Biome Australia Limited (ASX:BIO) delivered its second consecutive profitable year in FY26, with revenue rising 30% to $23.9 million and operating cash flow turning positive. But the headline $3.6 million profit includes a $2.4 million deferred tax benefit, leaving FY27 execution as the real test of the company’s growth plan.
- Revenue up 30% to $23.9 million
- Underlying profit after tax of approximately $1.2 million
- Operating cash flow turns positive at $1.6 million
- Onshore manufacturing begins in September 2026
- $32.7 million still required to meet Vision 27 target
Revenue growth meets a more important earnings test
Biome Australia’s FY26 result has plenty of momentum, but the most revealing number is not the $3.6 million statutory profit. It is the approximately $1.2 million underlying profit after tax left after stripping out a $2.4 million deferred tax benefit. Revenue rose 30% to $23.9 million, while EBITDA excluding share-based payments increased 115% to $2.0 million.
The microbiome health company also made a useful cash-flow conversion: net operating cash inflow reached $1.6 million, compared with a $2.9 million outflow in FY25. Cash stood at $3.6 million at 30 June, with a further $3.1 million available under an undrawn facility, while drawn debt fell by $1.0 million to $1.9 million. That gives Biome more room to fund its expansion, although the business remains committed to a sizeable step-up in FY27.
Onshore production is the central FY27 operational bet
Biome’s agreement with Specialty Probiotics Australia will progressively shift production of its Activated Probiotics range onshore, with the first commercial batch targeted for September 2026 and the transition expected to take about 18 months. The arrangement requires no capital investment from Biome, according to the annual report.
Management expects shorter freight and inventory cycles to release working capital and improve gross margin from the FY26 sales margin of 62.1% towards its target of more than 65%. Those benefits are expectations, not yet reported outcomes. The transition will also need to preserve supply reliability while Biome retains international manufacturing partnerships for diversification and overseas servicing.
Australian pharmacy remains the earnings engine
Domestic sales generated approximately $22.1 million of FY26 revenue, with Australian points of sale reaching 7,500 and same-store sales increasing 38.6% across about 1,600 new accounts. Monthly consumer sell-through passed 100,000 units for the first time in June, and IQVIA data identified Biome Daily and Biome Daily Kids as the leading probiotic products in their Australian pharmacy categories by value and units.
Biome says it achieved that growth without discounting or raising retail prices since the flagship brand launched in 2019. The company is instead leaning on pharmacist and practitioner education, dispensary recommendations and deeper relationships with national pharmacy networks. That approach supports brand positioning, but FY27 will show whether the model can keep compounding as the domestic base gets larger.
International markets are established but still small
International revenue increased 20% to $1.8 million across Canada, Ireland, the United Kingdom and New Zealand. Biome secured Fullscript in Canada and launched with Uniphar across Ireland’s wholesale and retail pharmacy network, reaching more than 1,400 pharmacy customers. New Zealand completed its foundation year ahead of a planned corporate pharmacy roll-out through Green Cross in FY27.
The overseas business carries an attractive reported gross margin of about 68%, above the 62.1% domestic blend, but its contribution remains modest relative to Australia. Biome’s capital-efficient model uses small local sales and education teams supported by centralised Australian functions, limiting the fixed-cost burden while markets are tested. The question is whether distribution agreements can translate into repeat practitioner demand at sufficient scale.
BMB18 moves from laboratory work into human testing
Biome also began recruitment for a 240-participant, randomised, double-blind, placebo-controlled BMB18 trial across La Trobe University in Melbourne and Harokopio University in Athens. The study will compare low and high doses of the company’s proprietary Lactobacillus plantarum BMB18 with placebo over six weeks, measuring digestive symptoms as the primary outcome and mood, sleep, quality of life and inflammatory biomarkers as secondary outcomes.
The company has filed its first patent application for the strain, which it describes as the foundation of a proprietary product program. The clinical trial is an important development in that strategy, but it has not yet produced efficacy results. Any commercial or intellectual-property value attached to BMB18 therefore remains dependent on recruitment, study completion and the eventual data.
Vision 27 now demands a substantial final-year lift
Biome has recorded $42.3 million of cumulative sales across FY25 and FY26 against its Vision 27 target of at least $75 million. That leaves $32.7 million to be generated in FY27, a material increase from the $23.9 million delivered in FY26. Management says the target remains on track, citing the domestic growth engine, new products, international distribution and the manufacturing transition.
The next annual result will provide the clearest evidence of whether those pieces are working together. Investors will have to separate the underlying earnings trajectory from the one-off deferred tax benefit, and judge whether onshore production delivers the promised margin and working-capital gains without disrupting supply. For Biome, FY27 is less about proving that growth is possible than proving it can be repeated at a larger scale.
Bottom Line?
Biome enters FY27 with stronger cash generation and a clearer operating platform, but the $75 million Vision 27 target now requires $32.7 million of additional revenue and genuine delivery from the manufacturing transition.
Questions in the middle?
- Can Biome generate the required $32.7 million of FY27 revenue without relying on discounting or materially increasing costs?
- How quickly will onshore production lift gross margin and improve inventory turnover after the September 2026 start?
- Will the BMB18 trial produce clinical evidence strong enough to support a differentiated product and licensing strategy?