Shares in medical device manufacturer PolyNovo Limited (ASX: PNV) sunk 5.6% on Friday following a resignation announcement.
PolyNovo’s shares have struggled in recent months. Since releasing its FY21 results at the end of June, its market valuation has tumbled by over 30%.
COO resignation
PolyNovo told the market on Friday that Anthony Kaye has resigned from his position as Chief Operating Officer. Anthony will be returning to his former workplace, CSL Limited (ASX: CSL) in a more senior position.
During his tenure, Anthony was involved with the completion of PolyNovo’s new manufacturing facility that will make its hernia product and will increase the production of its BTM product.
On the resignation, Managing Director Paul Brennan said “Anthony joined PolyNovo at a critical time to help complete our new manufacturing facility, oversee the commissioning of new machinery and put in place a team to deliver best practice production processes and costs.”
Recent financial results
Covid didn’t make things easy for PolyNovo during FY21.
In the US (its largest market), low vaccination rates have led to lower hospital capacity which negatively impacts the amount of BTM required. This is likely to be transitory however as vaccination rates improve.
On a global scale, hospitals have been unable to accurately forecast their revenues due to COVID. This has meant that getting the BTM product into hospitals has also been a challenge that’s resulted in holding higher levels of inventory.
Revenue from BTM sold in the US was $15.5 million, a 49% increase on FY20.
Excluding some non-cash expenses, PolyNovo made a small net profit after tax of $259k during FY21. However, it looks like it generated a free cash outflow of around $3.8 million.
Summary
There seems to be a lot of things on the horizon for PolyNovo. It plans to grow its share in existing markets, expand into new geographies and develop new products.
The ultimate question, however, is how long will it take to successfully execute its strategy? Notwithstanding Covid, introducing new technology into hospitals can be exceptionally slow for various reasons.
It’s tackling this headwind through the expansion of its sales team, geographic expansion and targeted marketing programs.
