BUSINESS UPDATE : APPENDIX 4D RELEASE – SOLID PROFITABILITY, GROWTH & EFFICIENCY GAINS CONTINUE
PERFORMANCE HIGHLIGHTS H1 FY19
- Shipped and invoiced sales increase 16% over H1 FY18 from $16.1m to $18.7m (12% on a constant currency basis)
- Asia-based sales increase 37% over H1 FY18 sales (24% on a constant currency basis) and USA-based sales increase 19% over H1 FY18 sales (11% on a constant currency basis)
- Germany-based DWL experienced a 51% lift in sales compared to H1 FY18 (35% on a constant currency basis)
- Profitability (EBITDA) improves to $1.5m for the six months to 31 December 2018 compared to $1.1m for H1 FY18, driven by sales growth at a constant gross margin of 58%
- Sales orders taken were $18.7m for the six months to 31 December 2018 resulting in sales orders on-hand at 31 December 2018 of $7.3m compared to $6.9m at 30 June 2018
- Profitability grows, with growing sales in key markets in Asia, USA and Europe
- Selective investment has been undertaken to grow the sales and marketing capability of the Company
- Continued product innovation and development
- Compumedics/Neuroscan continues to build its new Orion MEG system, with KRISS, its Korean partner, for expected installation at USA-based Barrow Neurological Institute in H2 FY19
- The Company continues to pursue other near-term identified Orion MEG opportunities
- Nexus 360: sites continue to be added
- Somfit® consumer sleep device: discussions continue with a number of third parties
- Remains as: Sales $40m-$42m, EBITDA $5.5m-$6.5m, NPAT $4.0m-$5.0m
Compumedics Limited (ASX: CMP) (“Compumedics” or “Company”) wishes to announce its financial results for the half-year ended 31 December 2018 (H1 FY19).
During the period H1 FY19, Compumedics generated revenues of $18.7m, representing a 16% increase over the previous corresponding period (pcp) of $16.1m, primarily due to organic growth in the Company’s key markets in Asia, the USA and Europe.
The improvement in the profitability of the Company compared to the pcp was primarily as a result of the growth in revenues across the key markets the Company operates in, whilst maintaining margins constant at 58%. The profitability improvement was partially offset by ongoing investments in sales and marketing, the ongoing investment in the development of new and innovative products for the core sleep and neuro diagnostic and monitoring business, once-off costs associated with the Health 100 negotiations and foreign currency movements.
The following table highlights the key financial performance, comparing H1 and H2 for FY18 and FY19 to guidance:
|H1 FY18||H2 FY18||Total FY18||H1 FY19||H2 FY19*||
Depn & amort’n
* Forecast data, based on current circumstances and information at hand at time the data was prepared
Key points comparing actual H2 FY18 to forecast H2 FY19:
- Orders taken for the core business in H1 FY19 were $18.7m compared to $15.7 for H1 FY18. Carry forward orders booked but not shipped at 31 December 2018 were $7.3m, compared to $6.5m at 31 December 2017
- Despite several delays the Orion MEG sale to USA-based Barrow Neurological Institute is scheduled for completion during H2 FY19
- The USA business is expected to continue to maintain its growth in H2 FY19
- The DWL business is expected to continue to perform at or above budget/pcp in H2 FY19
- New and incremental shipments to Fukuda, Compumedics’ new neuro-diagnostic distributor in Japan, will commence in H2 HY19
Core Diagnostic Medical Devices business separated from Medical Innovation business
Compumedics is pleased to report on the Company’s aggregated and disaggregated financial performance. This is attributable to the Company’s core Diagnostic Medical Devices business and Compumedics’ investment in technologies and products being developed in its Medical Innovation business. The Company believes that providing the investment community with the disaggregated information will give a clearer and more transparent picture of these two distinct Diagnostic Medical Devices and Medical Innovation activities.
The Company’s core Diagnostic Medical Devices business encompasses the technology and products currently sold globally for the diagnosis and/or monitoring of sleep disorders and neurological disorders, and for the monitoring of blood flow through the brain. It also includes products and technology used in advanced brain function research.
Compumedics’ Medical Innovation business primarily includes technologies and products for the consumer monitoring of sleep and subsequent treatment of sleep disorders and less developed technologies for depth of anesthesia monitoring.
