Release Date: February 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Medical Developments International Ltd (MDDVF, Financial) reported a 33% increase in group revenue for the first half of FY'25.
- The company achieved an $8 million improvement in underlying EBIT and a $6.8 million improvement in free cash flow.
- Strong performance in both the pain management and respiratory segments, with pain management revenue up 37% and respiratory up 26%.
- Successful implementation of targeted pricing initiatives and efficiency programs, resulting in a $6.6 million benefit from pricing and efficiency.
- Positive progress in international markets, with significant growth in Europe and Australia, and promising regulatory signals for pediatric submissions in Europe.
Negative Points
- Despite improvements, the company expects earnings to be lower in the second half of FY'25 due to phasing and foreign exchange rate movements.
- The transition to a partner model in France and Switzerland has taken longer than anticipated, with completion expected in Q1 of FY'26.
- Lower revenues were reported in the rest of world markets, slightly offsetting growth in Europe and Australia.
- The company faces challenges in changing long-held behaviors in favor of Penthrox, requiring targeted medical engagement initiatives.
- Potential quarterly volatility around cost lines and working capital is expected in the second half of the year.
Q & A Highlights
Q: How much of the Australian emergency room unit uplift came from Queensland, and what were the main drivers?
A: The percentage is mainly from New South Wales rather than Queensland. Queensland Health remains our most important customer globally, but there has been a greater uptake in New South Wales hospitals. The primary drivers are the key benefits of Penthrox, including its efficiency in emergency departments and its effectiveness for acute trauma pain compared to other analgesics. - Brent MacGregor, CEO
Q: Can you talk more about why the second half of FY'25 is expected to be weaker, and what are the primary drivers?
A: The expected weakness in the second half is primarily due to phasing and movements in foreign exchange rates. Timing of deliveries into Europe is a key factor, and FX was a positive in the first half due to sharp changes in exchange rates. We do not expect similar FX benefits in the second half. The underlying pricing and cost environment should remain stable. - Anita James, CFO
Q: Could you discuss potential quarterly volatility around cost lines for the back half of the year, and the same question for working capital?
A: Operating costs should remain stable and consistent with the first half, with some phasing. Working capital will fluctuate, as seen in the first half with a build in Q1 and a release in Q2. We expect similar movements between Q3 and Q4, but overall, the working capital position will be well maintained, and we anticipate positive operating cash flow in the second half. - Anita James, CFO
Q: What are the strategic priorities for Medical Developments International in FY'25?
A: Our strategic priorities include improving margins through pricing and efficiency, increasing penetration of Penthrox in Australia, growing Penthrox in global markets with a focus on the UK and Europe, and expanding our respiratory franchise, particularly in the US. - Brent MacGregor, CEO
Q: How has the financial performance improved in the first half of FY'25?
A: We delivered a 33% growth in revenue, with pain management up 37% and respiratory up 26%. Underlying EBIT improved by $8 million, and we achieved a net profit after tax of $300,000. The improvements were driven by pricing and efficiency initiatives, resulting in a $6.6 million benefit. - Anita James, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
