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Nanosonics (ASX:NAN) share price nosedives 12% on weak earnings

The Nanosonics (ASX: NAN) share price has dropped 12% today after the company reported its results for the first half of FY21.
The post Nanosonics (ASX:NAN) share price nosedives 12% on weak earnings appeared first on The Motley Fool Australia. –

downward red arrow with business man sliding down it signifying falling asx share price

It wasn’t long ago that Nanosonics Ltd (ASX: NAN) was being called the next CSL Limited (ASX: CSL)

But as far as February reporting season goes, CSL is still the consistent stock we all know and love. While the Nanosonics share price is not only 12% lower at the time of writing but down more than 35% for the year. 

The infection prevention company, known for its industry-leading trophon EPR disinfection system for ultrasound probes, released its financial results today for the first half of FY21.

Nanosonics share price lower on weak revenues

In today’s release, Nanosonics reported that its global installed base increased 12% in the last 12 months and was up 6% in the last 6 months to 25,100 units. More importantly, the number of new units installed in Q2 FY21 was up 38% compared to Q1 FY21, signalling that a recovery is taking place. 

However, due to mid-teens growth in the installed base, the company’s half-year revenue was down 11% to $43.1 million. This was driven by a foreshadowed reduction in purchases by GE Healthcare as a result of the impacts of COVID-19 and the stronger Australian dollar. 

Operating profit before tax took a hit after delivering just $0.2 million in the half, compared to $6.7 million in the prior corresponding period. This reflects the impacts of COVID-19, particularly on first-quarter revenue and the ongoing investment in the company’s growth strategy. 

Revenue breakdown 

Nanosonics revenue can be divided into capital revenue, or the sale of trophon units, and consumable and service revenue. 

Capital revenue was down 35% to $9.4 million due to reduced trophon unit sales to GE Healthcare and limited access to hospitals. As GE resumed capital purchases in the second quarter, coupled with increasing capital sales by Nanosonics’ direct operations and other distributor partners, capital revenue grew by 148% compared with Q1. 

Half-year consumables and service revenues for its installed base were down 1% to $33.7 million. Revenues for this segment were resilient due to a 29% increase in Q2 Fy21 compared with Q1 FY21. The growth reflects a recovery in ultrasound procedure volumes experienced in the half. 

Outlook

Looking ahead, the company anticipates ongoing growth in total revenue and profitability into the second half, driven by increasing installed base growth and increased usage of consumables across all regions.

The company is optimistic about the rollout of the COVID-19 vaccination and eager for improved overall market conditions and access to hospitals. 

However, it appears that the market so far today has put aside the company’s forward-looking statements about recovery and improving Q2 revenues.

The Nanosonics share price opened at $5.50 but has continued to face selling pressure falling to an intraday low of $5.13. At the time of writing, its shares are trading down 12.4% at $5.30.

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Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Nanosonics (ASX:NAN) share price nosedives 12% on weak earnings appeared first on The Motley Fool Australia.

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