Whilst the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) may have started the day relatively flat, it certainly wasn’t the case for Admedus Ltd (ASX: AHZ). The share price of the biotech company rocketed higher at the open and is currently up by over 14% at present.
The jump in its share price comes following the release of its fourth quarter report which showed a 40% increase in full year sales to $14.1 million. Furthermore, its full year forecast of sales growth of at least 50% in FY 2017 has no doubt gone down well with investors.
This growth is largely the result of its Infusion business being awarded a 5-year contract with the new Royal Adelaide Hospital for the installation of the arcomed Chroma Infusion pump system. It expects this contract to have a material impact on annual revenue starting in the first quarter of FY 2017.
Chairman and interim CEO Wayne Paterson anticipates its CardioCel product to also continue growing sales on a quarter on quarter basis. Although sales of the regenerative heart patch may have underwhelmed thus far, the company expects it to play a part in helping the company achieve profitability in FY 2018.
For the quarter the company reported a net cash loss of $4.4 million. This left it with a cash balance of $8.8 million and $3.5 million in research and development rebates expected in FY 2017. Thankfully for shareholders cost cutting is expected to reduce operating costs by $12 million during FY 2017, which should hopefully mean the company doesn’t have to initiate any capital raising in the next 12 months.
Whilst I think there are positives to be found in an investment in Admedus, in the sector I personally have a preference for Pro Medicus Limited (ASX: PME) and REVA Medical Inc (ASX: RVA). Both companies are well worth researching further in my opinion.