After scaling back investments in France and pulling the plug on its China trials, Aussie emergency medical solutions company Medical Developments International (ASX: MVP) has a renewed focus, one that helped it reduce its losses from $12.4 million in FY22 to $5.6 million in FY23.
The earnings report showed a net gain of $10.3 million before taxes from Underlying Adjustments, compared to a loss of $1.2 million in pcp. This gain is mainly due to stopping the clinical trial preparations for Penthrox (its pain-reducing inhaler, aka the Green Whistle for pain relief) in China. This resulted in a gain of $12.7 million. Some of this gain was reduced by expenses related to assessing the market potential for Penthrox in the US, amounting to $1.9 million, which the Company didn’t consider to be too much.
CEO, Brent MacGregor, said, “FY23 has been an encouraging year, with continued momentum in our Pain Management and Respiratory segments. Improved volumes and pricing in both segments have delivered strong revenue and margin growth in the period.”
The Company’s revenue grew by 47% on FY22, reaching a total of $32.3 million. The Pain Management division witnessed a remarkable rise in revenue, soaring by 54%. This increase was attributed to selling more products and implementing better pricing strategies. In Australia, sales volumes went up by 6%, mainly because of high demand from ambulance services, as well as increased use in procedural fields and hospital emergency units (a profitable segment).
In Europe, demand remained strong despite a tough economy. Sales went up by 33% in France, and the UK, Ireland, and different parts of Europe like the Nordics, Central Europe, Switzerland, and Belgium all showed good growth, with increases of 34% or higher.
Nonetheless, it had to pare back in France. Brent said, “We have reduced our investment in France considerably due to slower than planned progress, impacted greatly by challenging operating conditions. Our approach may include a partner supported strategy that is delivering encouraging growth in the UK, Ireland, the Nordics and Austria. Our decision in France will influence our approach in other European markets, including Germany, Italy and Spain. We will provide an update on our assessment in coming months.”
MVP’s underlying EBIT showed a loss of $18.3 million, which was $3.6 million lower than the previous year. This happened because expenses went up as the Company upskilled. This included investing in the Australian Penthrox field team, boosting resources in the Respiratory department, and making overall enhancements in leadership and functions.
Plus, the Company said that it will seek funding from one or more partner organisations to fund entry into the US market, seeing as its in-market revenue potential for Penthrox lies between $462 million and $616 million five years post launch.
In FY24, the Company expects underlying EBIT to improve by higher Penthrox volumes in Australian hospital emergency departments, increased share growth in the Respiratory segment and incremental improvements of $6 million from pricing and efficiency.
It closed FY23 with a cash balance of $24.7 million, and the Board chose not to declare a dividend.
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