Key insights
- An analyst presents a bullish case for InMode (INMD), citing a strong balance sheet, high gross margins, and a compelling valuation. The analyst believes the market has overreacted to concerns about GLP-1 drugs like Ozempic, arguing they may even expand InMode's market by creating demand for skin tightening procedures. The analyst suggests a 30% margin of safety based on their intrinsic value estimate.
TL;DR: InMode (INMD) has $547M in net cash against a $896M market cap. Strip that out and you're paying ~$349M for a business generating $73M in owner earnings — roughly 5x. Gross margins are 79%, debt is near zero, and management bought back $127M of stock this year. The Ozempic fear is overblown. IV estimate: $20.23 vs. $14.14 current price (~30% margin of safety). Verdict: BUY.
I also made a full video deep dive on this one if you prefer that format: https://youtu.be/_C1Y4yAoKzg
What they do — InMode designs radio-frequency platforms for minimally invasive fat reduction, skin tightening, and body contouring. Classic razor-and-blade model: sell $100K+ platforms to doctors (the razors), then collect recurring revenue on single-use consumable tips for every procedure (the blades). They outsource all manufacturing — virtually zero physical capital required.
Why the stock got cut in half — Two headwinds hit at once. High interest rates froze equipment leasing, so doctors stopped buying new platforms. At the same time, inflation-squeezed consumers delayed elective cosmetic procedures. Revenue shrank, and Wall Street panicked.
Then Ozempic entered the narrative. The market decided GLP-1 weight-loss drugs would destroy demand for fat reduction procedures entirely. The stock went from $40+ to under $15.
Why I think the panic is wrong — Rapid drug-induced weight loss creates a massive secondary problem: loose, sagging skin. InMode's flagship platforms are specifically designed for minimally invasive skin tightening. The GLP-1 wave may actually be expanding their addressable market. Meanwhile, interest rates and consumer caution are cyclical weather, not permanent climate change. The proof: despite a multi-year revenue decline, gross margins haven't budged from 79%. Their pricing power is fully intact.
The real money (Owner Earnings):
| | | |---|---| | Operating Cash Flow | $85.26M | | Less: Stock-Based Comp | -$11.13M | | Less: Maintenance CapEx (5yr avg) | -$0.87M | | Normalized Owner Earnings | $73.26M | | OE Per Share (63.36M diluted) | $1.16 |
CapEx is laughably small because they don't own factories. I ignore GAAP working capital changes to keep the estimate conservative.
The balance sheet — this is where it gets absurd:
| | | |---|---| | Liquid Net Cash | $547.10M | | Total Debt | $8.23M | | Net Cash Per Share | $8.63 | | Market Cap | $896M | | Enterprise Value | ~$349M | | EV / Owner Earnings | ~5x |
Read that again. You're paying 5x owner earnings for the actual business. The rest of the market cap is cash sitting in the bank. At these prices, over 60% of what you're paying is backed by liquid cash.
Capital allocation — Management is doing exactly what you'd want an owner-operator to do with a cheap stock. They bought back $127.44M of shares in 2025 and just authorized another program to retire 10% of outstanding shares. Every buyback at these prices increases our per-share ownership of future cash flows.
Valuation:
| | | |---|---| | OE Per Share | $1.16 | | Conservative Multiple | 10x | | Business Value | $11.60 | | Net Cash Per Share | $8.63 | | Intrinsic Value | $20.23 | | Current Price | $14.14 | | Margin of Safety | ~30% |
I'm using 10x because the business is cyclically shrinking. A 10% earnings yield is satisfactory even if they never grow again. 5-year OE CAGR is 5.87%, and ROIC sits at 13.43% (depressed by the trough — it was much higher pre-2023).
The #1 risk that would make me sell — The innovation treadmill. InMode has to keep releasing new platforms to stay relevant with doctors. If a competitor launches a clearly superior device and InMode fails to respond, the razor-and-blade flywheel breaks. I'm watching their R&D pipeline closely. The GLP-1 and macro risks I consider overblown and temporary respectively.
The four questions I always ask:
- Do I understand it? Yes — razor-and-blade medical device sales to doctors. 2. Are the economics durable? Yes — 79% margins held through a severe downturn on an asset-light frame. 3. Is management honest? Yes — aggressive buybacks, no empire-building acquisitions, near-zero debt. 4. Is the price attractive? Yes — 5x EV/OE with a cash floor covering 60% of the market cap.
Verdict: BUY. This is a classic cigar butt with plenty of puffs left. The market is pricing a temporary cyclical trough as permanent decline, while ignoring a cash fortress that de-risks the entire investment.
Disclosure: I hold a position in INMD. This is not financial advice — do your own research.