Nanosonics share price lifts despite FY22 profit tumbling 57%

The healthcare stock is trading in the green following the release of its full-year earnings.

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Key points

  • The Nanosonics share price is gaining today, lifting 2.52% to trade at $4.88
  • It comes after the company posted a 17% improvement in full-year revenue 
  • However, its operating after tax profit fell 57% while its EBITDA slumped 51%

The Nanosonics Ltd (ASX: NAN) share price has rebounded from its earlier fall after the company released its full-year earnings.

The S&P/ASX 200 Index (ASX: XJO) healthcare stock opened at $4.53 this morning, marking a 4.8% tumble.

It has since recovered to trade at $4.88, 2.52% higher than its previous close.

Nanosonics share price lifts on FY22 earnings

Here are the key takeaways from the disinfection technology-focused company's financial year 2022 (FY22) results:

  • Revenue came to $120.3 million – a 17% improvement on that of the prior corresponding period (pcp)
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) fell 51% to $7.5 million
  • Operating profit after tax fell 57% to $3.7 million
  • Gross profit lifted 14% to $91.9 million
  • Gross profit margin fell slightly to 76.4% – ahead of guidance – on higher freight costs
  • Ended the period with $94.5 million of cash and equivalents and no debt

The company's revenue lifted on continued growth in its new installed base, upgrades, and consumables and service.

Its operating expenses also rose to $90.5 million as the company continued to invest in its growth strategy, research and development, and its revised North American sales model, as well as geographical expansion and its capabilities and capacities.

Finally, supply chain issues saw it increasing its inventory holding by 91%.

What else happened in FY22?

The major news from the company last financial year was the decision by Nanosonic and GE Healthcare to revise the ASX 200 company's North American sales model to one that is mostly direct. The Nanosonic share price fell 5% on the back of the news.

Under the new agreement, GE transferred all its trophon customers to Nanosonics for the provision of all consumables. In addition, Nanosonics was made responsible for the majority of capital sales while GE still has access to capital equipment as a non-stocking capital reseller.

It also established partnerships to allow it to sell directly to US federal government accounts.

What did management say?

Nanosonics CEO and president Michael Kavanagh commented on the company's earnings, saying:

The 2022 financial year was an important year in the ongoing growth of the organisation through the successful implementation of a number of key strategic priorities.

Central to these was the successful evolution of our sales model in North America to an expanded and largely direct model. Nanosonics now manages all trophon customers directly for the ongoing provision of consumables. This largely direct sales model aims to capture the full market opportunity for trophon in North America as well as prepare for future product expansion plans.

What's next?

Nanosonics is targeting revenue growth of between 20% and 25% in FY23.

It also believes its gross margin will come in at between 75% to 76%. That's expected to be driven by an increase in the proportion of capital revenue resulting from growth in the sales of both new installed base units and unit upgrades, continued higher freight costs, and increased component costs.

Its operating expenses have also been tipped to grow between 15% and 18%, mostly due to market development activities and product innovation.

Nanosonics share price snapshot

This year has been tough on the Nanosonic share price.

It has fallen 26% since the start of 2022. It's also 19% lower than it was this time last year.

For comparison, the ASX 200 has fallen around 8% year to date and 6% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Nanosonics Limited. The Motley Fool Australia has positions in and has recommended Nanosonics Limited. 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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