Bod share price surges 5% on record revenue growth

The Bod Australia Ltd (ASX: BDA) share price is surging today on positive numbers from the company’s quarterly report. We take a look at some of the details.

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The BOD Australia Ltd (ASX: BDA) share price popped 8% today after the release of the company’s recent quarterly activities report, which outlines a record quarter of revenue growth. Bod shares have since pulled back slightly to be sitting at 27 cents per share, up 5.88% on yesterday’s close.

What does Bod do?

Bod Australia is a cannabis-centric healthcare company. Founded in 2014, the company is a developer, manufacturer, distributor and marketer of plant-based natural health supplements and beauty solutions. In late 2016, the company pivoted to focus on cannabis as the market environment improved, developing over the counter and therapeutic products based on good manufacturing practice (‘GMP’) certified cannabis extracts.

Bod recently launched 9 hemp-based products in collaboration with Swisse Wellness, which are being distributed to more than 2,000 leading retailers such as Coles, Priceline and Chemist Warehouse in Australia. The company also operates in the UK.

What is driving the Bod share price higher?

The Bod share price is rising on news that the company has achieved sales revenue of $2.74 million in the quarter ended June 2020. That represents a huge increase of 118% on the previous quarter (Q3 FY 2020). Most impressive, however, was the huge 358% increase in revenue to $6.14 million during FY 2020. The company also announced that cash used in operating activities continued to decrease as revenue from sales increased. 

Bod reports that revenue growth has been driven by unprecedented demand for CBD, hemp products, new international market entries and Bod’s strong relationship with H&H Group Limited. Furthermore, Bod continued to reduce its cash burn during the quarter to $730,000, marking an 11% decrease on the previous quarter.

Commenting on the results, Bod CEO Jo Patterson stated:

This is a great result for Bod and validates the strategic investments made towards key growth opportunities over the past 12 months. Most importantly, Bod now has two core divisions that are generating growing, diversified and sustainable revenue streams and we enter FY2021 with considerable momentum.

New cannabis prescriptions

Adding to the positive sentiment around the Bod share price is the confirmation in today’s announcement that the company has received its first medicinal cannabis prescriptions in the UK. The prescription came from a leading medicinal cannabis organisation, which has a number of clinics in London and the UK.

The UK has approximately 7.3 million consumers using CBD annually and represents a major market opportunity. According to the release, it is estimated this market will grow to be approximately four times larger than Australia’s market by 2028.

Bod also received a prescription from Project Twenty21, Europe’s largest medicinal cannabis registry, targeting 20,000 patients.

What now for Bod?

Looking forward, Bod reports it is focused on delivering important growth objectives via international market and product expansion initiatives. The company has a strong cash balance of $6.3 million, which gives it near-term flexibility and should allow it to pursue growth drivers. The company also confirmed it has not experienced any adverse effect on operations from COVID-19 thus far.

The Bod share price has been on a tear since its lows in March, gaining 125%, however, it remains down around 42% on this time last year.

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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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