The Nanosonics Ltd (ASX: NAN) share price is dropping on Wednesday.
In morning trade, the infection prevention company's shares are down 1.5% to $3.74.
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Why is the Nanosonics share price falling?
The weakness in the Nanosonics share price on Wednesday has been driven by the release of a business update.
This update was in relation to the company's direct sales model transition in North America which was announced in February.
According to the release, the direct sales model transition is progressing well with the transfer of GE customers currently in progress and a significant number of accounts already set up by Nanosonics.
The release notes that GE has been supporting Nanosonics with the transition by communicating with all of their trophon customers about the new arrangements being implemented for the ongoing provision of trophon products.
Furthermore, the relevant GE customer data has been supplied to Nanosonics and the company has communicated with all these customers to set up direct trading accounts. A significant number of these accounts are now in place. Management expects that the transition will be completed for the majority of customers by 30 June 2022.
Also supporting the transition will be a number of former GE High Level Disinfection team members that have joined Nanosonics. These include the previous Head of the GE High Level Disinfection team, a GE operations lead who was responsible for the supply and logistics of trophon products to all GE customers, and a number of sales managers.
Trading update
During the third quarter, Nanosonics' global installed base grew to 28,900. This is up a modest 2.6% from 28,160 units at the end of December. It could be this subdued growth that is weighing on the Nanosonics share price today.
Nevertheless, management revealed that it expects its full-year revenue to be in line with current market consensus estimates.
Furthermore, Nanosonics' Chief Executive Officer and President, Michael Kavanagh, believes the transition will benefit the company. He commented:
The continued transition to a more direct sales channel model in North America brings many benefits to Nanosonics and its customers. Our North American team can now manage the overall growth strategy associated with new installed base, upgrade adoption and consumables usage. This deeper relationship with our North American customers together with our corresponding infrastructure expansion also supports planned product expansion beyond trophon.
We are very pleased with the ongoing progress being made with the transition to the updated sales model. Our North American team and the GE healthcare ultrasound team continue to collaborate well ensuring the current and future infection prevention needs of all customers and their patients are fully met.
