Polynovo (ASX:PNV) share price stung 4% as H1FY22 net loss wreaks havoc

Shares in Polynovo are falling today as the company released its financial results for the half-year ended 31 December 2021.

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Key points

  • Polynovo released its half-year earnings today
  • Most of the strength was witnessed in its US markets, and the company recognised a record result at several levels 
  • In the last 12 months, the Polynovo share price has collapsed over 58% 

Shares in Polynovo Ltd (ASX: PNV) are falling today after the company released its interim report and financial results for the half-year ended 31 December 2021.

At the time of writing, the Polynovo share price is tanking 4% in the red at $1.01 after releasing its earnings today.

Polynovo share price spikes amid earnings growth

Key takeouts from the company's earnings results today include:

  • Reported revenue of $18.15 million signifying a gain of 41.9% on the same period last year
  • US Q2 sales was a record A$8.06 million signifying a gain of 105% Year on Year (YoY)
  • US NovoSorb BTM sales for December also came in at a record A$3.4 million and were up 76% YoY
  • 1H FY22 sales for the US were A$14.20 million and represented a 58% YoY growth
  • Group NovoSorb BTM sales came in to $16.27 million and grew 44.6% over the prior period
  • Group underlying profit after income tax was $1.618 million, up from a loss of $3.57 million in December 2020
  • Reported net loss after tax of $1.7 million when excluding non-cash items

What else happened this half for Polynovo?

Polynovo had a mixed set of results but strengths were predominantly seen in its US markets during this half. US revenue was up 58% for the period leading to all-time highs for sales in November 2021 and then again in December.

Total product sales were up 45% year on year whereas spending on research and development grew by 86%. As a result of its performance, the company recognised NPAT of $1.6 million.

However, when excluding non-cash items on the company's income statement, Polynovo actually reported net underlying loss after tax of $1.7 million.

The company is also playing an active role over its supply chain management in order to "counteract any demand planning and supply chain issues".

"We updated our cash flow forecasts to include the impact of changes in costs" it said, with respect to the supply chain issues currently plaguing global industry.

Positive sales momentum from the US has spilled over into the new year, such that the group has recorded another set of record results in January 2022. Sales of A$3.7 million have jumped 96% on the same time last year and are leading this growth.

It also added another 35 new accounts in 1H22, bringing the total number of accounts to 154 at the time of its half-year report today. Of this amount, 16 were added in Q1 FY22 and another 19 in Q2.

In its UK markets, first half sales of $369,000 were up 255% on the same time last year "but less than target", the company says.

Management commentary

In his director's report, Polynovo Chairman, David Williams remarked:

COVID-19 has led to new ways of working to allow remote working, virtual sales contacts, virtual conferencing, and protocols to ensure our profile in the market and demand generation continues to grow. All markets have been impacted to varying degrees by the lack of access to hospitals and medical professionals, and the reduction in procedures taking place with the biggest impact in UK and Ireland (UKI) and Europe, Middle East, and Africa (EMEA). Notwithstanding, the Group achieved 45% BTM sales growth globally and notably US revenue was up by 58% in the period to 31 December 2021 when compared to the comparative period. The Group continues to recruit sales and marketing staff to drive sales. The Company sees significant revenue upside in expanding its salesforce.

What's next for Polynovo?

The company outlined its "focus points for 2H22 and FY23" in the release today. It wants to increase sales teams to drive sales efforts, optimise both its distributor model and emerging markets model whilst expanding its footprint into other markets.

Not only that, but Polynovo is aiming to "expand Key Opinion Leader program (especially UK & EU)" and "focus on product development and faster commercialisation" in the coming periods.

Since 31 December 2021, the group recorded BTM sales of A$4.05 million in January 2022, exceeding the $4 million barrier in monthly sales for the first time in its history.

It's also added 10 more customers in the US, bringing the total to 164 and anticipated a strong recovery in ANZ markets.

Polynovo share price snapshot

In the last 12 months, the Polynovo share price has collapsed over 58% and is down 31% this year to date. During the past month of trading, shares have collapsed another 22% and are trailing the major indexes in 2022.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended POLYNOVO FPO. 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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