Release Date: August 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 9.6% year-over-year to $91.7 million, in line with revised guidance.
- Strong demand across all regions for core products, with total units sold exceeding 100,000 for the first time.
- Strengthened balance sheet with net cash of $16.2 million after raising $38.1 million in gross equity capital and repaying Australian debt facility in full.
- Early investments in manufacturing facility led to a 10% greater output in May and June compared to the first half of FY24.
- Positive outlook for FY25 with expected revenue of approximately $100 million and EBITDA of more than $5 million.
Negative Points
- EBITDA for FY24 was $0.6 million, down from $2.1 million in FY23.
- Product gross margin decreased to 69% from 72% in FY23 due to manufacturing facility capacity constraints.
- Net cash flow from operating activities was negative $3.3 million, excluding one-off restructuring costs.
- Capacity constraints led to longer turnaround times and more aggressive competition.
- Rest Assure product launch is delayed pending further information requested by the US FDA.
Q & A Highlights
Q: Can you provide more details on the launch plans for Rest Assure?
A: (Karen Borg, Co-CEO) Rest Assure is a priority for us, and we are currently responding to the FDA's requests for further information. If we receive a positive response, we will proceed cautiously with a beta launch to gather data on consumer and clinician engagement, which will also inform health guidelines and reimbursement modifications.
Q: What is the current status of production capacity for the Rest Assure device?
A: (Karen Borg, Co-CEO) Production capacity for Rest Assure is a work in progress. We have been working on its introduction through our manufacturing site for some time, and this continues to be developed.
Q: Why is North America's revenue considerably lower compared to Europe, despite its large population?
A: (Karen Borg, Co-CEO) The difference is primarily due to the more mature reimbursement environment in Europe compared to the United States. We are working to expand reimbursement availability in the U.S. to leverage growth, and we expect to see accelerated growth in the future.
Q: What are the key drivers behind the 9.6% revenue growth in FY24?
A: (Amrita Blickstead, Co-CEO) The growth was driven by strong demand across regions, sales and marketing initiatives, medical education programs, and a shift towards our premium products, Avant and Herbst Advance, which offer better clinical outcomes and scalable production capabilities.
Q: How did the company manage to achieve its revised guidance despite capacity constraints?
A: (Amrita Blickstead, Co-CEO) Early investments in our manufacturing facility enabled us to deliver 10% greater output in May and June compared to the first half of FY24. This helped us meet our revised guidance despite the constraints.
Q: What are the expectations for FY25 in terms of revenue and EBITDA?
A: (Karen Borg, Co-CEO) For FY25, we are guiding for revenue of approximately $100 million, representing over 9% year-on-year growth, and an EBITDA of more than $5 million. We also expect a CapEx spend of between $3 million to $4 million.
Q: How is the company addressing the competition and customer experience challenges?
A: (Amrita Blickstead, Co-CEO) We are focusing on improving turnaround times and reducing backlogs to enhance the customer experience. This, combined with our strong product demand, will help us maintain our leading position despite aggressive competition.
Q: What are the plans for capital allocation and investment in growth initiatives?
A: (Amrita Blickstead, Co-CEO) With the repayment of our debt facility, we now have the financial flexibility to invest in sustainable growth. This includes incremental CapEx investment in our manufacturing facility to increase capacity and reduce wait times and backlogs.
Q: What is the company's approach to building a high-performance management team?
A: (Amrita Blickstead, Co-CEO) We are committed to building a high-performance management team to drive execution against our long-term priorities. This includes recent additions like Jonathan Vowels as VP of Manufacturing and Operations and Mary Kennel as Global Director for Regulatory Affairs. We are also searching for a high-performing CFO.
Q: How does the company plan to achieve double-digit revenue growth and 10% EBITDA margins in the next three years?
A: (Karen Borg, Co-CEO) We are focused on building the right foundations for sustainable growth, including operational focus, cost management, and continued investment in manufacturing capacity. We are confident that these efforts will enable us to achieve our targets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
