COMPUMEDICS LIMITED BUSINESS UPDATE: APPENDIX 4D RELEASE – CMP RESULTS FOR THE SIX MONTHS ENDING 31 DECEMBER 2010
CMP present results for six months ending 31 Dec 2010 – delivered a solid performance
To view the CMP:ASX 31 Dec 2010 Presentation CLICK HERE (PDF)
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Dear Compumedics investors,
On behalf of the Board, management and Compumedics team, I present to you the Company’s results for the six months ending 31 December 2010.
Firstly, I would like to affirm that, despite an extraordinary economic environment for manufacturing and exporting medical device products from Australia, Compumedics has delivered a solid performance. The Company has advanced its key growth strategies in the face of hurdles not characteristic of ‘business as normal’. In particular, the adverse shift in foreign exchange rates relative to the Australian dollar required the Company’s management to focus on strengthening our business model in conjunction with staying the course on our fundamental growth strategies. The growth strategies are delivering proven outcomes and a number of new strategic alliance opportunities are under review. Importantly, the Company is expanding its sales and marketing forces, to transition the business from a predominantly technology focus to a sales and marketing focus, driven by the growing demand for our proven world-class products. Concurrently, we will continue to actively seek strategic alliances to expedite the commercialisation of our rich sleep, neurology and Doppler blood-flow intellectual property portfolio and technologies.
Additionally, the Company will focus on further strengthening its balance sheet in terms of continued productivity enhancements, scaling-up of sales and implementation of effective cost-disciplines.
6-month December-2010 financial performance highlights:
- Total revenues were $15.2 million, down 4%. In constant currency (that is, restating FY10 revenue at FY11 FX rates) H1 FY11 sales were up 5% compared to H1 FY10.
- Compumedics’ sales of diagnostic equipment held steady as reported at $13.4 million. In constant currency diagnostic equipment sales in H1 FY11 were up 9% compared to H1 FY10.
- Compumedics’ new Neuvo® long-term EEG monitoring (LTM) system achieved initial sales in the USA of $0.5m in H1 FY11.
- Loss after tax of $1.1m impacted by adverse $1.6m FX charge in H1 FY2011 due to currency movements compares to profit after tax of $0.3m in H1 FY2010.
- Cash position held steady at $1.4m at 31 December 2010 compared to $1.8m at 30 June 2010.
6 month December-end financial performance details:
Revenue history – Actual reported sales for the half year to 31 December compared to constant currency revenues at FY2011 exchange rates
ASX Graph 1 – 280211
EBITDA history – Actual reported EBITDA for the half year to 31 December compared to EBITDA with period-end unrealised FX adjustments removed
ASX graph 2 – 280211
From a strategic perspective, a number of important achievements and milestones covering home-sleep-testing (HST) advancements, Long-Term EEG Monitoring (LTEM) developments, global sales force expansion, China market developments, business model enhancements, and the growing demand for sleep and neurology monitoring products, are outlined here:
Compumedics was awarded (ASX:CMP; 7 Dec 10) the prestigious Harvard Medical home-sleep-testing study headed by Professor Redline (Sleep Heart Health Study Research Leader), confirming Compumedics’ success and commitment to this newly emerging market.
Compumedics offers the only integrated platform of its kind, enabling modular, home-sleep-testing from a type-IV (3 channels) system to American Academy of Sleep Medicine compliant type I (more than 16 channels) system, complete with integral battery, wireless, and web-monitoring capabilities.
Long Term EEG Monitoring (LTEM) Advancements:
Compumedics was awarded (ASX:CMP 1 Dec 09) the widely sought LTEM contracts to supply the University Medical Centre Freiburg, and the University of South Alabama Medical Centres providing important reference centres for the European and USA markets, respectively.
The Compumedics’ LTEM system represents the culmination of fusing the best of Compumedics’ clinical and Neuroscan® research technologies into a clinical solution offering unsurpassed signal quality and analysis capabilities, including the industry gold-standard CURRY® source-reconstruction (brain-mapping) software.
Global Sales Force Expansion:
The Company’s USA sales-force has undergone substantial expansion during the past financial half-year.
The European sales-force has undergone expansion during the past financial half-year, including the commencement of direct sales representation in France.
China Market Focus:
Australia’s close proximity and excellent trading relationships with China, coupled with Compumedics’ well established reputation and activity within this important growth market, augur well as the Company actively seeks to expand its Chinese strategic alliances and business partnerships. Compumedics’ reputation in this market as a premier supplier of sleep and neurology monitoring systems, coupled with ongoing activity, including the recently announced Chinese Doppler blood-flow contract (23 Dec 10) provide a strong basis to further our Chinese relationships and ongoing business development.
