I sort of alluded to in my presentation, a lot of smaller companies face the same situation. I mean they have high aspiration for growing into the market, but they also typically have a higher burn rate in the early stages of the company. What happened with Biomodex is that they run out of cash, and they were not able to secure more cash to support the business. So they had to scale down the business during late '22 and beginning '23. They were still not able to secure more capital, and they come into a situation where the Board and owners decided to basically liquidate the company, and we were able to buy -- buy the assets based on that liquidation.

And I'm not -- I don't have a crystal ball, but I think many companies will face the same situation. That's why it's so important for us to make sure we are cash positive, and we're not -- definitely not end up in the same situation. But -- so yes, that's -- we were there. We had a good relationship with them. We've been talking to them together. I mean, obviously, a lot of the companies in this industry, but we will have a dialogue with Biomodex for the last 5 years or so. So when this happened, we were there and we listened and we took the opportunity.

Operator

And I'm not sure how much you can talk about it, but what should investors expect in terms of both the top line and profitability? How is the Biomodex acquisition going to affect your numbers during 2024?

G
Göran Malmberg
executive

Yes. I mean I can't really go into detail sort of about that. But I mean if you look at the physical simulation marketplace -- so we obviously will combine and integrate the -- what we call physical simulation or endovascular simulation acquisition from 2020 with Biomodex, and that will -- we will make sure that the products doesn't overlap, and we have a complementary solution, which Biomodex is complementary because it's direct printing, it's a faster turnaround, while the vascular simulation products have a probably a higher level of realism and higher durability of the model. So it's slightly different focus, more on the training side, while Biomodex is more on the planning side.

But I think the combination of those represent a significant opportunity for growth. We just -- we did a couple of million dollars in order intake for 2023. I think the combination of that should be able to grow faster than the -- or yes, grow faster than the overall maintenance business in 2024 and '25.

Operator

And the M&A market in general, it seemed like we heard -- at least from the company's week, we heard from a lot of them that even during 2022 and 2023, valuations for strategic acquisitions. [indiscernible] for example, wanted to acquire technology, they didn't really come down in line with public market valuations. Is the Biomodex acquisition kind of a sign that private market valuations for these assets are kind of adapting to what we've seen in public markets?

G
Göran Malmberg
executive

I think that the reality catch up with company -- well, they need to inject new capital. And I think all the way up to that point, I think the company trying to maintain their perception of the valuation, at least the valuation that they've been -- or getting capital injected on earlier. So I think we've seen that several times. I mean people have the -- on the private side, they're trying to maintain a view of the valuation from 2021 and '22.

So I think still, the valuations generally in the private side is very high and it's very -- it's disconnected to the public market, especially if you think -- if you then add on AI, for instance, into that -- AI and healthcare in the combination, you still have very high valuations. But I think our opportunity generally is to have our ear to the ground and be there when there is an opportunity.

Operator

And as you already mentioned during the presentation, you recently got 501(k) clearance for Ankyras. Can you talk a little bit more about how much visibility do you have on growth from Ankyras? How is it going to, for example, affect your net sales?

G
Göran Malmberg
executive

Yes. I mean, Ankyras is really isolated -- still a fairly small business, and I don't expect this to take a significant part of our business. I think the opportunity is clear. I was in the U.S. last week, in the Neurovascular Congress and talked to all of the leading manufacturers. And I think we have -- I think the combination of our solutions is really the interesting piece.

I mean a lot of these companies want to use all of our tools, including Ankyras, including physical modeling, endovascular simulations. So that combination -- I think the combination of that will drive growth rather than, I'd say, that the Ankyras business will generate 10% or 20% of our business. I don't think that will happen. But clearly, we have significant opportunities.

But we should know we have competitors in the market. We have at least 2 competitors that has been in the market prior to Ankyras. And we still need to have the argument to replace them with our main clients. But I think the main argument, as I said, is the combination of solutions that Mentice has that no one else has.

Operator

Coming back to cash conversion, which you already commented on during the presentation, what can investors expect going forward? Because obviously, in healthcare, the market is kind of known to be a little bit slow, but are there any active measures that you can take to kind of ensure that payments occur relatively quickly? Or is that just an aspect of the industry, so to speak, that one needs to accept?

U
Ulrika Voksepp
executive

As Goran mentioned, we are going to have a focus on creating positive cash flow. So -- and we anticipate cash flow increasing during next year. So there are measures we can take. And obviously, there's always a certain element of the market situation.

Operator

We also received another listener questions. When it comes to both market potential and market share, especially in endovascular simulation, you obviously already dominate the market. But what do you kind of see as your potential when it comes to both market share and revenue?

G
Göran Malmberg
executive

I mean I have said before that I think that the opportunity for image-guided interventional therapies or performance solutions in that space is upward to 0.5 billion. And I mean, if we say that we have 50% or 60% market share today it's related to endovascular simulation training market in that space, which is a very small part of that. And I think that as we demonstrate with Ankyras but also the opportunity where we expand in the -- we are really creating or own market -- or the market space. It's a blue ocean market we're trying to build together. So that's what we're doing. So yes, I think the market opportunity is upwards to 0.5 billion or potentially more.

Operator

A follow-up question is regarding the growth of the industry. What should investors kind of see as the underlying growth of your market?

G
Göran Malmberg
executive

Clearly, the development of the minimally invasive treatment modalities -- endovascular in our case -- the penetration of those therapies, that's the underlying reason. Looking at many of our specialties they have in the CAGR of 10%, 15%, 20% and the typical penetration in any procedure might be 20% to 30%. So the upside potential is enormous.

So I mean, we don't really look at the simulation market talking about what is the expected upside on the academic side. We really look at, how are the therapies developing, how are the hospital developing, what is the trend there.

So we're really following that, and we're really, really close to what is the next big thing. I mean what's happening in structural heart, what's happened in neuro, what's happening in electrophysiology and all of the new therapies there. That's where we need to be, and that's what -- where the big opportunity is.

Operator

I think that wraps up all the questions that we received. So Goran and Ulrika, thank you so much.