Strong Sales Momentum Continues
Business Update - December Quarter
- Sales momentum continues - $602k invoiced to retailers and distributors.
- Quarterly recognised revenue grows to $437k (up 42% on last quarter).
- Quarterly cash receipts - $465k (up 86% on last quarter).
- Consecutive strong quarter - number of units shipped to customers - 53,000.
- Company strengthens capital structure and cash position.
Unaudited revenue recognised totalled $437k (see Note below), up 42% on the previous quarter with revenues from consignment stock expected to be recognised over the coming quarters. Cash receipts totalled $465k (see Note below), an 86% increase on the previous quarter reflecting the impact of consignment stock flow through.
The net operating cash burn for the quarter was down 47% to ($754k) versus ($1.190 m) in the September 2017 quarter. This was in line with expectations and reflects the company's belief that investment in the growth of the Mute brand and the significant growth in the global store count will enable the business to reach CY18 company objectives. The closing cash balance at quarter end was $3.08 million. The company has a $2m working capital facility which was not utilized during the quarter. The company has no debt.
The company continues to see strong demand from customers and retailers and shipped approximately 53,000 units during the December 2017 quarter compared to 150,000 units shipped for the full 2017 Financial Year. This trend reflects the underlying strength of the approximately 8000 stores stocking Mute globally.
The Company announced the core ranging in Walgreens in July 2017 of Mute into 4,300 stores across the USA. The roll out was successfully completed mid way through the quarter. With Walgreens stores now stocking Mute, the Company is well positioned to leverage this network through its planned promotional programs over the next two quarters as it seeks to significantly grow sales in this market.
Rhinomed's global sales team is focused on expanding our retail footprint in key markets - the USA, the UK and Australia. Driving growth in store numbers ensures that all marketing efforts are able to generate a better ROI with more and more consumers able to find the Mute technology in their preferred pharmacy or online store.
Rhinomed expects marketing expenditure to increase over the next two quarters as investment in the Mute brand increases. Marketing efforts are focused on growing the brand awareness in the USA as we seek to build revenues and drive sell through from our growing store base. Marketing spend year-to-date remains in line with forecasts and comparatively very low for a high growth consumer health company. The underlying organic growth in the US market in particular is pleasing, with Mute's strong on shelf presence attracting new consumers to the sleep category.
During the quarter the company carried out a capital raise that saw our largest shareholder increase their stake to 19%. Both the CEO and Chairman confirmed their commitment to the Company through participation in the raise (subject to shareholder approval which will be sought at an EGM to be held on the February 22nd 2018.)
During the March 2018 quarter, the Company commenced a radio campaign on the Sirius radio network throughout the US. This is being coupled with PR and marketing programs, involving a number of key opinion leaders.
In Australia and the UK, international breathing expert Patrick McKeown was interviewed about Mute across 21 radio networks, in The Australian Financial Review and on Channel 9's Today Show. In the US, Rhinomed had articles appear across TV, local and national print, including the widely read magazine Natural Solutions with world renowned US sleep dentist, Dr Michael Gelb, highlighting the use of Mute in his practice as a companion piece with oral appliance therapies.
The Company enters 2018 focused on supporting the now significant global retail store base and with the objective of reaching breakeven as soon as practical. Strong interest in the company's technology by US, UK and Australian retailers continues and the company will announce these deals when they are completed. The significant retail distribution base that has been built up over the last 12 months in particular, provides a very real opportunity from which to grow a major presence in the global consumer health sleep market.
Michael Johnson, CEO of Rhinomed commented: "The last quarter of calendar year 2017 was a momentous one for Rhinomed where we achieved one of our major milestones - the successful roll out of Mute onto the shelves of 4300 Walgreens stores. We are thrilled that we can now bring Mute to the millions of Americans who suffer from some form of nasal obstruction and who want to breathe more and snore less."
"We are continuing to build a strong global reputation at both a clinical and consumer level as the preferred non drug, low invasive solution for the one in four people who suffer from some form of nasal obstruction. Through our partnerships with both clinicians and pharmacies globally, we are actively working to deliver a disruptive suite of sleep and respiratory technologies that will solve one of the more compelling unmet clinical needs in health."
Note: All financial figures contained in this Announcement are provided on an unaudited bases.
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About Rhinomed Limited
Rhinomed Limited (ASX:RNO) is a Melbourne based, medical technology firm with a focus on nasal, respiratory and breathing management technologies. The company is seeking to monetise applications of its technology portfolio in the Sport, Sleep, Wellbeing and Drug Delivery markets. For more information, go to www.rhinomed.global