Next Science Posts 2.9% Revenue Growth, 48% Jump in 4Q Product Sales

Strong Revenue Growth Anchored by XPERIENCE™

Next Science Limited (ASX: NXS), a medical technology company specialising in biofilm infection control, has reported a modest 2.9% increase in FY24 revenue to US$22.8 million. This growth was largely propelled by an 85% surge in sales of its flagship surgical irrigation product, XPERIENCE™. The product’s direct sales nearly doubled, underscoring its expanding footprint in the surgical market, particularly during the saline shortage in the United States which created new adoption opportunities.

Quarterly Performance Highlights and Product Mix Shift

The fourth quarter of FY24 was a standout period, with product sales rising 48% to US$6.9 million compared to the previous quarter. Direct product sales accounted for 75% of this total, reflecting the company’s strategic emphasis on direct channels. The gross margin improved to 83%, up from 81% in 3Q FY24 and 79% in 4Q FY23, driven by a favorable shift in product mix towards higher-margin XPERIENCE™ sales.

However, the wound care segment faced headwinds, with Durable Medical Equipment (DME) sales declining 49% quarter-on-quarter and 82% year-on-year. This was attributed to the transition from a high fixed-cost direct sales force to a more flexible 1099-based agency model, which the company believes will be more sustainable long term.

Path to Profitability and Cashflow Improvement

Next Science achieved adjusted EBITDA and cashflow positive results on a monthly basis at different points in 4Q FY24, marking a significant milestone after a year of restructuring. The company reduced cash burn by over US$7 million in FY24, transitioning to a variable cost base better aligned with growth ambitions. Net operating cash outflows improved substantially to US$0.65 million in 4Q FY24 from US$2.9 million in 3Q FY24.

Cash receipts for the quarter were US$7.2 million, up 25% year-on-year and 78% quarter-on-quarter, supporting a closing cash balance of US$1.7 million. The company also drew down US$1.5 million from its US$5 million unsecured loan facility, leaving US$3 million available for future needs.

Clinical and Legal Developments

On the clinical front, recruitment continues for a large-scale Periprosthetic Joint Infection study in Canada, with over 1,200 patients enrolled. Additionally, a recent retrospective study involving 1,295 patients reported a zero percent infection rate using XPERIENCE™, reinforcing its clinical efficacy.

Conversely, Next Science disclosed ongoing litigation with former employees, which introduces some uncertainty. The company has committed to providing updates as material developments occur.

Looking Ahead

While the company is optimistic about sustaining growth and achieving consistent profitability in FY25, it acknowledges challenges ahead, including the lumpy nature of its revenue streams and one-off expenses such as legal fees. The strategic shift to a variable cost sales model and the expanding adoption of XPERIENCE™ will be critical factors to watch.