Somnomed Limited

SOM Details

Strong Q4 growth across geographies: SomnoMed Limited (ASX: SOM) reported strong sales in the US during the quarter (+24% over prior year), combined with ongoing strong Q4 growth in Europe (+20.6%), resulted in record total group unit quarterly sales of 19,859 units (+24.2%). Total device sales for the FY17 stood at 68,100 units. Unaudited quarterly group revenues grew by 22% yoy to $14.3 million (+22%) and total group revenues grew by 12% yoy to $49.3 million. Renew Sleep Solutions (RSS) opened its seventh center during the month of June, to end its first 7 months of trading with an exceptional operational performance. With the latest center in Phoenix, SOM continues its commitment to expand network of treatment outlets across the US. Moreover, the company remain confident that “Direct to Patient” initiative will continue to build in line with or above current expectations in terms of patient inquiries, appointments and treatments. Notably, SomnoMed’s sales in North America, which had seen the impact of a reaction to a perceived channel conflict linked to the establishment of RSS, reported its best quarterly results in the quarter for FY17. US sales grew by 24% and the North American region, including Canada, grew by 31.8% in Q4.
After a tough period in the second and third quarter of the year, the company witnessed the combined impact of a stabilization of the reaction to its establishment of RSS, with growth returning to direct US sales, robust growth in sales to licensees and device sales to RSS outlets. Additionally, Q4 growth indicates that FY17, which is transitional year for SomnoMed as it established a “Direct to Patient” channel to broaden the adaptation of COAT has been successfully navigated. Further, this should allow SomnoMed to accelerate growth through a stronger and broader distribution concept in FY18 and beyond. Given the strong bounce back in sales during the quarter, and optimistic outlook, we give a “Buy” recommendation on the stock at the current price of $3.21


SOM Daily chart; (Source: Thomson Reuters)

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