Creo Medical (LSE: CREO) has been an enormous disappointment in my Shares and Shares ISA. Since I first invested in early 2023 (then once more final yr, at a better price), the penny inventory is down nearly 50%. It’s now just below 16p.

On 17 February, shareholders obtained a buying and selling replace from the £65m medical machine agency. Was it any good? Let’s have a look.

Combined replace

AIM-listed Creo Medical makes minimally invasive electrosurgical gadgets. Its flagship Speedboat product can do a number of issues — lower, coagulate, dissect, and inject — in a single instrument, eliminating the necessity for a number of instruments.

The corporate is transitioning from the event part to full commercialisation, and its gadgets are being utilized in a rising variety of hospitals. Within the full-year buying and selling replace, although, we noticed combined outcomes.

Income for 2024 is predicted to be roughly £30.4m, down barely from 2023’s £30.8m. Inside this, Creo Core Know-how income grew 74% to £4m, with the second half attaining a 50% development in gross sales. This covers gross sales from all core merchandise, together with its newest Speedboat UltraSlim machine. Administration mentioned there had been “important new buyer additions throughout the interval“.

Elsewhere, its revolutionary MicroBlate Flex machine is making progress in robotic-guided lung most cancers procedures. It’s now in use with Intuitive Surgical’s Ion robotic system at two UK hospitals. Extra websites are to launch quickly, with the expectation that these will changing into revenue-generating after preliminary instances. Sadly although, no income was recorded right here throughout the interval.

Concerning 2025, the corporate mentioned it had made a “positive” begin to the yr, with buying and selling consistent with expectations.

Respectable money place

Earlier this month, Creo accomplished the sale of 51% of its Creo Europe consumables enterprise to Micro-Tech, a Chinese language agency. Creo Europe markets each its personal and third-party consumables and techniques.

Following this, the group’s money place was £31.2m. It mentioned this strategic sale “strengthens Creo’s industrial platform and allows Creo to proceed to fund the continuing strategic growth of its core expertise enterprise“.

In the meantime, the corporate says it has diminished working prices by £5m, with the complete profit to be seen this yr. We gained’t know precisely how a lot the agency has been shedding until the complete earnings ends in April.

In response to analysts at Edison, cash-flow breakeven is now more likely to be achieved in 2028 versus 2025 beforehand. Due to this fact, Creo is predicted to be loss-making for a while, which clearly provides danger.

My ideas

The cope with Intuitive nonetheless appears promising to me, with websites now performing mixed lung analysis and procedures with the robotic system and Creo’s MicroBlate Flex machine. This might ultimately be a high-margin income stream.

The corporate additionally has dry powder to spend money on its core enterprise, and I anticipate a big ramp-up in income from simply £4m. If that doesn’t occur, the inventory might fall even additional.

I’m optimistic it might get well, nonetheless, if I’m affected person. Certainly, dealer Cavendish has reiterated its 70p share price goal — over 330% increased than the present degree (no ensures it can finish up there, in fact). It mentioned it now expects Creo to achieve “profitability utilising its inside assets“.

At 15p, Creo may be price a search for risk-tolerant traders. As for me, I’m going to maintain the shares I already maintain, however I gained’t purchase any extra.