CleanSpace sales plummet following opportunistic IPO just months earlier

Investors who participated in the IPO of respiratory equipment manufacturer CleanSpace (ASX: CSX) will be concerned as to how the company can turn their fortunes around, following a massive decline in sales which keen pundits had expected in the wake of a recovering pandemic. 

For the Half-Year ended 30 June 2021, CleanSpace generated $10.2m from their healthcare products, a 74% decline on the $39.7m generated from the December Half Year. 

Likely as no surprise to investors that exited the Company through their IPO in November 2020 at an Offer Price of $4.41 per share, CSX shares have continued to decline to have last closed at $1.89. This has come amid what CleanSpace describes as a “challenging” environment. 

“The business is advancing its programs that support our strategy for growth; and not waiting for conditions to change,” said CleanSpace CEO, Dr Alex Birell. 

“The business is committed to accelerated growth for market adoption by expanding our pipeline through aggressive sales and marketing activity, stakeholder engagement and our R&D roadmap. 

“CleanSpace is pleased to see countries with high vaccination rates that underpin the path to economic recovery; with customers and policy makers (as seen by the new OSHA Standard) now far more educated about respiratory protection, our technology is well positioned both in health and industry to meet their needs.”

The major decline in sales of their world-first smart respirators has been attributed to an oversupply of disposable facemasks and aggressive vaccination rollout programs. 

In an effort to combat this, CleanSpace has entered new markets beyond healthcare facilities to now actively be targeting the mining industry where their reusable smart masks can reduce exposure to silica inhalation. 8 mining companies in the US have since engaged CleanSpace but this figure is still well below the 270 new hospitals around the world which signed up and contributed to their $10.2m in H2 sales. 

Fortunately for those shareholders that have stuck with the Company, CleanSpace has a healthy cash balance with $38.2m in the bank, the majority of which came from the $131.4m raised at IPO. Those same shareholders can take solace in CleanSpace’s expectation that buying patterns will return to their forecasts as well their powered air-purifying respirators (PAPRs). 

Last month, the Biden Administration released an Emergency Temporary Standard (ETS) that recommends healthcare facilities provide frontline workers with PAPRs or elastomeric respirators (rather than disposable masks). 

CleanSpace expects the $49.9m generated for the Full Year to deliver around $17m EBITDA at their healthy margins and lean operating model.