Today Nanosonics Ltd (ASX: NAN) released their half-year results for the period ending 31 December 2018 with net profit up 221% to $7.1 million.

About Nanosonics

Nanosonics manufacturers the Trophon EPR ultrasound probe disinfector and its related consumables. Nanosonics is seen similar to the Gillette model as customers buy the Trophon EPR system (the razor), then buy consumables (blades) which are high margin and recurring.

Andrew Page from Strawman.com recently covered Nanosonics in an investors event in Melbourne, co-hosted by us at The Rask Group.

Key Results

Nanosonics reported:

  • Record first half sales up 36% to $40.7 million
  • Installed base (trophon EPR systems) up 20% to 19,310
  • Revenue up 36% to $40.7 million
    • Capital sales (trophon EPR systems) up 11% to $16.4 million
    • Consumable and service sales up 59% to $24.3 million
  • Net profit after tax (NPAT) up 221% to $7.1 million
  • Cash from operating activities of $2.56 million.

Management Commentary

CEO and President of Nanosonics Michael Kavanagh said, “the organisation has delivered a strong set of results for the first half where we continued to grow the trophon installed base, deliver record half year financial results and progress many aspects of our strategic growth priorities, including geographic expansion and new product development”.

Nanosonics released its tropon2 technology in the second half of calendar 2018, with Mr Kavanagh saying, “customer reaction to the new features and benefits of trophon2 has been very positive with increasing numbers of trophon2 being adopted over trophon EPR every month since launch”.

Geographical Expansion

The North American market makes up 17,020 of its 19,310 installed units, but the company has plans to expand further worldwide with Mr Kavanagh saying, “Our geographical expansion activities progressed  with new agreements established with GE Healthcare for distribution in Denmark, Finland, Spain and Portugal effective February 2019. This is in addition to existing agreements with GE Healthcare in Sweden and Norway. A new distributor was also appointed for Switzerland”.

Nanosonics also signed a distribution agreement for Mexico and a market assessment study has commenced for China.

Rask Perspective

Nanosonics is a company doing great things which help to prevent the spread of infection in hospitals. While I would like to add it back to my share portfolio again, I think it’s too expensive at these price levels for me to buy more shares today.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).