Healthcare company, SomnoMed Limited (ASX: SOM) today (i.e., 29 January 2019) announced that its core revenues have increased by 13 percent in the Q2 FY 2019 as compared to the prior year, reaching $15.675 million for the three months period.
In the US, the company recorded the revenue growth of 10 percent in Q2 FY 2019. For the same period, the company’s group revenues decreased by 3 percent due to Renew Sleep Solutions (RSS) business revenues declining by 52 percent in its final quarter of operations.
As per the announcement, the 10% business revenue growth in the North American has confirmed the view that this region will continue to recover and grow again in the wake of the RSS closure.
According to the Global CEO of SomnoMed, Mr. Neil Verdal-Austin, this quarter has been very disruptive due to the decisions made during the latter part of 2018. He told that the management of the company is pleased with the company’s core business growth and overall direction, which will show half-year revenues of $28.8 million (unaudited) and a 15 percent growth over the prior year.
In Europe, the company’s business reported 14 percent revenue growth for Q2 FY 2019. The revenue growth was slightly below the company’s expectations due to the December month being softer than anticipated. The business in Europe was impacted by the political disruptions in France which caused some logistical upheavals, and there were some delays in recognizing some Swedish revenues due to technical laboratory issues, which have since been corrected.
As per the announcement, the volume growth of Finland, Spain, and the UK was very encouraging, and the outlook for Europe remains very positive into the second half of FY 2019. The APAC (Asia-Pacific) region reported revenue growth of 22 percent in the second quarter, with strong results from Australia.
The Renew Sleep Solutions (RSS) has shut down their business in the US, and all centres treated their last patients to 31st December 2018. Over the next six months, RSS will continue to wind down, and the company will negotiate to exit or sublease the contracted premises leases across all centres.
The Company’s core business generated an unaudited EBITDA of $1.3 million for the first half of FY 2019 which was 60% higher than the prior year. The EBITDA includes an allocation of the one-off group corporate overheads of $300k relating to the severance payment to the former CEO. In the first half of FY 2019, the Renew Sleep Solutions generated EBITDA losses of $7 million (unaudited), resulting in the group’s net EBITDA loss being $5.65 million (unaudited).
During Q2 2019, the company generated $1.5 million in operating cash from which the core business generated $2.7 million while the RSS cash losses totaled $1.2 million. At the end of December 2018, the company had a cash position of $8.5 million.
In the past six months, the share price of the company decreased by 20.19 percent as on 24 January 2019. SOM’s shares traded at $1.690 (-0.588% intraday) with a market capitalization of circa $106.77 million as on 29 January 2019 (AEST 2:43 PM).
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