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Micro-X Ltd (ASX: MX1), an Australian hi-tech company, on 7 April 2020, announced to have received purchase orders valued at $1.2 million for the Carestream DRX Revolution Nano, majorly for Australian customers. Of the total, MX1 secured purchase orders for a total of $1 million for the New South Wales government health agency and other Australian customers, as part of their proposed emergency tender response to the COVID-19 pandemic. This is also the first major sale of Nano units in the Company’s domestic market.
‘Carestream DRX Revolution Nano’ is an ultra-lightweight fully integrated digital mobile x-ray system designed for medical purpose by Micro-X, a leader in cold cathode x-ray technology for health & security markets, worldwide.
Quantum Health – Authorised Carestream Distributor in ANZ
Quantum Health Group Limited (ASX:QTM), through which these orders were secured, is also continuing discussions with other state agencies as well as customers for further orders. QTM is an ASX-listed healthcare distribution company that focuses on delivering first class customer service and clinical support for a large installed base of medical equipment for Asian clients. As the authorised Carestream distributor for ANZ (Australia and New Zealand), Quantum Health acquired its service business in these nations in October 2019. QTM has been working together with Micro-X to develop market interest and respond to often critical enquiries from potential government and healthcare clients in Australia.
Orders for Nano Units
The first order for a Nano unit was placed by The Alfred Hospital, Melbourne in late-November 2019. Post three months of the operational assessment of their first Nano unit, the hospital has now placed an order for a second Nano unit.
Further, MX1 received purchase orders worth ~$0.2 million from European and Asian countries.
Since February 2020, the Company has received total nano orders valued at $3.6 million.
Nano Production ramp Up
According to a Company announcement in the last week, MX1 started a staged major ramp-up in Nano production, given the rising demand for mobile x-ray imaging to meet the imaging requirements of a COVID-19 response. The Company believes that the demand for Nano would sustain for some time. The forward planning by MX1 is directed towards enabling additional purchase orders to be secured, owing to the fact that end users now need the product in shorter delivery times.
Peter Rowland, Managing Director of Micro-X stated that there is a huge demand across the globe for the acquisition of imaging capabilities in response to the COVID-19 pandemic. At present, 12 nations are using this product. He added that the Australian government agencies are preparing themselves to image possibly many more Australian patients. On this front, Mr Rowland stated that their locally developed as well as manufactured high-tech Nano is now assisting Australian citizens in these difficult situations.
He also assured that the Company’s recent investment to boost the production of Nano as well as lessen delivery duration would allow these extra orders to be filled quickly. It would also support the Company to meet the anticipated ongoing demand for fresh orders whenever received.
Quarterly Activities and Cash Flow Report Highlights
On 8 April 2020, MX1 released its quarterly activities and cash flow report for the quarter ended 31 March 2020.
During the quarter, the Company noted significant growth in orders for its product Carestream DRX Revolution Nano in response to COVID-19 demand. Earlier, the World Health Organization defined the criterion for the diagnostic progress of the COVID-19 infection from ‘Confirmed Case’ to ‘Severe Illness’ as a chest X-ray with multi-lobar infiltrates or pulmonary infiltration, which has evolved over 50% within 24 to 48 hours. In this context, the Company had received feedback that the Carestream DRX Revolution Nano is suited well to the workflow of an increased volume of coronavirus imaging in temporary or crowded isolation facilities, as it has mobility, battery strength along with ease of infection control cleaning.
During the March 2020 quarter, the Company receive total orders of Nano for $3 million and post the end-quarter, it again received a purchase order of $0.6 million. The revenue generated by the Company during this period for the completed Nanos was $1.3 million. The payment of these Nanos would be made in the next quarter.
Other Operational & Development Activities
- In February 2020, the Company obtained re-certification of its ISO 13485 Quality Management System from external auditors BSI. Also, the in-house manufactured X-ray tubes remained regular production cycles with yields of ~ 100%. Meanwhile, the Company commenced risk management as well as renewed operational procedures in response to the COVID-19 disease following social distancing, working from home and increased hygiene procedures.
- The Mobile Backscatter Imager project continued to progress in alliance with Thales.
Financial Highlights
During the quarter, net cash used by MX1 in operating activities stood at $3.986 million, with major cash outflow into product manufacturing and operating costs. Other significant sources of cash outflow were staff costs.
Net cash outflow into investing activities and financing activities was noted at $0.128 million and $0.125 million, respectively.
By the end of the quarter on 31 March 2020, MX1 had net cash and cash equivalents of $8.120 million. Further, the Company has total financing facilities of $13 million.
Outlook
In the near future, the Company would focus on scaling its production capacities as well as inventory levels, targeted towards achieving competitive product delivery times and ramped up production output for the Nano at the time when there is a global increase in mobile X-ray procurement to fight against the coronavirus pandemic.
MX1 is of the view that demand will continue to grow in the foreseeable future and by providing shorter delivery duration after receipt of order, Nano sales would remain strong. Further, the Company remains committed towards ensuring that supply chains do not get compromised and orders can meet a 4-week duration to provide support during this health emergency.
Parallelly, the priority of the Company’s engineering team would be starting the formal ISO 60601 electrical & mechanical safety testing plan that is necessary for medical devices.
Stock Information- MX1 was trading at $0.170 on 9 April 2020 (AEST 02:01 PM). The Company has a market cap of $42.5 million and ~ 250.02 million outstanding shares. The last five days’ return of the stock was noted at 30.77%.
