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Here’s why the Next Science (ASX:NXS) share price is sinking 6% lower

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The Next Science Ltd (ASX: NXS) share price is out of form and sinking lower on Tuesday.

At the time of writing, the medical device company’s shares are down 6.5% to $1.40.

However, despite this decline, the Next Science share price is still up 16% since the start of the year.

Why is the Next Science share price sinking today?

Investors have been selling Next Science shares today following the release of its first quarter update.

For the three months ended 31 March, the company reported unaudited revenue of US$2.2 million. This is almost five times greater than the US$0.45 million it recorded in the prior corresponding period.

However, it is down slightly from US$2.3 million during the fourth quarter of FY 2020. It could be this lack of quarter on quarter growth that is weighing on the Next Science share price today.

Management notes that the US healthcare market continued to be impacted by the high presence of COVID-19 during the quarter. This was particularly the case in January, when the impact on surgery numbers was heavier than the previous four months.

Nevertheless, despite the COVID conditions, its SurgX product continues to attract surgeon interest and support in the market.

What about cash receipts?

Next Science’s cash receipts were strong during the half. They came in at US$3.4 million for the three months. Though, with the company reporting cash receipts of only US$0.28 million in the fourth quarter on revenue of US$2.3 million, it appears as though there may have been a bit of lag in receipts.

This ultimately led to the company only burning through US$0.2 million of cash during the quarter, which left Next Science with a cash balance of US$15.1 million.

Next Science’s Managing Director, Judith Mitchell, said: “I am pleased to report that our Q4 FY20 run rate has continued and cash receipts for the quarter were also strong and we continue to see progress with the review of XPerience with the FDA.”

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nexus Energy Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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