Ann: 1H FY22 Results Presentation, page-250

I thought it was pretty well handled, DW obviously has been questioned on the statement many times and this is probably the first time he has elaborated on it (or the first I have heard anyway).

Given the opportunity, he seemed to qualify it by clarifying that he was only referring to their base salary and that there is clearly a lead time of around 6 months where sales are onboarded and do not generate meaningful sales. And after 6 months, they may generated 10's of thousands in sales to start off with before they really get off the ground. But as I suspected, his statement around sales staff paying themselves off within a handful of months was only referring to sales staff after they were all set up and even still, you will have oustanding sales staff and some ok ones.

He gave examples where one sales staff could pay his own base salary with a months sales, but that is obviously not everyone. So I suspect what he really meant is that on average for those who are well on the way, they will be contributing to the bottom line after a handful of months.

That's a fair statement and I think a very reasonable one, as you'd expect nothing less from your sales team.

Having said that, the pace at which they are hiring and the costs growth to date appear to be outpacing sales growth. I get that this is likely a temporary phenomenom, but it may be set to continue for a while yet with more sales staff coming on and essentially being 'dead weight' for 6 months, before starting to first pay their own way and then maybe after another 3-6 months start to contribute to the bottom line. So essentially you don't get any positive contribution from a profit perspective from sales staff up to 9-12 months after hiring.



So doing a back of the envelope, 35 sales staff are generating $16.3m in BTM sales in 6 months. On average, that is $466k per sales staff and annualise that and its showing that each sales staff that is fully on boarded and had 6 months in the field, is generating around $931k in sales each year.

Thats pretty close to the $1m per sales staff being thrown a around, so it appears to stack up.

If we apply this methodology, then fast forward 12 months and go to 1H23 and with 49 sales staff that are flying along, you can expect 49 x $1m in sales per year, so if the above is extrapolated, they may end up with A$49m in BTM sales across the group in FY23. You have to tack on the BARDA revenue as well to show a full year revenue, so group revenue in FY23 should exceed $50m.

could they do better than that? of course, as the more experienced sales team members should be pulling in higher annual sales year on year with that increased customer base and overall improved acceptance of BTM.

But what I feel was dragging on sentiment today was the somewhat higher than expected increase in costs... and the cash burn, resulting in real estate needing to be sold to repay debt and fund ongoing operations.

That leaves very little room for anything to impact revenue growth, as there is little cash buffer to remain a going concern, which DW raised on the call as being signed off by the auditors, though it does as with all disclosures, come with a lot of caveats / risks to consider that could derail such a conclusion.



in short costs are going up and sales are as well, the drivers are there for both.. and there is a timing difference between costs incurred and revenues generated (around 12 months) from sales staff. costs are currently growing faster than sales, but I'd expect a strong second half if there are no impediments, and nobody, not even DW has a crystal ball... so there lies the concern and risk.

management were very positive and upbeat as you'd expect, but I keep in mind that they did forecast high double digit sales growth for FY22 with similar rhetoric around 'its a numbers game, we have more sales staff, conditions / hospital access are improving' but at the half way point of the year, they are nowhere near high double digit growth. So at the start of the year, they were aiming for a small profit for the year. Right now, success if everything goes there way is to break even, just like last year. I think we all hope and expect FY23 to be very different i.e. a profitable one, but anything can happen.