Now might be an opportune moment to take a stake in heart-monitoring specialist LiDCO (LID:AIM) before the company reports a maiden profit at its finals due before the end of April. The £33 million cap is an exciting growth prospect as its systems speed up post-operative recovery times and therefore reduce hospital costs just as budgets are beginning to bite.

All the conditions are now in place for the wide international adoption of the company’s technology. Monday’s (20 Jan) endorsement by the Association of Anaesthetists of Great Britain and Ireland (AAGBI), for the use of LiDCOrapid v2 during operations on elderly patients, is just the latest highlight in a long-stream of positive newsflow.

Optically the London-based firm looks expensive, trading on 19 times next year’s, to 31 January 2015, earnings per share (EPS) forecast of 0.9p. But investors who take a stake now will be doing do in the very early stages of what is likely to be an explosive growth story. The 2015 EPS forecast is up 125% on the 0.4p outcome anticipated by house broker finnCap for this year.

Proven technology

Health authorities around the world are desperate to save money during these austere times and LiDCO might just have the answer. The company’s machines aim to boost recovery times by monitoring blood flow around the body to ensure vital organs are suitably oxygenated during surgery.

The AAGBI endorsement follows a number of milestones achieved by the company in getting its product to market, including a policy change in the NHS to use fluid-monitoring technologies for high-risk surgery. Last year’s thumbs up from America’s Food & Drug Administration for use of LiDCOrapid v2 across the pond was a major step forward.

In an AAGBI observational study using LiDCOrapid v2 on 120 patients undergoing peripheral vascular surgery, the mortality rate was much lower than predicted at 0.8% compared to an expected 9%. The need for post-operative care was also much lower, underlining the technology’s potential to free up beds for other patients that much quicker.

The AAGBI now recommends a system that continuously monitors three aspects of a patient’s condition during surgery: intra-arterial blood pressure, the haemodynamic response to fluid admission and the depth of anaesthesia, which is relevant for older patients who require lower levels of sedation. LiDCOrapid v2 meets all these requirements.

Growth in the US and Japan has been strong, pointing to the universal appeal of the company’s products. LiDCO is targeting a $70 million market in the UK and a $660 million market in the US and it estimates the global market for its monitors, sensors and smartcards, at some $2 billion. Based on this year’s expected £8.5 million revenue outturn, clearly there is plenty more growth to go for.

LiDCO (LID:AIM) (FGP) 17.0p

Stop loss: 13.6p

Market value: £32.9 million

Prospective PE 31 Jan 14: 42.5

Prospective PE Jan 15: 18.9

1-month relative strength: +2.6%

1-year relative strength: +10.0%

Prospective dividend yield: n/a

Bid/offer spread: 5.71%