|AUDm||Medical Diagnostic Devices||Medical Innovation||As Reported|
|H1 FY19||H1 FY18||H1 FY19||H1 FY18||H1 FY19||H1 FY18|
|EBITDA to revenue||15%||13%||–||–||8%||7%|
|Depreciation and amortisation||(0.2)||(0.1)||(0.0)||(0.2)||(0.2)||(0.3)|
|Net profit after tax (NPAT)||2.1||1.8||(1.3)||(1.2)||0.8||0.6|
|NPAT to revenue||11%||11%||–||–||4%||4%|
Highlights and achievements for the Diagnostic Medical Devices business for the half-year ended 31 December 2018:
- Shipped and invoiced revenues were up 16% to $18.7m for the six months to 31 December 2018, compared to $16.1m for the prior corresponding period. On a constant currency basis revenues were 12% higher
- Revenue growth was achieved in the DWL business in USA and Asia, as well as the Sleep and Neurology business in Asia and the USA
- EBITDA for H1 FY18 was $1.5m compared to $1.1m in the pcp, despite some one-off expenses and further investment in sales and marketing and new product development
- Operating cash flows for the half-year to 31 December 2018 were $2.0m, compared to $(0.2)m for the half-year to 31 December 2017
- Cash on hand at 31 December 2018 was $4.3m compared to $3.9m at 30 June 2018, whilst debt was $1.8m at 31 December 2018, compared to the $1.9m of debt at 30 June 2018
Highlights and Achievements for the Medical Innovation business for the half-year ended 31 December 2018:
- Compumedics/Neuroscan is scheduled to ship the new Orion MEG system, at USA-based Barrow Neurological Institute during H2 FY19
- Continues to pursue other near-term Orion MEG opportunities
- Compumedics is continuing to sell its Nexus360, cloud-based sleep diagnostic platform in the USA
- Now expanding to other parts of the world
- Detailed discussions with third parties continue in relation to the company’s SomFit® consumer sleep platform
- The Company continues to progress a number of other technology opportunities currently residing within the Medical Innovation division, including the eHealth technology, and will make further announcements when appropriate
Key Growth Opportunities
The Company is continuing to focus on a number of initiatives to underpin both current and future growth, including:
New product platform roll-out to significantly expand addressable market
- The Company is continuing to develop its neuro-diagnostic business in the US and China, as well as other key markets around the world
- The Company will over the next 12 months launch two new major product platforms for home sleep-testing for the sleep market, as well as a new range of laboratory and portable neuro-diagnostic and monitoring devices for epileptic and well as general neurological monitoring
Neuroscan moves into much larger brain analysis imaging market
- Compumedics is well advanced with the production of its first Orion MEG sale scheduled for installation at USA-based Barrow Institute of Neurology during H2 FY19
Growth in international sales with expansion plans in the USA, Germany and China markets
- The Company will continue to expand its USA sales team in order to grow market share in both sleep and neurological diagnostic and monitoring markets
- In Germany the Company will pursue sales resources for both sleep and neurological diagnostic and monitoring markets
- In France the Company is currently expanding its sales team in H2 FY19
- The Company will continue to build on its long-term relationships in China to continue to grow the Company’s businesses in the region
eHealth: Developing the commercialisation of cloud-based sleep diagnostics platform
- Compumedics continues the rollout of its professional cloud-based sleep diagnostic platform, Nexus 360, to key sites in the USA and other key markets around the world
- Compumedics is in on-going discussions with several parties regarding the commercialisation of its consumer, cloud-based sleep diagnostic platform, SomFit®, and will update the market as key milestones are met
DWL: Expansion opportunities with the newly granted break-though auto-scan TCD patent to be pursued.
- The Company will continue to develop its technologies around the 3D Transcranial Colour Doppler (3D TCCD)/Duplex and PLL/Robotic imaging, while refining the best way to fully exploit this commercial opportunity
Compumedics expects the identified key growth opportunities to deliver an increase in revenues and earnings in the current financial year.
As a result, the Company expects its full-year results to be within guidance already provided to market. These expected FY19 results are as follows: Sales $40m – $42m, EBITDA $5.5m – $6.5m, and NPAT $4.0m – $5.0m.
This guidance is based on the general economic environment in Australia and the Company’s other key offshore markets – USA, China, France and Germany – remaining broadly as they are at the timing of the release of these results.
About Compumedics Limited
Compumedics Limited (ASX: CMP) is a medical device company involved in the development, manufacture and commercialisation of diagnostics technology for the sleep, brain and ultrasonic blood-flow monitoring applications. The company owns US based Neuroscan and Germany based DWL Elektronishe GmbH. In conjunction with these two subsidiaries, Compumedics has a broad international reach, including the Americas, Australia and Asia Pacific, Europe and the Middle East.
Executive Chairman Dr David Burton founded Compumedics in 1987. In the same year the company successfully designed and installed the first Australian, fully computerised sleep clinic at Epworth Hospital in Melbourne. Following this early success, Compumedics focused on the development of products that sold into the growing international sleep clinic and home monitoring markets.
Compumedics listed on the Australian Securities Exchange in 2000. Over the years, Compumedics has received numerous awards, including Australia’s Exporter of the Year, and has been recognised as a Top 100 Innovator by both German and Australian governments.
For further information please contact:
Dr David Burton
Executive Chairman, CEO Executive Director
Phone: + 61 3 8420 7300
Fax: +61 3 8420 7399
Chief Financial Officer
Phone: + 61 3 8420 7300
Fax: +61 3 8420 7399
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