Is $15M enough to see cash flow positive .... how long is a...

Is $15M enough to see cash flow positive .... how long is a piece of string !

My rambling thoughts ....

So much is unknown
- projection for ATCOR clinical trial business & timing to get there
- detailed plans for CONNEQT Band timing/costs/GTM strategy
- plans for inHealth (ie. add to position, or sell within 18 months for USD$4.0M plus )
- forecast for CONNEQT Pulse market penetration / final pricing / strategy for direct sales vs leasing model
- currency movement over the next 2 years
- take up on ARTY platform / subscriptions / SaaS revenue

etc. etc.

However we can assume that the cash flow analysis has been done in detail, and AUD$15M is at least an 18 month buffer.
This will facilitate the full launch of CONNEQT Pulse.

On Pulse

Omron currently sell these at the top of the range in Walmart.


Pulse is targetted are at this end of the market, but not OTC of course, so maybe USD $150 ( AUD$230 ) per device.

There is plenty of margin in this, and wriggle room for more margin for the "retailer" ( medical centre etc. ) if that is needed to get sales across the line.





Breakup of sales for Pulse :

Retail - 5% ( Direct to consumer using online prescription services & sales )
Wholesale - 70% ( decentralised trial customers, medical centre's for RPM etc )
Leasing - 25% ( as for wholesale above, but customers choose leasing model )

The leasing model is going to add more to the balance sheet in terms of inventory, but higher earnings in the medium term.

IF CDX can hit a run rate of 50,000 units a quarter by the 1st quarter of calendar year 2025, they will deliver a gross margin of `~ USD$2M a quarter.
At 80% margin, an annualised USD$12m clinical trial business will deliver a gross margin of ~ USD$9.6M per year.

So ignoring the CONNEQT Band (jury is out if that can be delivered in 18 months), I can see the way to USD$17.6M annualised gross margin per year from 2025 onwards.

Ignoring one off costs for NASDAQ listing expenses, increasing marketing and sales , the latest 4E suggests CDX needs around AUD$22M - $25M (USD $15M - $16.5M) gross margin a year to run the business at break even.

Is AUD$15m enough to get CDX to cash flow positive & funding it's own growth.

IMHO, most likely not.

It depends on factors like how the balance sheet needs to grow to sustain a going concern selling volume items (both inventory and debtors will grow substantially- a customer like Walgreens pays on 90 days, although debtor finance can help ), and the speed of the sales ramp for the pulse device in 2024 ( eg. one big contract like Walgreens Clinical Trial business would materially change the shape of the business overnight ).

However, if additional funds are needed in 18 months time to support the launch of CONNEQT Band, and if the above has played out with the successful launch of Conneqt Pulse, then CDX will be a materially different, cash flow positive business, and funding may well be via one of the "cornerstone" investors taking a position in the company.

All IMO and all numbers are estimates only.