Polynovo Ltd (ASX:PNV) Downplays Coronavirus Impact on Sales

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Polynovo Ltd (ASX:PNV) continues to elicit strong interest in the market after confirming it does not expect the coronavirus epidemic to have a direct impact on its businesses as well as sales going forward. In a press release, the company has confirmed it does not source raw materials from China; thus, its business will not be affected by the shutdown of industrial operations in China.

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Coronavirus Disruption

The medical device company boast of multiple supplier redundancy built on the supply chain. Similarly, the company does not anticipate any form of supply chain disruption; given that, it has sufficient raw materials to support two shifts of production.

Likewise, PolyNovo intends to run two shifts of production in a bid to boost its inventory levels. Inventory boost is part of the company’s bid to take advantage of the expected strong product demand for the remainder of the year.

In addition, the company has a sufficient inventory of finished products on the shelf in the U.S as well as Melbourne New Zealand. The adequate stock should also cater to strong demand in the U.K and Europe, where the company remains well positioned to meet anticipated sales for a significant period.

The fact that PolyNovo does not sell its products in China means its revenues will not be affected as shutdowns in China continue to take a toll on businesses. The company’s major customers are in the U.S Australia, New Zealand, and the U.K as well as Western Europe.

In addition, surgeries should continue even in countries embattled with the coronavirus, which should continue to present business opportunities for the company. A majority of the company’s products are used in trauma or extensive surgery application, thus expected to continue eliciting strong demand.

PolyNovo Chief Executive Officer, Paul Brennan, said, “We are taking a disciplined approach to the virus, and we are careful to be realistic and not have undue optimism. We are vigilant about our business and will adapt to any changes at short notice and, as they arise, taking decisive action if required.

Half-Year Update

PolyNovo has already started developing a comprehensive digital marketing program as it seeks to enhance its surgeon reach. The digital marketing program should help shrug off the effects of conference cancellations as well as hospital restrictions on sales representatives that has taken a significant toll on marketing operations.

The shareholder’s update comes weeks after the company delivered impressive half-year results. The company says its NovoSorb BTM sales for the half-year increased by 129%. The rate of sales growth appears to have picked pace early in the year with sales in January more than tripling. The U.S Market remains the key driver of overall sales. Likewise, the company continues to expand its U.S sales team as it looks to accelerate sales growth in the market.

The company booked sales amounting to $10.18 million, nearly double sales of $5.67 million reported a year earlier. However, the company plunged into a wider than expected net loss of $2.42 million from $1.92 million reported a year earlier. The wider than expected net loss was because of share-based payment expenses.

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