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Health & Biotech
An ordering intermediary between chemists, wholesalers and suppliers, PharmX Technologies (ASX:PHX) services a whopping 99% of pharmacies so at face value it’s hard to know where further revenue growth will come from.
Yet CEO Tom Culver reckons there’s plenty to come.
In all, PharmX clips the ticket on around $20 billion of transactions annually.
“We operate at the heart of the pharmacy network,” Culver told attendees at this week’s Australian Microcaps Investment Conference.
“Ultimately, we connect the industry and streamline order management.”
PharmX is coming off a strong year, having boosted revenue by 9% to $6.7 million and underlying earnings by 13% to $1.8 million.
The company has not lost its pep so far this current year, either.
“We are ahead of revenue in our budgets by 4% and … we are double digits ahead of where we were last year,” Culver crows.
Despite a market dominance that would make even the proposed Sigma-Chemist Warehouse tie-up look modest, Culver says PharmX has plenty of growth levers.
At a macro level, pharmacies are benefitting from both the ageing population and an influx of younger customers who buy over-the-counter stuff rather than just a prescription.
“Pharmacists are increasingly important as a healthcare access point,” Culver says.
“They are increasingly taking on the role of GPs and providing services you might not immediately think of, such as vaccines and sleep apnoea tests.”
Medicinal cannabis and nicotine vapes (now sold only by chemists) will also contribute to the growth – even though most apothecaries seem keen to leave the latter to shady tobacconists.
Culver says while Woolworths this week pointed to subdued sales, “we are not seeing cost of living pressures translating into pharmacy sales as yet.”
PharmX this year is targeting a 30% increase in its supply base and a 10% increase in active accounts, focusing on “growth brands with no or low penetration into the pharmacy market.”
On average, Culver says, Australia’s 19,000 chemists use seven suppliers (and as many as 25). Some order directly with a supplier via fax, having just phased out carrier pigeons.
“We work with 99% of pharmacies but not all those pharmacies work with all our 140 suppliers,” Culver says.
“So as our average number of pharmacies per supplier increases, our revenue opportunity increases.”
Given PharmX’s dominance of its niche field, its revenue is modest, but the company argues it has only just changed from a less attractive legacy business model.
“For 10 years we were not well loved,” Culver says. “We should have been built on a percentage-based model.”
Meanwhile, Culver is indifferent about whether the competition regulator approves or blocks the Sigma/Chemist Warehouse union, because PharmX’s close links with wholesalers, suppliers and network vendors puts it in an agnostic position.
PharmX shares this morning were steady at 4.4 cents, ascribing a $27 million market capitalisation.
In the 1930s children’s book The Story of Ping, a family of ducks lives on a boat on the Yangtze River and the last one to return after a day’s fossicking gets whacked with a cane.
Realising he will be last up the gangplank, Ping hides from his master, but after being captured and narrowly avoiding being served as someone’s dinner he returns for his punishment.
Judging from the string of last-minute quarterly reports this morning – the last permissible day for September quarterly filings – plenty of CFOs want to avoid Ping’s fate. Or even worse, being ‘pinged’ by the ASX for late filing.
Among the morass of reports, stem-cell developer Mesoblast (ASX:MSB) affirmed a January 7 (or earlier) D-day for the US Food & Drug Administration to approve Ryoncil, its proposed treatment for children’s steroid-resistant graft-versus-host disease.
Investors have criticised Mesoblast’s heavy spending in the past, but cash burn of US$10.5 million was 26% lower than the previous corresponding period.
Mesoblast is sitting on cash of US$51.1 million, with access to a further US$60 million on Ryoncil’s approval.
And Ryoncil should be approved this time around. If it isn’t, Mesoblast’s backside will be even sorer than Ping’s after investors finish with their hiding.
Mesoblast shares fell 1.8% to $1.32.
A US-focused supplier of radiology imaging tools, Mach7 Technologies (ASX:M7T) has a long way to go to rival the stellar growth of ASX peer Pro Medicus – and we wouldn’t say it is travelling at warp speed.
But during the quarter the company at least amped up the thrusters, with contracted annual recurring revenue (CARR) of $27.5 million, up 2% on the June quarter.
Management reaffirmed guidance for 15-25% growth in CARR and revenue and for operational expenditure growth to be less than revenue growth.
“Our pipeline continues to grow and generate opportunities across multiple geographies and product combinations,” says CEO Mike Lampron.
During the quarter, the company inked two of its largest deals: an $11.7 million agreement with US Veterans Health Affairs and a $15.3 million compact with the Hospital Authority of Hong Kong.
Mach7 has a market cap of $120 million, with cash of $22 million and no debt. The company burnt $3.59 million during the quarter but expects the 2024-25 year to be cash-flow positive.
Pro Medicus is worth more than $20 billion, having last year reported revenue of $161 million and a stonking $83 million profit.
On paper Mach7 looks an attractive alternative valuation-wise, but the trouble is it has for some years without rewarding investors.
Investors this morning were unconvinced, with Mach7 shares down 11% to 45 cents.
Health & Biotech
Health & Biotech
Health & Biotech
