PNV - Ann - First A$11m sales month

Reports (12) My Report Forum Investors

Forum Topics PNV PNV Ann - First A$11m sales month

Pinned straw:

Parko5

Added a month ago

https://app.sharelinktechnologies.com/announcement/asx/359627e8d176d551caab0add3d7416de

So this came out yesterday (i missed it). And was sold into....with SP dropping. Wow.

Some quick points and then ChatGPT analysis after:

Record month (just) in terms of sales.
USA continues to be the lion share of the revenue. Interesting the STLY is up 92.6%. @mikebrisy this seem to be higher....I thought the USA growth rate would be slowing?
RoW growth....Still low...what is the plan to increase this?
India - 16 tenders won...and only $133k in revenue? I'm dissapointed in India. They need to turn this around.
Lots of focus on Cash position. Why? After the large cap raise, was always going to drop (as they spend on capex and some expansion in team and R&D. But from a quick glance...doesn't look good. But I don't have an issue with it. Some muppets on HC reckon that there could be a Cap Raise coming. I don't think so.
No mention of progress on New CEO, board changes.
Fildelity continues to buy PNV. What are their plans? Long term hold? Buying for someone else to do a takeover?

From ChatGPT:

Reassessing PolyNovo’s RoW Growth: Slower Than the U.S. – Why It Matters

Despite headlines of growth, PolyNovo’s Rest of World (RoW) performance isn’t scaling like its U.S. business did — and that’s raising flags for investors. Here's the situation in plain terms:

???? RoW Growth – The Reality Check:

RoW sales grew from ~A$5.8m (FY22) → A$13.5m (FY23) → A$23.3m (FY24) — good, but off a low base.
By comparison, the U.S. grew from A$48.7m to A$64.4m YoY (+32.3%) in FY25 YTD alone, and hit A$9.3m in monthly sales in March 2025.
RoW’s March 2025 sales were A$2.6m – barely a quarter of the U.S. run rate.
RoW is not scaling at the same velocity, despite being 3–4 years behind in maturity.

???? What’s holding RoW back?

Fragmented distribution model in Europe is delivering inconsistent results.
India and emerging markets show promise, but revenue remains small (<A$1m).
UK/Ireland (direct) is the standout, but still subscale compared to U.S.
Regulatory delays and reimbursement hurdles slow uptake in many RoW markets.
U.S. hospitals offer concentrated revenue opportunities; RoW markets require more time, more reps, and more cash.

⚠️ Why It Matters:

Investors hoped RoW would become a second growth engine — that hasn’t materialized yet.
The RoW ramp looks more gradual, not exponential like U.S. (which went from ~A$15m to >A$60m in 3–4 years).
PolyNovo’s strategy to go direct in new markets is costly and slow to pay off.
Without a breakout RoW market (like the U.S.), the valuation case leans heavily on pipeline delivery (e.g. MTX, hernia mesh).

???? Pipeline Update – Still the Wildcard:

BTM pivotal burn trial (BARDA) could unlock PMA & major U.S. upside – data lock May 2025.
MTX cleared by FDA in Sept 2022, now gaining traction (~A$3.8m YTD sales).
Hernia mesh program delayed, with no submission likely until late 2025 or 2026.
Chronic wounds (DFU) trial ongoing, but commercial impact still years away.

???? Bottom Line:

Yes, RoW is growing – but not at the speed or scale needed to de-risk PolyNovo’s growth story. The U.S. remains dominant, and RoW looks like a long, patient build rather than a near-term catalyst. With the pipeline timelines stretching, investors are rightly cautious.

Then when I ask if it is worth investing at the share price of $1...it said this:

✅ **Reasons It Could Be Worth the Risk:**

1. Underlying sales growth is still real.

Group revenue grew +24% YoY (YTD March), and March was a record month (A$12.4m revenue). The U.S. business is firing, and RoW is growing, just more slowly.

