Health Check: It’s show-and-tell time for three of our home-grown heroes

Three of Australia’s most successful global life sciences plays have reported increased interim profits – with the promise of more for the current half.

It's profit show-and-tell time for three of our global healthcare heroes – and 'teacher' is largely happy. Pic via Getty Images

• Nanosonics says it’s on track to release its much-awaited next-generation anti-infection device this year

• Cogstate's earnings driven by Alzheimer’s disease trials growth 

• Sonic hoists profit by 17% but there’s no share price boom

Hospital instrument de-bugger Nanosonics (ASX:NAN) says it is on track to release its updated device, dubbed Coris, in the September quarter.

Today’s interim results also show that the company’s doing well to maintain sales of its mainstay Trophon units, which was enough to push Nanosonics shares 15% higher.

Trophons automate the traditional manual haphazard – and hazardous – means of cleaning endoscopes.

But the Trophons have been around for a while and investors have been keen to hear about the company’s new growth avenues.

Hence the wait for Coris, which can clean tricky flexible probes – inlcuding tubing – without leaving gunky bits.

Nanosonics today said Coris “continues to proceed through the US Food and Drug Administration’s de novo (new device) review process”.

As flagged in a January trading update, Nanosonics reported a $10.9 million operating profit, 122% higher and revenue of $93.6 million, up 18%.

Capital revenue (from newly-installed Trophons) rose 11% to $24.4 million. Globally, the company installed 1730 new Trophons, with a net increase of 1050 to 35,840 units (about 86% of which are in the US).

The result was driven by revenue from services and consumables (such as the requisite hydrogen peroxide canisters) – up 20% to $69.2 million.

Nanosonics chief Michael Kavanagh said given the “good start” to the year, the company has upped the revenue outlook for the full year, from the 8-12% envisaged last August to 11-14%.

Guidance is subject to “potential impacts associated with macroeconomic and political uncertainty” – a.k.a. what on earth will Trump and RFK do next? – as well as “potential impacts from increased competitive activity in the US”.

The results show the company's ongoing Trophon growth is helped along because close to one-third of the machines are more than seven years old and need replacing.

But Coris is expected to move the dial for Nanosonics, which has a market cap approaching $1.2 billion.

Australian Ethical portfolio manager Andy Gracey says investors liked the guidance upgrade, which implies a 21% uplift in earning per share terms.

He adds that Coris could be just as big a product as Trophon, which now generates sales of about $190 million a year.

Because the two products have different functions, hospitals are likely to purchase both.

ECP Asset Manager portfolio manager Sam Byrnes says Nanosonics’ revenue guidance looks conservative on current foreign exchange assumptions.

“We are starting to see some operating leverage coming through which is particularly impressive given the business is carrying the costs of Coris," he says.

Cogstate’s brain testing hits the cerebral sweet spot

Brain testing house CogState (ASX:CGS) is benefiting from the strong global interest in cognition-related clinical trials, especially for Alzheimer’s disease.

The company today reported a 19% surge in December half revenue, to a record US$23.94 million, with a 95% leap in net profit to US$3.9 million.

Cogstate’s Cognigram platform allows for standardised testing of cognitive decline, a crucial function for trials involving the central nervous system (CNS).

Alzheimer’s trials accounted for 70% of Cogstate's clinical trial revenue.

The company is eyeing growth in trials for other indications such as multiple sclerosis, Parkinson’s disease, depression, epilepsy and oncology (when the studies have cognitive endpoints, such as for brain metastases).

The company also has a high-profile but much smaller line in testing groggy sportspeople for concussion.

Cogstate reports US$20.3 million in contracted revenue, up 86%, with $14.2 million derived from Alzheimer’s trials. A large Alzheimer’s trial might run for several years, so spits out decent repeat revenues.

However Cogstate’s total contracted forward revenue declined 8% to US$99.1 million.

This was partly because of a clearing of clinical trial backlogs and the renegotiation of a deal with Japanese partner Esai.

Current half revenue should be “consistent with that of the first half”.

Cogstate’s clinical trials chief Rachel Colite says that with late-stage novel candidates progressing, the CNS treatment market is expected to reach US$230 billion by 2023.

“The opportunity is second only to oncology; it is an incredible unmet clinical need.”

Management also highlights Cogstate’s partnership with data analytics company Medidata.

“Medidata is an extremely large organisation,” Cogstate CEO Brad O’Connor says. “It has a size and scale that dwarfs  Cogstate so their reach into the clinical trial market is much broader.”

Sonic's profits boom, but investors are ho-hum  

Today’s interim numbers from imaging giant Sonic Healthcare (ASX:SHL) are best described as workmanlike and as expected – albeit unspectacular.

Sonic reported an underlying net profit of $237 million, up 17%, with revenue advancing 9% to $4.669 billion.

RBC Capital Markets opines that total pathology revenues and profit were in line with expectations, albeit weaker in the US.

The contribution from the GP partnership, Sonic Clinical Services was “disappointing”.

The results show what a true global beast Sonic is these days, with the US accounting for 22% of revenue and a further 20% from Germany.

Late last year Sonic acquired Germany’s LADR Laboratory Group for around $800 million in cash and scrip. With the purchase due to be finalised in July, LADR will further bolster Germanic revenues.

Originally published as Health Check: It’s show-and-tell time for three of our home-grown heroes