The share price is climbing fast in morning trade because this is one company which navigated the challenges of Q4 to put itself on track for a muscular year of growth in 2022.

Multi-channel health & wellness company Wellnex Life (ASX:WNX) is heading into 2022 with strong momentum and a robust cash balance, as it looks to build on its first-mover advantage in key retail distribution verticals.

In its quarterly trading update this morning, WNX flagged cash receipts from customers of $4.7m for the quarter.

At lunchtime, WNX was ahead by 4.9%.

And indicative of its strong momentum in the new year, the company also notched up another $325,000 of sales in the first week of January alone.

The results mark a validation of the company’s growth strategy, which saw it launch a number of new brands on retail shelves through major distribution partners, with more launches in the works.

WNX shares rose to 11c following the update.

Revenue momentum

Wellnex Life’s cash receipts were a reflection of strong revenue growth, with half-year revenues up by 18% to $8.8m.

While top-line revenue climbed, WNX was also able to expand its margin growth to 33%.

And looking ahead, the company also received $1.6 million in purchase orders during the quarter for its Liquid Paracetamol product, which will be recognised as revenue over the next five months to the end of FY22.

Just as importantly, the WNX took direct action to secure its inventory pipeline in Q4, amid a number of logistical challenges caused by the Omicron COVID-19 outbreak.

Braced for disruption

As a result, it heads into 2022 with inventory levels above $5m, leaving it positioned to prevent disruption to stock levels and meet demand as sales pick up.

CEO George Karafotias said the result reflected the ability of the WNX management to drive sales and grow margins through a “difficult period of trading conditions”.

“The decision to invest significantly into our inventory levels should allow us to avoid major disruptions stemming from supply chain issues,” Karafotias said.

“With multiple owned brand launches across a range of product categories and agreements with major distribution networks nationally, we’re confident we will continue to create shareholder value and cement our position in the accelerating health and wellness industry.”

Product suite

Operationally, a Q4 highlight for WNX was the launch of The Iron Company and Wakey Wakey owned brands into the Australian pharmacy market.

Launched as a complementary medicine, The Iron Company product is Australia’s first slow-releasing iron gummy, while The Wakey Wakey range has also been developed as a complementary medicine and is available in a range of gummies and effervescents to support energy levels.

Along with leading pharmacy chains such as Chemist Warehouse and Terry White Chemmart, the success of the new brands also saw their successful inclusion in both major grocery outlets – Coles and Woolworths – in the March quarter of this year.

The company also announced the launch of its wholly owned Pharmacy Own brand, and entered a supply deal with Clifford Hallam Healthcare — Australia’s only fully integrated pharmaceutical and medical consumable distributor.

The first available Pharmacy Own products are scheduled for launch in the first half of 2022, with the range enabling consumers and pharmacies to benefit from competitive retail prices and strong retail margins.

100% Aussie deal

Rounding out a busy quarter, the company also established a deal with ASX-listed Australian Dairy Nutritionals (ASX:AHF) to launch Australia’s first organic A2 protein infant formula range using 100% Australian milk.

Both coverage will leverage the strength of Wellnex’s existing pharmacy distribution network to drive distribution.

It adds up to a strong outlook for the company, as management continues to execute on each of the company’s stated objectives as WNX grows into a leading player in Australia’s lucrative health & wellness market.

This article was developed in collaboration with Wellnex Life, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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