The Nanosonics Ltd (ASX: NAN) share price is on the move today, rising as much as 4% in early trade before dropping back to its current level of $6.15 a share, down 0.32%. The share price fluctuations come after the company released an update in relation to the impact of the COVID-19 crisis on its business.
What does Nanosonics do?
Nanosonics is an infection prevention specialist that sells a device called trophon, along with other related consumables and accessories. Trophon is used in hospitals to sterilise ultrasound probes – the device is automated, quick and doesn't require chemicals. Nanosonics is currently growing revenue rapidly in its largest market, the US, along with growth in Asia, Europe and the Middle East.
What did Nanosonics announce?
Nanosonics reported that unaudited sales for 3rd quarter (Q3) of FY20 were significantly up on its prior corresponding period. Additionally, it confirmed its sales of consumables are still in line with the company's pre COVID-19 estimates, however it noted uncertainty for sales throughout Q4.
Nanosonics also noted that it is well positioned to continue to meet demand for its products, thanks to close management of its supply chain with increased inventory of raw materials and finished goods.
Investments in research and development across a range of active programs has continued, with measures to reduce non-essential operating costs in Q4. It also has a strong balance sheet with negligible debt and $82 million in cash reserves.
Outlook
Although Q3 was in line with management's expectations, Nanosonics did however flag some potential issues for Q4. As direct access to hospitals becomes increasingly limited, its planned time frame for the adoption of trophon by some hospitals may be longer than expected. As a result, this may produce lower than anticipated growth in its installed base throughout Q4, which will impact the overall growth for FY20.
Nanosonics has, however, implemented measures for digital communication and engagement, with staff also taking necessary safety precautions for any onsite support.
Prior to these COVID-19 developments, Nanosonics announced it was targeting continued growth for its installed base in North America. This morning, however, Nanosonics has reported that the net impact on its revenue and profit for Q4 and FY20 is currently uncertain.
The company is currently benefiting from a relatively strong US dollar as the majority of its business is conducted in the US.
It appears demand for Nanosonics products has remained strong, with disinfection being thrown into the spotlight recently.
CEO Michael Kavanagh said:
Now more than ever the importance of infection prevention has gained prominence not only within the healthcare community but across the broader community. Our focus is on the safety of our employees as well as the support for our healthcare customers and their patients.
