Release Date: August 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Improved margins by 5 percentage points and underlying EBIT by $7 million.
- Free cash flow improved by $10 million, resulting in a strong balance sheet with $19 million in cash.
- Penthrox volumes grew in key markets, with over 30% growth in the Australian hospital market.
- Respiratory revenues in the US increased by 37%, marking the third consecutive year of strong growth.
- Successful clinical outcome of the MAGPIE study in children, potentially expanding the addressable market.
Negative Points
- Group revenue only increased by 3%, which was below expectations.
- Net loss after tax was $41 million, reflecting underlying adjustments and tax loss de-recognition.
- US market entry and next-generation device development have been paused, delaying potential growth.
- Behavioral change in hospital EDs has been slower than anticipated, impacting Penthrox adoption.
- Lower revenues in rest of world markets, particularly due to prior year inventory stocking in Canada.
Q & A Highlights
Highlights of Medical Developments International Ltd (ASX:MVP, Financial) Earnings Call
Q: What is the sales impact from a new hospital protocol listing for Penthrox? Do sales follow on quickly or does it take more time? Can you give any examples?
A: (Brent MacGregor, CEO) The selling cycle is long and varies from hospital to hospital. After a protocol is written and approved, training of ED staff on the protocol and product use takes time. Even after training, it can take several weeks to a few months for behaviors to change and sales to follow.
Q: Have you any idea how the tests in the USA are going?
A: (Brent MacGregor, CEO) We currently do not have any trials underway in the US. The project is on pause, and we are not in Phase 3 or conducting pre-clinicals for Penthrox in the US at this time.
Q: Can you explain how the additional cash will impact FY25 expenses versus FY24?
A: (Anita James, CFO) Our outlook for FY25 includes $3 million to $4 million in efficiencies, leading to strongly improved earnings. The capital raise will support the acceleration of our strategy in Australia, including investment in data generation and expansion of commercial activities, but significant impacts are expected in the second half of FY25.
Q: Given the price increases in Australia generated $2.2 million in FY24, what will the new 25% price increases in Australia in August 2024 generate in FY25?
A: (Anita James, CFO) The new price increase is expected to generate an additional $1 million to $2 million annually. This increase is effective from August 1 and will be leveraged to push pricing more broadly in the market.
Q: Given that the introduction of selfie might help drive adoption and further market penetration, what time and capital amount is likely required to finalize development of selfie and bring it to the market?
A: (Brent MacGregor, CEO) Selfie is in late-stage engineering but is currently on hold, linked closely with the US market entry. The cost of goods for selfie is higher than our current device, making it likely a US market device. We do not have a definitive cost or timeline for its completion.
Q: Can you give more information on the results and submission of the MAGPIE study in the UK?
A: (Brent MacGregor, CEO) The MAGPIE study aimed to lower the age indication for Penthrox from 18 years to 6 years, showing equivalent efficacy and safety. The dossier was submitted to European authorities on August 14, and we expect a positive result by August 2025.
Q: How long can the FDA approval be paused for?
A: (Brent MacGregor, CEO) The FDA approval process can be paused indefinitely as long as we maintain interaction with the authorities to keep the IND open. We do not have a timeline for re-engaging the US project, but it will not occur in FY25.
Q: On the last call, management said there would be no need for a capital raise. What changed in the three to four months to needing a $10 million raise?
A: (Brent MacGregor, CEO) The decision for a small raise was made to fund additional initiatives and shore up the balance sheet, not because it was required to achieve positive operating cash flow. This decision was influenced by strategic considerations and market reactions.
Q: AU's pain growth slowed in the second half. What is the outlook for FY25?
A: (Anita James, CFO) The growth percentage was softer in the second half, but we continue to see volume growth in all markets. Taking an average across the year might provide a better perspective on growth.
Q: What is the outlook for FY25?
A: (Brent MacGregor, CEO) We expect positive operational momentum to continue in FY25, with further earnings benefits from pricing and efficiency improvements. The company anticipates strongly improved underlying EBIT driven by higher Penthrox prices and operational efficiencies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
