CONNEQT faces equity dilution risk after A$3.06 million quarterly cash burn

Cash position leaves CONNEQT dependent on new funding

CONNEQT Health Limited (ASX:CQT) finished the September quarter with A$501,000 in cash after burning A$3.06 million in operating activities. On the company’s reported calculation, that represented only 0.16 quarters of available funding, with no unused finance facilities included.

The result keeps liquidity at the centre of the investment case. CONNEQT’s latest annual report had already highlighted a going-concern uncertainty, after a year of heavy cash use and negative net assets in the company’s FY26 going concern warning. The September quarter adds a more immediate financing timetable: the existing A$1.115 million Kashcade R&D loan matures on 30 November 2026, while the company expects an approximately A$1.5 million FY2026 R&D Tax Incentive refund in the December quarter.

Revenue drop exposes the cost of interrupted Pulse supply

Group revenue fell 48% from A$2.28 million in the June quarter to A$1.18 million, although it remained 86% above the September 2025 quarter. Consumer revenue took the sharpest hit, dropping 68% quarter-on-quarter to A$450,000 after Pulse inventory was unavailable from July to mid-August.

Pulse sales fell to 1,015 devices from 3,574 in the previous quarter. The inventory interruption also forced CONNEQT to reduce paid customer acquisition, with advertising and marketing expenditure falling 53% to A$521,000. Product and operating payments, however, rose to A$1.03 million as the company restocked and paid deposits for future production, contributing to the quarter’s A$3.06 million operating cash outflow.

Funding package remains partly prospective

The board says it is assembling a package combining debt and equity. It expects the FY2026 tax refund to repay the Kashcade facility, is pursuing a new A$1.5 million R&D loan against the FY2027 refund, and has received a term sheet for inventory funding of up to A$1.5 million. An equity capital raising is also expected in the December quarter.

None of the proposed FY2027 debt, inventory facility or equity raising is completed in the filing. The company’s previous June share purchase plan raised A$380,000, while a further A$1.10 million of September-quarter financing cash came from the SPP and the second tranche of the June placement. That financing included the conversion of A$1.275 million in related-party loans into equity.

Pulse v2 strategy depends on execution and capital

CONNEQT is trying to use the December quarter to reset its consumer economics rather than simply resume previous advertising levels. It plans to reduce consumer advertising in the near term, improve contribution per customer and test a lower entry price for the existing Pulse, with advanced cardiovascular features offered through Care+.

The longer-term proposition centres on Pulse v2, targeted for early 2027, and the SphygmoCloud software platform. The company is targeting manufacturing cost reductions exceeding 50%, or approximately US$50 per device, by shifting cardiovascular biomarker processing from hardware to the cloud. Its SphygmoCloud FDA pathway has already been framed around a potential software-led model, but the latest update still describes the regulatory and product milestones as subject to development, validation and applicable requirements.

There are some constructive operating signals beneath the cash pressure. Research and pharmaceutical revenue rose 174% year-on-year to A$700,000, enterprise contracted sites increased to 20 and clinical subscription annual recurring revenue reached A$103,200. Digital revenue also rose 27% from the June quarter, although at A$50,000 it remained small and lower device volumes limited new Care+ additions.