Business Model Foundation:
Patient treatment starts with diagnosis. The growing demand for Compumedics’ patient monitoring systems continues to be driven by the increasing awareness of sleep and neurology health disorders, along with the associated co-morbidities, as outlined here:
Sleep apnoea diagnostic and treatment represents a young market. Additionally, the high prevalence of related co-morbidities has rapidly driven awareness of these disorders since the turn of the millennium1
There are 84 classified sleep disorders
- 1 in 5 adults suffer sleep disordered breathing (SDB)2
- Up to 80% of the SDB population are unaware of the condition, and remain undiagnosed and untreated
- Most people today suffer from sleep deprivation, which remains one of the major health epidemics of the modern age
- Transport drivers with sleep apnoea have a 6-fold increased accident risk3
- 28.1% of truck drivers have sleep apnoea4
- SDB affects about 11%5 of all children
- Obstructive Sleep Apnoea affects 0.7%6 – 3%7 of all children
- 10% of the USA population are likely to suffer a seizure in their life-time8
- More than five million older Americans are living with Alzheimer’s disease or other dementias; a 10% increase in prevalence from just five years ago9
- Most of the population suffers from one of these sleep-related or neurological disorders and, even more concerning, most of these disorders are undiagnosed and sufferers are unlikely to be unaware of their health risks.
From a strategic perspective our go-forward mission is to:
expand Compumedics’ sales force 2 to 3-fold as Compumedics complements its technological leadership with sales and marketing leadership; and
achieve substantial and rapid commercialisation of Compumedics’ new breakthrough sleep-treatment SomniLink® SPAP® technology.
The primary strategic drivers of growth in the core diagnostic business are:
the new market opportunity for LTEM through the release of the Neuvo® system (a USD220m pa global market);
the relatively new USA HST market opportunity; and
the increasing prevalence, awareness and need to diagnose sufferers of sleep and neurological disorders.
In summary, the Board, management and Compumedics’ team remain committed to our strategy to increase revenue through significantly expanding our sales force. Importantly, in order to expedite our progress and traction in the vast markets in which we operate, we clearly understand the need to identify strategic alliance/investor opportunities as we accelerate the commercialisation of our suite of newly released sleep and neurology products. We remain committed to our continued sales and performance focus, our business development efforts, and further productivity enhancements to underpin a sound investment and commensurate returns to our shareholders.
Finally, I would like to thank our shareholders, employees and other Compumedics stakeholders for their support and loyalty as we continue to navigate and reposition our Company for potentially exciting growth ahead.
David Burton, Ph.D.
Refs: Global Industry Analysts, Inc Oct 2010; 2.Young T et al. Am J Respir Crit Care Med, 2002; 3.Teran-Santos J et al. NEJM, 1993; 4.Grubhagavatula L et al. AJRCCM, 2004; 5.Guilleminault and Pelayo Annals of Medicine, 1998; 6.Ali N, et al. Arch Dis Child, 1993; 7. Gislason T et al. Chest, 1995; 8.Epilepsy Foundation, 2010; 9.Osterweil, Medpage Today, 2007
Compumedics Limited, was founded in 1987 by current Chairman/CEO Dr. David Burton and today is a global leader in the design and manufacture of diagnostic technologies for sleep disorders, neurophysiology and cardiology.
In 1987, Compumedics established Asia Pacific’s first fully computerized sleep laboratory. Compumedics holds 80% share of the Australian sleep-diagnostic market, and has a major and rapidly growing presence in the US, European and Asian marketplaces for its sleep, neurological, and Doppler blood-flow diagnostic monitoring devices.
In 1995, the company was selected to supply equipment to the US Sleep Heart Health Study, the world’s largest sleep study of its kind, with over 8,000 participants scheduled by 2008. With headquarters in Melbourne, Australia and offices in the United States, and Europe its products are distributed in over 50 countries.
In 1998, Compumedics was awarded the overall Australian Exporter of the Year.
In 2000, Compumedics was listed on the Australian Stock Exchange.
In 2002, Compumedics acquired US-based Neuroscan – the world’s leading supplier of instruments for brain research. In the US – the world’s largest medical device market – Neuroscan holds around 90% of the market for brain-research products.
In 2003, Compumedics was awarded the Frost & Sullivan Award for Market Expansion Strategy.
In 2004, Compumedics acquired Germany-based DWL Elektronishe GmbH, enabling Compumedics to expand its global operations into the neurovascular and cardio-vascular diagnostic fields.
In 2006, Compumedics was awarded the Frost and Sullivan Technology Leadership award for its innovative Somté® recorder product.
In 2007, Compumedics and its Chairman were inducted into the Victorian Manufacturing Hall of Fame.
In 2008, the DWL division received a top 100 German Innovation award. With 20,000 systems installed globally across the finest hospital, universities and clinics Compumedics sales have grown more than 4-fold from $9 million (1999) to $39 million (2008).
In 2009, Compumedics was awarded a design award for its GRAEL® PSG/EEG premium laboratory-based product.
In 2010, Compumedics was recognized by the Australian Innovation Government and Industry body as one of Australia’s Top 100 Health Innovators through its’ world leading devices for sleep diagnostics.
Visit : www.compumedics.com for more information
For further information please contact:
Compumedics CEO/Chairman: Dr. David Burton
T: + 61 3 8420 7300
Bourse Communications: Mr. Rod North
T: 03 9510 8309 / M: 0408 670 706
Investors: CMP.ASX (ASX.COM)