What to track going forward:
Growth in EMEA and APAC markets
New product launches - I am not very convinced with AuditPro, which was launched recently. It seems they have launched something to calm down customers and investors after failed attempt to launch something innovative.
Founded In 2001 and head-quartered in Sydney, Australia, Nanosonics was listed on the Australian Securities Exchange (NAN) in 2007. Nanosonics is a single-product company and its trophon device provides automated high-level disinfection, or HLD, of ultrasound probes used in semicritical procedures. The patented technology uses low-temperature sonically-activated hydrogen peroxide mist that is suitable for the sensitive probe. Automated HLD is increasingly being adopted as the standard of care globally as it is superior in preventing cross-infection across patients. Nanosonics’s revenue stream comprises capital sales of trophon units and ongoing consumables sales
when standing in front of the ultrasound machine, you need to make some concrete decisions about what probe to use, and what buttons to press, in order to obtain a good image—sometimes known as knobology. Probes (transducers) are generally described by the size and shape of their face ("footprint"). Selecting the right probe for the situation is essential to get good images.There are three basic types of probe used in emergency and critical care point-of-care ultrasound:
linear/vascular : generally high frequency, better for imaging superficial structures and vessels
curvilinear : have a wider footprint and lower frequency for transabdominal imaging, or in a tighter array (wider field of view) and higher frequency for endocavitary imaging
phased array : A phased array probe generates an image from an electronically steered beam in a close array, generating an image that comes from a point and is good for getting between ribs such as in cardiac ultrasound
What is Ultrasound and where probes are used : https://www.nibib.nih.gov/science-education/science-topics/ultrasound
http://www.absolutemed.com/medical-equipment-blog/how-ultrasound-transducer-work.htm
Competitors:
https://www.civco.com/products/probe-cleaning-disinfection/automated-probe-disinfection/?cat=probe-cleaning-disinfection&p_id=automated-disinfection
The ASTRA series of reprocessors received their FDA 510K clearance in March 2016
medisound , Sydney based established in 2017 distributors of Geritech
https://germitec.com.au - French co established in 2005 ; https://germitec.com.au/hypernova-chronos-high-level-disinfection
Selling Models:
Direct Channel
Distribution Channel
FY20 HIGHLIGHTS
Full year revenue of $100.1 million, up 19% on prior corresponding period
Full year global installed base up 13% to 23,720 units
Full year consumables and service revenue up 36% to $70.1 million
The company has negligible debt.
Gross profit of $75.5 million, or 75.4% of revenue
Effective income tax rate for the period was 18.6%
Continued development of China market entry strategy
Consumables and services revenue collectively made up 70% of FY20
Group revenue (consisting of 60% Consumables, 10% Services).
FY21 Outlook:
Beyond FY21, Nanosonics is targeting: • Continued growth in the trophon installed base across all regions. • Growth in upgrades of trophon EPR to trophon2. • Japan to become an important contributor to global installed base growth as well as further expansion into the Asia Pacific including China. • Broadening of our product portfolio through internal product development and opportunities for strategic acquisitions and product licensing. • Ongoing investment in R&D, infrastructure, people and capability to drive the global strategic growth agenda.
Notes from Billy:
Nanosonics will be open to the new competition when the major trophon device patents expire in 2025
70% revenue from consumables and services, the consumable is protected from generic substitution until fiscal 2029
40% of all ultrasound procedures require HLD
Consumables roughly earn a gross margin of 85% and devices 65%
Nanosonics has stated it expects to launch a new product in the infection prevention market in 2022
Nanosonics business model, the company posted a return on invested capital, or ROIC, of 37% in fiscal 2020 and we anticipate the ROIC to far exceed its 9% weighted cost of capital
for our 10-year forecast period.
The cumulative R&D investment of AUD 54 million over the preceding five years
Nanosonics’s closest competitors are Germitec, Tristel
Yellow Flag:
potential conflict of interest between the company and non-executive chairman, Maurie Stang, who holds approximately 7% of the issued equity of the company and is CEO of Nanosonics’ Australian distribution partner, Regional Healthcare Group.Regional Healthcare is privately owned, partly by Stang, and transactions between it and Nanosonics ran at AUD 2.6 million, or 3% of Nanosonics revenue, in fiscal 2020. Management has confirmed the terms of this distribution agreement are comparable to those with GE Healthcare in the geography, however, the matter is not addressed specifically in its corporate governance reporting.
Annual Reports:
2020:
The company has negligible debt.
total operating expenses for the year are expected to be in the range of $75 million to $78 million,
New business development function established, together with a new investment subsidiary, dedicated to identifying and assessing local and international opportunities to accelerate the growth of our infection prevention portfolio
Our trophon®2 device represented over 90% of new installed base sales, demonstrating the strong value proposition of the product
Commercialisation of the new technology is no longer expected to be in FY21 but will likely be in FY22,
China regulatory consultant to assist our regulatory strategy and have also commenced the establishment of a Wholly Owned Foreign Enterprise (WOFE).
The Group’s key distribution customer accounts for approximately 54% of the Group’s revenue
Notes from Annual Reports:
2009:
the Group operates in the Australian and European markets. Australia is the home country of the parent entity. Operations in Europe commenced in August 2007.
