Release Date: September 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 16% in the first half of 2024.
- Gross profit margin improved from 49% to 53%.
- Adjusted EBITDA profit more than doubled to $1.1 million compared to $0.9 million for the entire 2023.
- dCELL division delivered robust 34% growth.
- Strong strategic partnerships, including with Arthrex, a leading sports medicine company.
Negative Points
- BioRinse division faced regulatory headwinds, impacting growth.
- Administrative costs increased by 13%, outpacing inflation.
- Regulatory approvals are taking longer than anticipated, affecting market expansion.
- Cash position decreased compared to the same period in 2023 due to increased inventory levels.
- Challenges in predicting the pace of regulatory approvals, causing delays in market entry.
Q & A Highlights
Q: When does the company hope to be adding some serious value to the shareholders given the fall in share price since 2014?
A: David Cocke, CFO: Since joining in 2021, we have focused on implementing the 4S strategy and growth pillars, delivering consistent growth and profitability. We believe continued execution will eventually be recognized in the market.
Q: Are you anticipating related regulatory decisions approvals in the near future?
A: Daniel Lee, CEO: Regulatory approvals have been delayed significantly, both in the U.S. and other markets. We continue to move forward but at a slower pace than anticipated.
Q: What was behind the 13% increase in admin costs, which is well ahead of inflation?
A: David Cocke, CFO: Adjusting for non-cash items, we still show significant operating leverage. We are managing our budget to ensure sales growth outpaces administrative expenses.
Q: Why isn't revenue growth larger than it is given the market size, the quality of existing products, and the development of new products?
A: Daniel Lee, CEO: Our dCELL business grew by 34%, and BioRinse by 26%, despite regulatory headwinds. Our compound annual growth rate over the past three years is over 20%, which is strong compared to peers.
Q: With $3.5 million in cash and Phase two expansion by 2025, how will you fund it? Any plans for capital raising or financing?
A: David Cocke, CFO: We do not anticipate raising equity funds for Phase two expansion. We plan to use non-dilutive financing and our current cash balance to fund our growth.
Q: At current rates of growth, how many years will the company's facilities be able to meet demand?
A: Daniel Lee, CEO: Our Phase 1 expansion will carry us through just beyond 2025, with revenue potential up to $40 million. Phase 2 expansion will increase this to about $100 million.
Q: Do you have any plans or ambitions for acquisitions or further strategic products, processing, or geographic expansion beyond those discussed today?
A: Daniel Lee, CEO: We are actively pursuing regulatory approvals for global expansion and always exploring strategic product processing opportunities. Acquisitions are considered based on strict criteria.
Q: How do you assess the risk of opportunistic litigation in the United States against pharma device companies?
A: David Cocke, CFO: We maintain insurance policies and have a risk protocol reviewed regularly. Our products are terminally sterilized, reducing the risk of litigation related to disease transmission.
Q: Will you be working to keep the corporate website up to date and relevant as a marketing tool for the company?
A: Daniel Lee, CEO: While the website is not a priority for generating new business, we recognize its importance for general awareness and attracting new shareholders. Updates are planned in the near future.
Q: Is there a plan to highlight or advertise the upside you are delivering to the wider marketplace to gain further share interest?
A: David Cocke, CFO: We are actively engaged with private and institutional investors. We have taken steps to make our investment opportunity more attractive, including a share price adjustment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
