By Tom Kerr, CFA
NASDAQ: BDMD
READ THE FULL BDMD RESEARCH REPORT
Interim Financial Results
On September 3, 2026, Baird Medical (NASDAQ: BDMD) released financial results for the 6-month period ending June 30, 2026, which showed strong revenue growth from non-China regions.
Revenue grew 24.6% to approximately $9.9 million in the 1st half of 2026, compared with $8.0 million in the prior-year period. The increase was driven primarily by stronger sales outside of China, particularly in the U.S. and Hong Kong, as well as higher licensing revenue. Approximately two-thirds of total revenue came from markets outside of China. Gross profit increased 32.0% to $8.6 million, while gross margin improved to 87.0% from 82.1%, reflecting a more favorable geographic and revenue mix.
Operating expenses declined sharply to $7.8 million from $17.0 million a year earlier. The reduction was primarily due to significant cuts in research and development and general and administrative expenses. This more than offset higher selling and marketing costs associated with the company's expansion in the U.S. and other international markets. As a result, the company essentially reached breakeven, reporting net income of approximately $14,000 versus a ($11.4) million net loss in the 1st half of 2025.
Cash level profitability also improved significantly. EBITDA increased to approximately $1.6 million from a ($9.7) million loss in the prior-year period, while adjusted EBITDA reached approximately $4.0 million compared with a ($3.3) million loss. This improvement was driven by higher gross profit, stronger international revenue, and substantial reductions in operating expenses.
Valuation
We believe Baird Medical can generate double-digit revenue growth over the next 10 years through organic growth and a strong development pipeline. We believe gross margins will remain in the 70%-80% range, and EBITDA margins will exceed 20% as the company's U.S. market entry gains traction.
Our primary valuation tool utilizes a Discounted Cash Flow process. We maintain our price target of $4.00 per share. Our target price may be conservative, as it incorporates a high discount rate of 10.0% due to the unpredictability of earnings, prevailing interest rates, and the timeline for commercialization of its product pipeline.
We also use forward price/sales multiples to validate our DCF target price. The average 2027 price/sales multiple for small- to mid-cap medtech companies is approximately 3.00x. Based on our 2027 revenue estimate for BDMD, that would provide a relative valuation target of $2.94, which supports our DCF-derived price target of $4.00 per share for BDMD.
The current market cap of only $46 million appears to be irrational and more reflective of the ongoing micro-cap stock malaise than of the solid company growth fundamentals going forward.
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