SomnoMed's Q4 FY24 Report Shows Revenue Growth and Strategic Updates
SOM (SOM) Share Update July 2024 Tuesday 23rd
SomnoMed Reports Strong Q4 FY24 Performance and Key Operational Updates
SomnoMed Limited (ASX: SOM), a leader in oral appliance treatment solutions for sleep-related breathing disorders, has released its quarterly activities report for Q4 FY24, showing notable revenue growth and significant operational updates.
Instant Summary:
- FY24 unaudited revenue of $91.7 million, up 9.6% from the previous year.
- Q4 FY24 revenue of $24.1 million, a 2.5% increase from the previous corresponding period.
- EBITDA guidance revised upwards to between $0.3 million to $0.8 million.
- Completion of cost reduction initiatives, resulting in annual savings of $5 million starting Q1 FY25.
- Appointment of new key executives in manufacturing and regulatory affairs.
- Repayment of debt facility, saving $1.7 million in annual interest costs.
- Total patients treated by SomnoMed worldwide now exceeds 915,000.
Financial Performance
SomnoMed Limited reported unaudited revenue of $91.7 million for FY24, reflecting a 9.6% increase compared to the previous year. This growth exceeded the top end of their revised guidance of 6-9%. For Q4 FY24, the company achieved revenue of $24.1 million, marking a 2.5% increase from the previous corresponding period. In constant currency terms, the revenue growth was 5.5% for the full year and 3.0% for the quarter.
EBITDA guidance for FY24 has been revised upwards to a range of $0.3 million to $0.8 million, excluding an estimated $3 million in restructuring costs. This is a significant improvement from the previous guidance of -$1 million to $0 million.
Operational Updates
SomnoMed has completed its planned cost reduction initiatives, which were announced at the AGM in November 2023 and further detailed in April 2024. These initiatives resulted in restructuring costs of $3 million in Q4, but the company expects annualized savings of $5 million starting from Q1 FY25.
The company also made key executive appointments, with Mr. Jonathan Vowels taking on the role of Vice President of Manufacturing and Operations and Ms. Mary Kennell becoming the Global Director of Regulatory Affairs, effective from 1 July 2024.
Debt Repayment and Cash Position
SomnoMed has successfully repaid its debt facility with Epsilon Direct Lending, which will result in an annual saving of $1.7 million in interest costs for FY25. As of 30 June 2024, the company had a cash balance of $16.2 million.
Regional Performance
Revenue across different regions showed varied performance. European revenues fell by 2.3% (-1.7% in constant currency) due to increased turnaround times affecting sales in the Netherlands and Germany. In contrast, North American revenue rose by 9.6% (+9.7% in constant currency), and Asia Pacific revenues grew by 8.7% (+9.8% in constant currency), with Australia showing the highest growth rate since Q3 FY21.
Rest Assure® Technology and Future Plans
The company continues to work on its Rest Assure® technology, addressing areas where the US FDA has requested further information. SomnoMed expects to respond to the FDA by 5 September 2024. Additionally, the company is preparing for a further submission to the US Pricing, Data Analysis, and Coding (PDAC) to expand reimbursement coverage, including Medicare, for its SomnoDent® products.
The positive revenue growth and upward revision of EBITDA guidance are likely to boost investor confidence in SomnoMed. The completion of cost reduction initiatives and the repayment of the debt facility will further strengthen the company's financial position, potentially leading to a positive impact on the stock price. The strategic appointments and ongoing investment in technology and regulatory approvals indicate a forward-looking approach that could yield long-term benefits.
Investor Reaction:
Analysts and investors have reacted positively to SomnoMed's Q4 FY24 report. The upward revision in EBITDA guidance and the completion of cost reduction initiatives have been particularly well-received. The repayment of the debt facility and the resulting interest savings are also seen as significant positives for the company's financial health.
Conclusion:
SomnoMed's Q4 FY24 report highlights strong financial performance and strategic operational updates that position the company for future growth. Investors should keep an eye on the company's progress with its Rest Assure® technology and regulatory approvals, as these could further enhance its market position. Overall, SomnoMed appears to be on a solid path, making it a stock worth watching.