2. MTX adds a new revenue stream.

Early MTX sales were A$2.1m in 1H FY25 – small but climbing. It’s the first new product since BTM and shows the company can commercialize innovation.

3. Upcoming catalysts:

BARDA pivotal trial for BTM burns – data lock expected May 2025, with PMA filing after.
Potential FDA approval for BTM 6mm in FY25 – would expand market size.
New manufacturing facility due online by December – could improve margins/logistics.

4. Balance sheet is fine.

~A$22m cash on hand + receivables. Capex for facility is mostly covered. No need for emergency raising.

5. Valuation reset.

Market cap is now ~A$650m, with trailing revenue around A$92m. That’s ~7x sales, which is a lot lower than past multiples (it used to trade at 15–20x revenue).

❌ Why It’s Still Risky:

1. RoW is underwhelming vs hype.

Investors expected faster international scale-up. Outside the U.S. and UK, traction has been slow, despite hiring and expansion.

2. Pipeline delays = overhang.

The hernia program is now years behind schedule. PMA for BTM burns still isn’t done. SynPath (chronic wounds) is in trial limbo. Delays hurt credibility.

3. No clear path to major margin improvement.

Gross margin isn’t breaking out yet. RoW sales are more expensive (direct teams or distributor cut), and new products take time to be profitable.

4. Sentiment is shot.

The stock is in a downtrend, and institutions have been reducing positions. Even good news hasn’t moved the needle lately.

5. Execution risk is real.

PolyNovo’s commercial teams are now spread across 40+ countries. Managing that, plus trials and launches, stretches a small company.

???? Bottom Line:

If you’re long-term oriented, can handle volatility, and believe in the NovoSorb platform's real-world traction, then sub-$1 could be an opportunistic entry.

But this isn’t a slam dunk. The market is saying: “prove it.” Execution on pipeline milestones (especially PMA, MTX ramp, and RoW growth) is critical to turning sentiment.

???? If those slip again, it could trade lower.

???? If they land well, the stock could easily re-rate.

Would you like a checklist for entry timing (e.g., what catalysts to watch for)? Or want this broken into a 1-minute pitch for a forum post?

Some incorrect statements like "The stock is in a downtrend, and institutions have been reducing positions"....but overall a decent snapshot.

I'm going to keep a close eye on what Fidelity does. These guys often have inside info.......and remember...they have bought all the way from $2 down to $1........

mikebrisy

Added a month ago

@Parko5, there are really only 2 key numbers here that matter to me. The record months and monthly STLY numbers are (by definition) cherry-picked and highly volatile.

The key numbers are:

US YTD STYL = +32.5%

RoW YTD STLY = +27.2%

My analysis

This seems to indicate that the 1H FY25 growth slowdown of Total Revenue to PCP of +22.8% indeed indicates a strong slowdown in the growth trajectory.

The product sales slowdown is less at +27.2%, because of the effect of BARDA.

US appears stable. 1H FY25 growth of +27.9% has improved signficantly to +32.5% for the YTD March, indicating that the FY growth will be c. +30%. The US remains the powerhouse of this business.

But RoW slowdown appears to be confirmed, with 1H FY25 of +28.6%, appearing to soften slightly to +27.2%, although its in the noise.

Overall, Group total Revenue growth for March YTD to STLY of 23.7% is almost unchanged from 22.8% from 1H FY25.

The dizzying array of monthly record comparisons shows to me that DW has learned nothing from recent months. And the omissions are notable. For example, not a word about ANZ which declined in 1HFY25 to PCP. Nothing about Germany, which was a blowout star only a year ago.

However, I don't want to overlook the cash position. At 31 Dec 2024 this was $30.5m. Three months later we are at $22.0m with about $15m of planned capex to come over the coming year.

My Conclusion

The result appears to confirm that $PNV sales growth has matured from 50%-60% p.a., to 27-30% p.a.

It is hard to see that $PNV can get back to the c. 50% DW has been quoted in the press as saying he thinks can happen.