Share capital: 196,282,947 (2008: 195,083,623)
Maurie Stang - Non-Exec Chairman; David Radford - CEO
Total potential market opportunity of 500 million ultrasound procedures per annum globally. This equates to a total market opportunity in excess of AU$1.5B.
Competition: Based on market feedback, the Company believes that it enjoys a significant fi rst mover advantage. The Trophon EPR is the only device providing a fully automated, quality-assured process that removes toxic chemicals from the workplace and provides higher efficacy of disinfection (High-Level Disinfection Plus) and can be installed at the point of care. Currently, available disinfection solutions are predominantly manual in nature or involve the use of toxic chemicals, neither of which gives the range of benefits that are provided by the trophon EPR.
The application to the FDA for approval to market was lodged in May 2009.
the Company made its first sales, in March 2009, of the trophon EPR ultrasound probe disinfector and associated consumables
2010:
Total market size as claimed by the company
ANZ: Total market opportunity estimated to be A$40M
EU: Total market opportunity in excess of A$200M
US: Total market opportunity in excess of A$500M
Spoke about new products in 2010
2011:
Partnership with GE Healthcare
Dr Ron Weinberger was appointed as CEO in May 2011
it is in discussions with a number of significant global companies for the joint development of several new products
Contract fillers to three with locations in Europe, Australia and the US,
The most significant customer accounts for 70% (2010: 92%) of external revenue
2012:
Annual service contracts launched as a new revenue stream
EPR printer launched market penetration and acceptance of the Trophon® EPR in Australia and New Zealand, with in excess of 600 of units already installed, has already achieved a market share of around 30% for Nanosonics
Singapore, Japan, South Korea and China priority targets for approval and roll-out
The most significant customer accounts for 83% (2011: 70%) of external revenue
2013:
The most significant customer accounts for 88% (2012: 83%) of external revenue
2014:
The trophon EPR is now installed at 40 of the top 50 Hospitals in the US
The most significant customer accounts for 82% (2013: 88%) of external revenue
2015:
The most significant customer accounts for 80% (2014: 82%) of external revenue lower sales because of non-exclusion with GE ANZ remained strong at $2.28 million for FY15 ANZ with the installed base growing by 13% to 951 units market penetration in ANZ is now in excess of 60%
Japan is expected to begin in the 2016 financial year.
2016:
The most significant customer accounts for 55.2% (2015: 73.8%)
2017:
Global market expansion continued with the start of Canada’s direct sales operation and the signing of a distribution agreement with Sakura Seiki, Japan’s leading.
Distribution strategies in a number of countries in the Middle East progressed and are expected to be finalised in early FY18.
The goal of the program was to increase our manufacturing capacity to double the manufacturing output in half the space. This goal was achieved by the end of FY17
During the year, a Managed Equipment Service (MES) business model was introduced in the UK.
The trophon system uses a proprietary hydrogen peroxide disinfectant that is sonically activated to create an ultrafine mist and free radicals. These
potent free radicals have super oxidative properties enabling the disinfectant to act quickly to destroy pathogens.
Our investment in R&D is planned to grow in FY18 with the aim of bringing a minimum of two new products to market over the next two years.
Material business risks:
Customer concentration in the US ; 66% revenue from 1 customer
Competition / IP / R&D
Supply Chain Risk / Regulation/Product Liability
The most significant customer accounts for 65.7% (2016: 55.2%) of external revenue
2018:
Trophon2 device, which was released to the market in the first quarter of the 2019
Trophon Companion Wipes
225 people located in Australia, the United States, Canada and across Europe. (Prev - 165)
Nanosonics also enjoys IP protection over subject matter related to its ongoing consumables revenue out to 2029.
FY19 Outlook:
Grow Install base
Expand into new markets
One new product in FY20
Over time this upgrade market is expected to grow as the existing installed base of trophon EPRs ages
ANZ: With market penetration in the region approximately 70%
The Group’s key distribution customer accounts for approximately 49.3% of the Group’s revenue
IP Protection:
Trophon, for example, is covered by 14 patent families. Most are active through to 2025 and in many cases beyond
including patents relating to the consumables which go out to 2029.
Related Party Transactions:
Current trade receivables (supply of goods and services) 643K
2019:
286 team members and activities across the Asia Pacific, the Americas, Europe and the Middle East.
An agreement with GE Healthcare Japan, as well as the recent Japanese regulatory approval of trophon2
Targeted introduction of the next significant new product for the end of FY20
The distribution agreement with GE Healthcare in the USA changed to a Capital Reseller model.
This change will result in a material increase in both sales and margin from consumables in NA
In FY20 the company is focused on three core areas:
1. Establishing trophon as the standard of care
2. Geographic expansion
3. Product expansion
China: Market assessment study underway
ANZ: Achieved approximately 75% market penetration
286 employees globally to meet the needs of the growing business.
The Group’s key distribution customer accounts for approximately 54% of the Group’s revenue
The most significant customer accounts for approximately 54% of external revenue (2018: 49.3%).
