Shares of Nanosonics Ltd. (ASX: NAN) rose marginally today after the company released its full-year earnings results to the market. There were few surprises from the report, although investors may wonder what to make of the sales result.
So What: Nanosonics is a Sydney-based medical equipment producer which develops products designed for infection control as well as decontamination of utensils in the medical field. Its key product is the Trophon EPR ultrasound probe disinfector which significantly reduces the chance of infections being spread between patients.
Management said that more than 5,000 of its Trophon units were now installed across 1,900 facilities in the United States (including 43 of the nation's top 50 hospitals) while sales in Australia, New Zealand and Europe also remained strong with the group reporting total sales of $22.2 million for the year – a 3.4% increase on the prior year.
While this might look modest at first glance, the result was to be expected after the company established a direct sales operation in North America in the second half of the year. Sales growth was strong during the first half and, encouragingly, picked up again in the June quarter compared to the March quarter.
The company's investment in a direct sales system as well as a move to upgraded facilities caused operating expenses to increase 16% year-over-year to $23.4 million, while the net loss more than doubled to $5.5 million. Still, the company ended the period with $45.7 million cash on hand, giving it a nice safety buffer.
Now What: Of course, it will take time to determine whether taking sales in-house was the right move by management but although there are certainly risks to such a strategy, it is a move that could reward shareholders well over the long run.
With Nanosonics' shares currently changing hands for just over $1.70 – down nearly 16% from their 52-week high – now could be a great time to load up on the company's shares for the long haul.