At $1 + change per share, there is every chance that this business is now undervalued. I haven't had a close look at it, partly because of my concern about overall margin evolution story. But it is entirely possible that the business is worth $1.50 - $2.00+

However, I have lost confidence in the Board and in management, And the Board (DW) continue to selectively cherry pick results.

I am not going to given them more of my time, as there are businesses more worthy of my attention. But in writing this I fully recognise that I am turning my back on what could well prove to be a strong SP recovery over a 12-month period or so.

Disc: Not held

mikebrisy

Added a month ago

DW has just sent round the latest Macquarie Flash Note (below) on today's Trading Update from $PNV. (They really are rusted on bulls.)

The revenue growth assumptions are FY25=25.6% , FY26=29.8%, and FY27=20.8%. (My observation: potential for FY25 to slightly outperform this, FY26 is a bit more challenging as $IART will be fully back, and FY27 seems reasonable.)

So far, so good. And all within the range of my scenarios. So, why are my valuation ranges so much lower? (My guesstimate range is $1.50-$2.00, as I haven't done a full model update). So, let's have a closer look at FY27.

Macquarie's Forecast Reported EPS is 6.7cps. Valuation is $2.80 in 12-months. So let's say FY27 result is further 1.25 years beyond that. So implied FY27 SP is $2.80 x (1+10%)^1.25 = $3.15.

So, by my calculation, Macquarie's valuation would have $PNV on a P/E of ($3.15/$0.067) = 47 at end of FY27, when its annual EPS growth rate will be 58%. That's pretty reasonable, if they can hit those earnings.

And that's my problem.

2 years ago, Macquarie had $PNV on a 12m PT of $2.75, generating NPAT in FY25 of $25.7m. In today's note, the forecast FY25 earnings have evaporated to $9.1m.

But the forecast FY25 revenues have barely changed. ($131.6m in today's note, versus $135.3m in the June-2023 note).

So the slippage is in the cost base. Uncertainty in the earnings trajectory has been a key theme of mine in the last few straws, ever since the shock update on slowing RoW revenue growth. A bit of slippage didn't matter when revenue growth was >40% p.a., which is where I had it in my bull days. But as revenue growth falls, then the control of cost becomes more important.

But let's look beyond the numbers at the activities of the business.

Product pricing has been holding up in the US. They've even put price rises through. We don't, however, have much transparency on what is going on in other markets. And we've never had an indication of what they are selling for in India. However, gross margins are strong and let's face it - US dominates the picture.

So, the issue is in operating expenses, where we've seen growth in the S&M Field Force, increases in Head Office functions, and wages inflation. We know the market is competive, with several competitors growing strongly in the US and elsewhere. So the competition for experienced staff is probably pretty strong. And even though India is progressing well off a small base, its sales of <$1m will likely not even come close to covering the operating costs of 20+ staff over several locations. Looking forward, after a few years of stability there will also now be some "one-off" severance and joining costs to pay for CEO change, and advisor fees etc. Offsetting that, we might get some non-cash benefit from the cancellation of the CEO's options, .. just like last time.

In conclusion:

1) If I had conviction in the overall financial case set out in the Macquarie note, and 2) if I could look past my concerns about managementBoard, then today I'd be a strong BUY.

However, 1) I don't and 2) I can't. I'm not saying never. Just not today. .... and the shorts continue to agree (see graph at bottom.)

However, the Macquarie note clearly lays out what is possible. And so $PNV stays on my watch list. I want to see the FY financials, and see progress on CEO succession. And I'll reflect on whether that can be enough. After all the red-faced, red-jacketed ringmaster with his "roll-up, roll-up" record reporting, and disclosure-dance-of-the-seven-veils remains centre stage in the Big Top. And while I like being entertained, that it not my primary objective here.

There are perhaps just too many CEOs and Chairs in my holdings who are more candid, clear, reliable, less excitable, less promotional. Maybe the bright lights, the noise, the high trapeze of the Big Top is just too much for me. It's nice to have been to the circus, but I feel I might give it a miss the next time it comes to town.