Cost Cuts and Clinical Trials Propel Resonance Health but Execution Risks Remain
Resonance Health reports record $14.9M cash receipts over 12 months and completes cost-cutting measures while advancing two major pharma clinical trials on schedule.
- Record $14.9M cash receipts and $3.1M positive operating cashflow over last 12 months
- Completed cost efficiency program cutting 12 roles, saving $1.1M annually
- Two major global pharma clinical trials progressing with $8M invoiced and $12M remaining
- SaMD business secured contract extensions worth over $1M and strong $2.5M-$3M pipeline
- TrialsWest expands capacity and wins new tenders, driving expected strong FY26 growth
Robust Financial Performance and Operational Efficiency
Resonance Health Ltd (ASX: RHT) has delivered a standout quarterly update for the period ending 31 March 2025, reporting record cash receipts of $14.9 million over the last twelve months and a positive operating cashflow of $3.1 million. This marks a significant step-change in the company’s cashflow profile, underpinning its strategy to scale profitably across its core business segments.
Central to this financial strength was the completion of a major cost efficiency program in March 2025, which saw a reduction of 12 roles primarily within the Software-as-a-Medical Device (SaMD) division. These measures are expected to yield annual savings of approximately $1.1 million, enhancing operational leverage as Resonance Health invests in automation and capacity building.
Clinical Trial Management Driving Revenue Growth
The company’s Clinical Trial Management arm, Resonance Clinical, continues to deliver on two substantial contracts with a major global pharmaceutical partner. To date, $8 million has been invoiced, with an additional $12 million expected over the next 18 months, contingent on the full duration of the trials. The first trial, announced in August 2023, is nearing completion with data analysis and final documentation expected within the current financial year. Meanwhile, the second trial, valued at $13.8 million and announced in November 2024, is progressing on schedule with initial patient recruitment anticipated in early Q4 FY2025.
SaMD Business Expansion and Pipeline Strength
Resonance Health’s SaMD division has secured several contract extensions from global pharmaceutical customers worth over $1 million, alongside a promising pipeline of bids valued between $2.5 million and $3 million across multiple years. The division is poised to commence revenue generation from its new Magnetic Resonance Elastography (MRE) central-read analysis service in the June 2025 quarter. Additionally, development continues on the innovative Non-Invasive MRI Liver Fibrosis product, with an Extended-Proof-of-Concept trial now operating across four data collection centres to accelerate validation.
TrialsWest Expands Capacity and Market Reach
The TrialsWest clinical trial site services business is experiencing strong momentum, bolstered by new tenders from global pharma clients and the operationalisation of a second site opened in August 2024. With a third site in planning, TrialsWest is well positioned to support the upcoming patient recruitment phase of the second major clinical trial, underpinning expectations for significant revenue growth in FY26.
Financial Position and Market Resilience
At quarter-end, Resonance Health held $3.2 million in cash with net cash of $0.3 million after accounting for $2.9 million in bank debt under a secured facility with National Australia Bank. Notably, the company reports that recent US tariffs have not impacted trading volumes with US customers, and no material effects are anticipated. This resilience, combined with ongoing automation and cost discipline, provides a robust platform for sustained growth.
Overall, Resonance Health’s quarterly update reflects a company successfully executing its multi-pronged growth strategy across clinical trial management, SaMD services, and trial site operations, while maintaining financial discipline and operational efficiency.
Bottom Line?
With strong cashflow and clinical trials advancing, Resonance Health is well positioned for profitable growth but must navigate execution risks in trial completions and contract conversions.
Questions in the middle?
- How will the completion of the major clinical trials impact revenue recognition and profitability in FY26?
- What is the timeline and commercial potential for the new Non-Invasive MRI Liver Fibrosis SaMD product?
- How might evolving US trade policies affect Resonance Health’s future US market operations and contract wins?
