Cost Cuts and Funding Backlogs Pose Challenges Despite Revenue Surge at Control Bionics

Record US Revenue and Market Penetration

Control Bionics Limited (ASX: CBL) has reported a landmark quarter ending December 2024, with its US business delivering nearly US$1 million in revenue, the strongest sales performance in years. This surge was underpinned by growing market penetration and the company’s first reimbursements under the Healthcare Common Procedure Coding System (HCPCS) from both public and private insurers, a critical step that promises improved margins and revenue stability in the US market.

The company’s CEO, Jeremy Steele, highlighted that this quarter marked a pivotal moment, demonstrating the scalability of Control Bionics’ NeuroStrip® technology across diverse sectors including assistive communication, sports science, and rehabilitation.

Strategic Expansion and Commercial Agreements

Beyond the US, Control Bionics has broadened its commercial footprint with first sales in the UK and Ireland, facilitated by a new distribution agreement with Smart Box. In Japan, the company secured its first commercial NeuroStrip® partnership with Stroke Lab, targeting the rehabilitation market, a promising high-growth segment.

Notably, Control Bionics acquired a 20% stake in Neuro Elite Athletics, the US-based company behind the NeuroBounce program, which applies NeuroStrip® technology to sports performance. Early results are compelling, with athletes reportedly increasing their vertical leap by up to 7.5cm in four weeks. This investment not only diversifies Control Bionics’ revenue streams but also positions it to capitalize on the expanding sports science market.

Operational Efficiencies and Financial Position

In parallel with growth initiatives, Control Bionics implemented A$700,000 in annualized cost savings within its US operations, with the full impact expected in the second half of FY25. The company also raised $2.47 million through a successful capital raise involving both new and existing shareholders, providing a solid financial foundation to support its ambitious growth plans.

Despite a net cash outflow of $1.7 million for the quarter, largely due to inventory build-up to meet demand, the company ended the period with nearly $1 million in cash at bank. Management anticipates improved cash flows in the coming quarters, driven by clearing of National Disability Insurance Scheme (NDIS) funding backlogs in Australia, higher sales conversion, and forthcoming funding tranches from the ALS Association.

Looking Ahead: Commercialisation and Market Growth

Control Bionics is advancing its DROVE autonomous wheelchair module commercialization in Australia, with three live demonstration sites and a clinical trial partnership with Cleveland Metro Health underway ahead of an FDA submission expected mid-2025. The company’s strategic priorities for 2025 include achieving profitability across core markets, scaling NeuroNode sales, expanding NeuroStrip® applications, and accelerating growth through partnerships and acquisitions.

With a new chairman, Dr. Samuel Straface, bringing deep US healthcare and neurophysiology expertise, Control Bionics appears well-positioned to navigate the complexities of international markets and regulatory pathways.

Overall, the quarter’s results and strategic moves signal a company transitioning from development to sustained commercial growth, with multiple avenues to enhance shareholder value in the near term.