The Nanosonics Ltd. (ASX: NAN) share price will be on watch today following the release of the medical device company's results for the half year ended 31 December 2019.
What did Nanosonics announce?
Nanosonics recorded revenue of $48.5 million for the first half of FY20, up 19% on the prior corresponding period (pcp). However, operating profit before tax fell significantly by $6.7 million, down 39% on pcp.
Sales in North America accounted for the vast majority of these revenues at $43.8 million, up 18% on pcp. Sales in the Europe/Middle East region amounted to $2.4 million, up 38% compared to the pcp, and sales in the Asia Pacific region also reached $2.4 million, up 26%.
Revenue associated with consumables and service amounted to $34.1 million, which was up 40% on pcp. This strong growth reflected Nanosonic's growing installed base as well as the impact of increased price of consumables to GE North America. Nanosonics advised that the timing of the shipment of GE North America's January consumables order also had an impact.
Capital sales were $14.4 million for the period, however capital sales to Nanosonic's main North American distributor were down by 24% on pcp. Nanosonics attributed this drop to the timing of purchases in prior periods and the distributor's inventory management.
The company continues to heavily invest in its global infrastructure expansion and research and development program. This drove operating expenses higher at $30.7 million for the half year, up 11% on the prior 6-month half and up 43% on pcp.
Nanosonics reported that free cash flow for the half year came in at $10 million, much higher than the $1.6 million in the prior corresponding period.
Strategic priorities
Nanosonic's strategic priorities continue to be to focused on four core areas: continuing to establish trophon technology as the industry standard in its operating markets, expanding and investing into new markets, developing new products, and maintaining a strong financial position.
Product expansion continues to be very much the core growth strategy for the company. Research and development amounted to $6.8 million in the first half of FY20, an increase of 24% on pcp.
Outlook for rest of FY20 and beyond
Further to its recent guidance, Nanosonics commented that for the remainder of FY20 it is targeting continued growth in its installed base in North America, further growth of trophon in Europe, and ongoing investments in Asia Pacific.
The company anticipates operating expenses in H2 of between $36 million and $37 million, resulting in full year operating expenses of approximately $67 million to $68 million.
For FY21 and beyond, the company added that it will be targeting increasing product upgrades to trophon2, the Japanese market and ongoing investment in research and development.
Nanosonics president and CEO Michael Kavanagh commented:
The organisation continues to effectively execute on its strategic growth agenda delivering continuing growth in the trophon installed base, expanded geographical reach and significant investment in both local and international infrastructure and operational capability to support ongoing growth. In addition, advances were made in our research and product development program where we are working on a number of new innovations in infection prevention to meet significant unmet needs.
