Nanosonics share price crashes 14% on first-half profit crunch

Investors haven't responded positively to the release of the company's half-year results.

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The Nanosonics Ltd (ASX: NAN) share price is having a tough start to the week.

In late trade, the infection prevention company's shares are down 14% to a 52-week low of $2.69.

This follows the release of its half-year results this morning.

Nanosonics share price sinks on profit crunch

  • Revenue down 2% to $79.6 million
  • Operating expenses up 12% to $60.8 million
  • Profit after tax down 40% to $6.2 million
  • Global installed base increased by 1,100 units to 33,550 units,

What happened during the half?

For the six months ended 31 December, Nanosonics' total revenue was down 2% over the corresponding period to $79.6 million. This was attributable to lower than anticipated capital unit sales due to delays in hospital capital budget availability.

Capital revenue was down 15% to $21.9 million for the half, which offset a 4% lift in consumable and service revenue to $57.7 million.

Although Nanosonics reported a small increase in gross margin due to currency tailwinds, its operating margin didn't fare as well.

The company's operating expenses grew 12% over the prior corresponding period to $60.8 million. Though, this includes investments being made in preparation for the commercialisation of the company's new endoscope reprocessing platform, CORIS.

A number of productivity initiatives are now underway across the organisation which will see operating expenses for the year reducing from the 17% to 22% growth outlook to between 9% and 11% growth.

In light of its softer revenue and higher expenses, Nanosonics' profit after tax tumbled 40% to $6.2 million. This includes a $1.3 million income tax benefit, compared to a $1 million expense a year ago.

Management commentary

Nanosonics' CEO, Michael Kavanagh, acknowledged that the first half was challenging. He said:

The first half of FY24 brought a number of market challenges resulting in lower than expected capital sales despite a growing sales pipeline for both new installed base and upgrades. This was seen to be driven by customers deferring purchases due to hospital capital budget constraints. This particularly impacted our expected growth in trophon upgrade volumes as customers extended the use of their original trophon EPR unit.

Despite the market challenges faced in the first half, we expect both unit and revenue growth in H2 over H1. We remain confident in the ongoing growth opportunity of our trophon ultrasound reprocessing business as well as our broader growth opportunities through the investments being made in both product and geographical expansion.


Total revenue for the second half is expected to grow between 6% to 15% over the first half. This will mean full year revenue of between $164 million and $171 million, compared to $166 million in FY 2023.

This is expected to be achieved with a gross profit margin of 76% to 78% and operating expense growth of 9% to 11%.

The Nanosonics share price is now down 40% over the last 12 months.

Motley Fool contributor James Mickleboro 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. The Motley Fool Australia has positions in and has recommended Nanosonics. 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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