Media Release: Hydrix Limited 30 June 2020 Quarter Activity Report & Appendix 4C
4QFY20 & FY20 Highlights1:
- FY20 operating revenue (preliminary and unaudited) of $15.0m, up 12.6% on FY19, despite impacted COVID-19 4QFY20 revenue of $3.0m;
- 4Q20 cash operating profit2 of $0.02m, driven by swift implementation of cost reduction initiatives;
- FY20 cash operating loss2 of $0.26m, a significant improvement of $1.69m year on year;
- Capital raise of $3.0m from a fully underwritten entitlement offer and placement;
- Pro forma 30 June cash on hand of $4.2m after $0.75m debt reduction;
- $50m Services pipeline is a solid book of business to generate conversions from; and
- First sales (implants) of Angel Medical Inc. (AngelMed) Guardian devices in Singapore are scheduled in the September quarter (1Q’21).
Hydrix Limited (‘Hydrix’ or ‘the Company’) (ASX: HYD) today released its Appendix 4C for the three months ended 30 June 2020 (4Q20) and a business update for 4Q20.
Hydrix Executive Chairman, Gavin Coote, said:
“The fourth quarter and full year results represent a solid performance despite the challenging COVID-19 environment. It was particularly pleasing that the core business achieved a cash operating profit in the fourth quarter. We made significant progress with Hydrix Medical acquiring the exclusive rights to distribute the AngelMed Guardian System in APAC. Further, we are pleased to announce the first sales and implants of the Guardian System are anticipated to commence in Singapore in the September quarter. Overall, the quarter reflects significant progress of the Company’s growth strategy.”
Business and financial update (1):
Hydrix Services achieved operating revenues of $3.0 million in 4QFY20, with the effects of COVID-19 resulting in the slowing and deferral of some contract conversions. Notwithstanding this, the $50 million plus pipeline provides for a solid book of business to work from in the year ahead.
Despite the impact of COVID-19, in 4QFY20 the Company achieved a quarterly cash operating profit2. This was the result of swift action by management to implement cost saving initiatives, resulting in monthly cost reductions of ~20%.
FY20 full year cash operating loss was $0.26 million, a significant improvement of $1.69 million compared to the prior year’s result. Operating revenues for the year were $15.0 million compared to $13.3 million in the prior year, a 12.6% increase. Cash on hand at 30 June 2020 was approximately $4.2 million on a pro forma basis, after paying down $0.75 million of debt and taking into account net funds received from the fully underwritten entitlement offer and funds to be received from placement (announced in July 2020).
Hydrix Medical incurred costs of approximately $0.12 million in 4QFY20, as it continued to progress planning of regulatory and reimbursement approvals, and personnel, marketing and transaction costs incurred to establish and acquire the exclusive rights to distribute the AngelMed Guardian System.
The significant progress of operating and strategic initiatives implemented in the fourth quarter, and successful capital raise completed in July 2020, set the business up well for FY2021.
Hydrix leverages its deep commercial market insights, product innovation capability and technical expertise to pick winning investments in high potential medical technologies. Hydrix invests in clients to share in the upside of value created. Equity positions are established with cash, equity in-kind from services rendered or both. Early stage client investments include Angel Medical Systems, Inc., (early warning heart attack alert device), Gyder Surgical Pty Ltd (intra-operative surgical navigation tool), Cyban Pty Ltd (brain trauma injury monitor), and Memphasys (ASX: MEM)(bio-separation medical device).
On 13 March 2020, Hydrix announced that it had been granted the exclusive rights by AngelMed to distribute its Guardian System, an implantable heart-attack warning device. The distribution rights cover eight Asia Pacific countries in which over 500,000 people suffer annually an acute coronary syndrome event (including silent heart attacks).
These patients represent a large addressable market opportunity for Hydrix. For context, a 1% market share in the top four Asia Pacific countries that Hydrix is initially targeting could translate into over $35 million in annual Guardian System sales revenue for Hydrix.
The Company is pleased to announce the first sales and implants are scheduled in Singapore in the September quarter, where early access scheme approval has been granted and preparatory work completed. Hydrix is also well progressed with planning to submit for early access scheme approvals in Australia and continues to consult with key stakeholders in this regard. Subject to reaching commercial and regulatory arrangements, and COVID-19 disruptions, there is potential for first sales and implants in Australia in the December 2020 quarter.
Hydrix Medical is responsible for gaining all regulatory approvals for commercial sales in jurisdictions under the distribution agreement. Submission to the various regulatory authorities can begin once AngelMed is granted FDA approval for the upgraded implanted device, anticipated to occur in the March quarter of 2021.
Hydrix successfully completed a $3.0 million capital raise, via a $2.0 million fully underwritten 1 for 3 pro rata non-renounceable entitlement offer and a $1.0 million placement to sophisticated investors. Participating shareholders also received one free attaching option for every three new shares subscribed for with an exercise price of $0.12, expiring on 31 July 2022.
Funds raised have been used to repay $0.75 million of debt to the Company’s facility lender Pure Asset Management Pty Ltd (Lender) and provide working capital and balance sheet support to accelerate key growth initiatives including in Hydrix Medical.
Completion of the $1.0 million placement is subject to shareholder approval under ASX Listing Rule 7.1, which the Company intends to seek at an extraordinary general meeting to be convened in early September 2020. Further details of this meeting will be set out in a Notice of Meeting to be lodged with ASX in the coming weeks.
The aggregate number of payments made during the quarter to related parties and their associates (referred to in item 6.1 of the accompanying Appendix 4C (quarterly cash flow report) comprise full-time salary payments to the Executive Chairman, and payments of directors’ fees to all Directors.
About Hydrix Limited
Hydrix Limited (ASX: HYD) is a powerful product innovation company. We leverage our product innovation capability across multiple growth platforms. These platforms include Hydrix Services design and engineering to create products which transform markets; Hydrix Ventures to pick winning investments in high potential innovative products; and Hydrix Medical to create new product revenue streams bringing cardiovascular technologies to market.
For further information please contact:
Rod North, Managing Director,
Bourse Communications Pty Ltd
T: (03) 9510 8309, M: 0408 670 706,
E: [email protected]