Medical technology company, dorsaVi Ltd (ASX: DVL) is planning to make some operational changes to reduce its operating costs, build revenue and sales capability, and optimize cash reserves.
In an announcement made on 15 March 2019, the company has disclosed the results of an internal review following the release of its half-year financial results. As part of its review process, the company has announced initiatives to reduce its expenses and optimize its cash reserves.
It is expected that the company’s cash outflows from operating activities will reduce by 30-40% compared to the 1st half of FY19.
To reduce its cash outflow, the company has announced a voluntary reduction in senior management salaries. The company’s CEO, Mr. Andrew Ronchi has agreed to reduce his salary and benefits from USD$310,000 to USD$221,500. Andrew remains committed to the goals of building the US market through strategic deals and increased recurring revenue. In order to improve its cash reserves, the company has announced a reduction in corporate and marketing overheads. To further reduce it cash outflow, the company is optimizing the spend on new development within the company technical team, which reflects a focus on enhancing dorsaVi’s core products in the marketplace and tuning the product platform for large multi-national company applications, rather than pursue new applications.
As a result of these changes, the staff numbers have been reduced in corporate and support services while the Company maintains a focus on building revenue and sales capability. Further, the company’s technical team will now be focusing on enhancing the existing product portfolio rather than developing additional products. According to the company’s announcement, these changes are aligned with its strategy to prioritize the US market and to increase direct sales capability in the US workplace and clinical market.
The Company intends to expand its sales, product development, and support capabilities in a measured way as its recurring revenue base increase over time.
To support these initiatives, the Company’s non-executive Directors have resolved to accept options in lieu of directors’ fees applicable from 1st March 2019. Subject to shareholders approval, the number of options which are going to be issued, will be determined on the last day of each quarter by dividing the current board remuneration owing to each non-executive director by the closing share price on that day.
In the recently released half-year results, the company reported growth of 68% in its recurring revenue which has reached to $659k in H1FY19 as compared to $393k in the previous corresponding period (PCP). The company reported an after-tax loss of $1.91 million in 1H FY19 as compared to $1.97 million in PCP.
In the past six months, the share price of the company decreased by 58.23% as on 14 March 2019. DVL’s shares traded at $0.035 with a market capitalization of circa $7.14 million as on 15 March 2019 (AEST 03:11 PM). It has 52 weeks high of $0.217 and 52 weeks low of $0.032.
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