Genomic life science company EZZ Life Science Holdings Limited (ASX: EZZ) has demonstrated strong financial performance in the second quarter of FY24, with a focus on key health challenges and strategic expansions.
EZZ closed Q2 FY24 with $13.6 million in cash inflows from customers, marking a 57% increase from the same quarter last year and a 102% surge from Q1 FY24. The Double 11 Shopping Festival played a significant role in this success. The EZZ L-Lysine Capsule (for calcium absorption) was particularly successful, ranking first on Tmall Global in the Children’s Essential Minerals category as both the ‘Best Selling’ and ‘Most Repurchased’ product.
EZZ develops nutritional supplements and distributes them via e-commerce and omnichannel models across Australia, New Zealand, China and worldwide.
Seven new products were introduced during the quarter, contributing $0.2 million (1.8% of total cash inflows) from customers. The Company expanded its brick-and-mortar presence by commencing trading within DFS’s flagship store in Sydney. Additionally, two new eCommerce distribution channels (Chemist Warehouse Marketplace and O’mall Global) were added, contributing $0.6 million in total sales.
Operating cash outflow for the quarter was $0.75 million, attributed in part to increased production costs to meet the expected surge in sales associated with the HIC contract. By the end of the quarter, revenue from the partnership with HIC reached $3.8 million. The first sales from this partnership were generated in early September 2023.
In May 2023, EZZ Life Science Holdings Limited inked an exclusive two-year distribution deal with HIC, represented by service management company Aubay Pty. Ltd. The agreement, covering 27 countries, was forecasted to generate a minimum annual revenue of $16 million for EZZ starting FY24.
This followed a strong FY23, which surpassed the Company’s expectations, achieving a 147.3% year-on-year revenue growth, reaching $37.1 million. Gross margins also expanded significantly from 50.0% to 76.8%, leading to a 172.5% increase in EBITDA (excluding other income) to $4.8 million.
In a bid to maintain FY23’s glory, EZZ has been focusing on growth. Investments in marketing rose from $3.5 million in Q1 FY24 to $9 million in Q2 FY24. These funds were allocated to support new channels and implement targeted promotional strategies, including KOLs, single-product store promotions, and advertising at major airports in Australia.
As of December 31, 2023, EZZ maintains a robust financial position with a cash balance of $12.6 million, and the Company remains debt-free.
Related party payments during the quarter included the purchase of inventory from Australian United Pharmaceuticals Pty Ltd, three months’ rent paid to WM Group Pty Ltd for the Silverwater office/warehouse, and fees paid to Directors and CEO.
Shareholders received a fully franked final dividend of 1c per share for FY23 resulting in a payout of $0.4m in Q2 FY24.
Alinda is a Business Reporter for The Sentiment
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