Tight hospital budgets hurt Nanosonics Nanosonics (ASX:NAN) has...

Tight hospital budgets hurt Nanosonics

Nanosonics (ASX:NAN) has slumped ~15% in the past five days after releasing its H1 FY24 results with the disinfection device maker citing hospital budgetary pressures as deferring purchasing decisions.

The results follow NAN releasing a negative trading update in January. Revenue was $79.6m, down 2% on pcp which was in line with the trading update, while EBIT was $3m, which was what Morgans forecast.

Half year capital revenue of $21.9 million fell 15% on pcp, which NAN says “primarily related to delays in expected upgrade unit sales”.

NAN says upgrades to its latest probe sterilisation device Trophon 2 of 620 units were down 23% on pcp with customers extending use of their existing Trophon EPR devices due to budgetary constraints.

Gross profit margin of 79.7%, was up from 78.9% on pcp with NAN saying the stronger gross margin was driven by revenue mix and the positive impact of foreign exchange rates.

Despite the market challenges faced in the first half, NAN says its expects both more unit and revenue growth in H2 FY24 .

“They’ve called out that hospital budgets are still quite tight so their growth is more skewed to the second half,” Power says.

While Morgans maintains an add rating for NAN it has reduced its 12-month target price to $3.50 from $3.88.