The Somnomed Limited (ASX: SOM) share price has rebounded nearly 11% from a 52-week low today, surging 31 cents higher to $3.15 per share.
SomnoMed is a leader in continuous open airway therapy (COAT), providing treatment options for various sleep-related breathing disorders such as obstructive sleep apnea (OSA). It competes against other companies such as ResMed Inc. (CHESS) (ASX: RMD) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), whose share prices have risen 13% and 27% year-to-date respectively. SomnoMed, by contrast, has fallen 20%.
In April, the company delivered bad news to investors as it revised its guidance for full-year volume, revenue and earnings. However, the company did note, at the time, that it had seen signs of business stabilisation during March and into April.
Today, the company appears to have delivered. The company posted positive cash flows from operating activities for the final quarter of FY2017 while U.S. and European sales were 24% and 20.6% higher than the prior corresponding period. The company reported a record total group unit quarterly sales of 19,859 units (up 24.2%), compared to 68,100 units for the entire year.
In total, the group estimates that its revenue for the quarter was $14.3 million, representing growth of 22%. That compares to 12% for the full-year, signifying the strength of the more recent performance.
In an update to the market it said:
"A very positive Q4 result brought an excellent end to what could be considered a transitional year in the USA, where we introduced and launched the RSS [Renew Sleep Solutions] business. The future of this region is extremely bright for SomnoMed overall now that we move to the next phase with RSS and SomnoMed NA has returned to positive growth."
Of course, there are risks associated with an investment in SomnoMed, and the company's strong performance during the final quarter of FY2017 does not necessarily reflect the company's future performance. But given the recent falls, I think SomnoMed is worth a closer look by investors, and is at least worthy of a position on your watchlist.
