Why the SomnoMed Limited share price is falling today

The SomnoMed Limited (ASX: SOM) share price is down nearly 50% in one year.

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The SomnoMed Limited (ASX: SOM) share price is down 3% to $1.65 today after the sleep related breathing disorder treatment business posted a positive operating cash flow of $1.46 million for the quarter ending December 31 2018. However, for the six-months ending December 31 2018 the group's operating cash loss sits at $4.3 million.

Total "core" revenue of $15.7 million was 13% above the prior corresponding quarter, however, when including its Renew Sleep Solutions (RSS) business total revenue actually fell 3% over the quarter.

The group is now closing its loss-making RSS business in North America in response to its poor performance that has seen the share price collapse in half over just the past year.

SomnoMed's European operations delivered 14% revenue growth in the quarter and in total over the first half it delivered revenues of $28.8 million, up 15%, when excluding the disastrous performance of the RSS business.

SomnoMed is in a similar space to sleep treatment disorder market leader ResMed Inc. (ASX: RMD) that has seen its shares slammed around 20% since handing in a weaker-than-expected quarterly profit report last Friday morning.

Motley Fool contributor Tom Richardson owns shares of ResMed Inc. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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