Shares in Polynovo Ltd (ASX: PNV) are trading lower today. This comes despite the medical device company delivering a solid half-year trading update just one day earlier.
On Monday, the Polynovo share price finished almost flat, down just 0.41%, as investors digested the announcement. However, selling pressure has returned on Tuesday, with the stock now down 7.5% to $1.11.
That leaves Polynovo shares down almost 50% over the past 12 months. It marks a sharp reversal for a company that was once one of the ASX's standout growth stories in the healthcare sector.
So, what did the company report, and why has the update failed to lift the share price?
What did Polynovo report?
Polynovo said it delivered another strong half-year, with sales continuing to grow.
Total sales for the six months reached $68.2 million, up 26% on the same period last year. Growth was broad-based, led by the United States, where sales rose 25.3% to $51.7 million.
The company's main product, NovoSorb MTX, also performed strongly. Sales jumped to $6.2 million, up 195% from a year earlier, as more hospitals used it to treat burns and complex wounds. Sales outside the US rose 28.3%.
Including government BARDA revenue, total group revenue increased 17.6% to $70.4 million.
Cash flow improved, with Polynovo generating $9.5 million in operating cash, compared with a $12.5 million outflow a year earlier. The company ended December with $29.3 million in cash and access to additional funding if needed.
So why is the share price falling?
Despite the solid numbers, the update was largely in line with what the market expected.
After a tough year for the share price, investors are looking for clearer signs that growth can pick up, especially in the United States, which is Polynovo's most important market.
Some investors are also cautious about timing. The company is still working through key approval and reimbursement steps in the US, including progress with Medicare.
Until there is more certainty around these milestones, some investors are choosing to stay on the sidelines.
What it means for investors from here
Polynovo's share price has been falling for much of the past year, well before this update was released. From that perspective, Tuesday's drop looks more like a continuation of weak sentiment than a direct response to the results.
That said, the business is still growing, generating cash, and expanding its products into new markets.
For long-term investors, the key issue is whether that growth can turn into steady profits and restore confidence in the stock. Until then, share price swings are likely to continue.
