Cellmid Ltd - Cellmid Ltd (ASX:CDY) reports increase in sales & 18 new distribution channels in 1H FY2020 results
Cellmid Ltd (ASX:CDY)

Cellmid Ltd (ASX:CDY) reports increase in sales & 18 new distribution channels in 1H FY2020 results

Highlights

What's happened?

Cellmid Limited (ASX:CDY, "Cellmid") released its financial results for 1H FY2020.

What are the key highlights?

  1. Consumer health revenue increased by 5.5% to $3.66 million (up from $3.49 million in H1 FY2019). Revenue was adversely impacted by the timing of a major export shipment to China in 1H FY2020, which is expected to ship during 2H FY2020.
  2. Cellmid established and expanded 18 new distribution channels across premium beauty retailers, pharmacies and television shopping channels in Australia, USA, Japan, Europe and Asia. The revenue impact of these new distribution channels is expected to accelerate growth in 2HY 2020 and onwards.
  3. The financial impact of these new distribution channels has started to show in the USA and in Australia, where sales were up 74% and 24% respectively on pcp. This is expected to accelerate in 2H FY2020 and in the following years.
  4. Cellmid is actively monitoring macroeconomic developments, including those in relation to the COVID 19 containment measures, and will advise the market immediately should there be a material impact expected on the Company’s operations or profitability.
  5. Guidance is confirmed for operating profitability in the consumer health business in FY2020 driven by revenue growth in new distribution channels.
  6. Lyramid’s intellectual property portfolio is earning attention from potential partners, with several aspects of midkine biology critical to drug development currently being studied together with research partners.

What does this announcement mean?

Erik Bergseng CFA® from Mawson Graham provides perspective on this recent announcement.
Erik Bergseng CFA®
Written by Erik Bergseng CFA®
Published Feb 27, 2020

With 18 new distribution agreements in place, Cellmid expects to continue growing sales. One of these distribution agreements is the national ranging agreement with API which is expected to commence in full by March 2020 and could see évolis® stocked in 400 Priceline pharmacies nationally.

Because gross profit margins are relatively high (73% in 1H FY2020), even a modest increase in sales should contribute significantly to reducing the cash burn of the company. This cash burn reduction potential is also supported by the guidance provided that operating profitability for the consumer health business in FY2020 will be driven by sales growth from its newly established distribution channels.

Cellmid has also managed to keep total debt relatively low at A$1.33m while maintaining cash reserves at $3.88m, which gives the company a net cash position of ~$2.55m. Short term payables of $2.27m are also roughly in line with receivables of $1.61m and inventory has also increased slightly to $2.37m. Given the balance sheet as of the 31st December 2019, the new distribution agreements in place and managements profitability guidance, we believe Cellmid as an entity is in a strong position to reach cashflow break-even without the need to raise additional capital.

The information within this section has been provided by Mawson Graham Pty Ltd and is for general information purposes only and is not intended to reflect any recommendations or financial advice. The information in this section has been prepared without taking into account your objectives, financial situation or needs. For this reason, you should consider the appropriateness of the advice or recommendation in light of your own personal circumstances, relevant risk factors, the nature and extent of your risk of loss, as well as the legal and accounting consequences before acting making an investment or trading decision regarding any Financial Product mentioned herein. While it is believed that all information sourced and contained within this section to be accurate at the time of publication, liability for any errors, omissions, accuracy or completeness of the information (except any statutory liability which cannot be excluded) is specifically excluded by Mawson Graham Pty Ltd, its associates, officers, directors, employees and agents. Past performance is not a reliable indicator of future performance. Important Disclosure: Mawson Graham Pty Ltd, its directors, associates and employees advise that they may hold securities, may have an interest in and/or earn brokerage, investor relations fees, corporate fees, and other benefits or advantages, either directly or indirectly from client transactions arising from any information mentioned within this section and in documents published within this section.
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CEO's Summary

Maria Halasz

"We are very proud of the enormous progress we have made over the past year in implementing our strategic growth plan. Our new senior management team has worked hard to expand our global footprint, diversify our revenue and expand our e-commerce and we are well positioned to accelerate revenue growth through these new distribution channels in the months and years ahead."

Maria Halasz
CEO, Cellmid Ltd

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