The Nanosonics Ltd (ASX: NAN) share price is steaming higher today after the company revealed a strong first half to financial year 2017. Below is a summary of the results.
- Sales of $36.1 million, up 33% on the prior half
- Operating profit before tax of $10.1 million, up 203% on prior half
- Cash on balance sheet of $56.9 million
- Company recorded a net income tax benefit for the period of $11.7 million
- Sold 2,000 more units in North America over the period taking total to 10,700
- Now has 12,300 units installed globally
This looks another spectacular half of growth for the hospital equipment specialist that has now established a strong and profitable North American business with the opportunity to expand globally.
Market-leading medical device businesses have some attractive qualities in that they have huge globally addressable markets, decent barriers to entry and the ability to command price premiums due to the nature of their products. Others that can already boast of blockbuster success include Cochlear Ltd (ASX: COH), ResMed Inc. (CHESS) (ASX: RMD) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH).
Some of the senior management at Nanosonics are former Cochlear employees and the impressive results delivered suggest the company may have a lot of growth ahead of it yet. So far it has largely been focused on selling into the lucrative U.S. market, but today it flagged an extended focus on growing in large European markets like the UK, France and Germany. While Australia, Asia and the rest of the world also offer plenty of opportunity to replicate its U.S success.
The only problem is that Nanosonics' big potential is no secret with the company valued at $834 million after shares climbed 2.9% to $2.88 in morning trade. Investors then are paying more than 40x annualised operating profits, which leaves little margin for error for the company in delivering on its strong growth potential.
