Nanosonics Limited (ASX: NAN), a prominent player in the life sciences sector, has recently captured the attention of analysts despite a dip in its stock price following the release of its annual financial results. The company, valued at $1.4 billion, reported a substantial increase in revenue and profitability, prompting optimism about its future growth potential.
The company’s financial report for the fiscal year ending in June revealed a full-year revenue of $198.6 million, marking a 14% increase in constant currency terms. This growth was driven by a 6% rise in the installed base of its Trophon ultrasound technology, which now stands at 37,000 devices. Additionally, Nanosonics experienced a 20% surge in consumables and services revenue, reaching $146.1 million.
Strong Financial Performance and Strategic Developments
Chief Executive Officer Michael Kavanagh expressed confidence in the company’s performance, highlighting the significant growth in recurring revenue. “Total revenue for the year reached $196.8 million, a 17% increase, driven by a 9% rise in capital revenue to $52.5 million and 20 percent growth in recurring revenue to $146.1 million,” Kavanagh stated. “This performance underscores the growing value of our recurring revenue business, which is fuelled by installed base and product expansion.”
Nanosonics’ net profit after tax also saw a remarkable increase, reaching $20.7 million, up 59% from the previous year. This robust financial performance sets the stage for the company’s ambitious plans for future growth.
Innovations and Market Expansion
The year was also marked by significant advancements in product development. Nanosonics is on the brink of launching the next generation of its Trophon technology, which is expected to reinforce its market leadership in ultrasound probe reprocessing. Furthermore, the company received clearance from the United States Food and Drug Administration for its CORIS endoscope system.
“The CORIS system is designed to deliver a new standard of care for the cleaning of flexible endoscopes by addressing recognised issues associated with current manual processes,” Kavanagh explained. “With over 60 million flexible endoscope procedures conducted annually across the top seven key markets alone, CORIS represents a substantial opportunity for the organisation.”
Analyst Optimism and Future Projections
Analysts at Wilsons Advisory have maintained their bullish stance on Nanosonics, reaffirming an overweight rating on the stock. They have set a price target of $6.39, significantly higher than the current trading price of $4.50. “This FY25 result and the accompanying FY26 guidance boiled down to a ‘Trophon flex’ from Nanosonics,” Wilsons noted. “Having upgraded that business through the course of FY25, we assess Trophon is targeting another 13% standalone EBIT growth with margin expansion in FY26.”
Nanosonics has also addressed potential challenges, such as the $4 million direct impact from United States tariffs. The company plans to mitigate this through various strategies, including “reasonable price adjustments over time.”
Looking Ahead
For the upcoming fiscal year, Nanosonics has issued guidance for revenue between $215 million and $223 million, representing an 8% to 12% increase over FY25. This projection underscores the company’s confidence in its growth trajectory, bolstered by its innovative product pipeline and strategic market expansions.
As Nanosonics continues to navigate the complexities of the global healthcare market, its commitment to innovation and expansion positions it well for sustained success. Investors and analysts alike will be closely monitoring the company’s progress as it seeks to capitalize on emerging opportunities in the medical technology sector.
