SomnoMed Warns Growth May Slow After Strong Q2 as Backlog Clears
SomnoMed reports a robust 19.8% revenue increase in Q2 FY25 and updates its full-year guidance, reflecting strong demand and operational improvements amid ongoing production enhancements.
- Q2 FY25 revenue up 19.8% to $28.5 million
- FY25 revenue guidance raised to approximately $105 million
- EBITDA forecast set between $7 million and $9 million
- Cash balance strengthened to $18.5 million
- Appointment of Andrew Price as new Director with extensive medical device experience
Strong Revenue Growth and Updated Guidance
SomnoMed Limited (ASX: SOM), a leader in oral appliance treatments for sleep-related breathing disorders, has delivered a strong second quarter for FY25, reporting revenue of $28.5 million, a 19.8% increase compared to the same period last year. This growth, consistent even when adjusted for currency fluctuations, underscores the company’s expanding footprint in key markets.
Building on this momentum, SomnoMed has updated its full-year FY25 guidance, now targeting approximately $105 million in revenue, up from previous estimates. The company also projects EBITDA in the range of $7 million to $9 million, reflecting both top-line growth and ongoing operational efficiencies.
Geographic Performance and Operational Efficiencies
Geographically, North America and the Asia-Pacific region led the charge with double-digit revenue growth, while Europe also contributed positively, albeit at a more modest pace. Notably, December 2024 was a particularly strong month for North America, highlighting the region’s critical role in SomnoMed’s growth strategy.
Operationally, SomnoMed continues to collaborate with manufacturing consultants to enhance production capacity and efficiency. These efforts aim to reduce turnaround times and optimize resource allocation, critical factors as the company manages a robust order backlog. However, management cautions that growth may moderate in the second half of FY25 as this backlog is cleared.
Financial Health and Strategic Appointments
The company’s cash position remains solid, with a balance of $18.5 million as of 31 December 2024, supported by low-interest government-backed loans in Europe. This financial strength provides SomnoMed with flexibility to invest in operational improvements and innovation.
In a strategic move to bolster its leadership team, SomnoMed appointed Andrew Price as a Director in January 2025. Mr Price brings 25 years of experience from ResMed, including senior roles in supply chain, product development, and business development, which is expected to enhance SomnoMed’s operational and strategic capabilities.
Innovation and Regulatory Progress
On the innovation front, SomnoMed’s Rest Assure® device received FDA clearance as the first oral appliance with integrated compliance monitoring. The company is now initiating clinical trials in the US to support a 510(k) submission for efficacy monitoring, signaling a potential new growth avenue through enhanced product offerings.
Overall, SomnoMed’s Q2 results and strategic initiatives position it well for continued growth, though investors should watch for how the company manages the transition from backlog-driven expansion to sustainable, organic growth.
Bottom Line?
SomnoMed’s strong Q2 and strategic moves set the stage for a pivotal second half of FY25 as it balances growth with operational refinement.
Questions in the middle?
- How will SomnoMed sustain growth once the current order backlog is cleared?
- What impact will Andrew Price’s leadership have on production and innovation?
- How quickly can the Rest Assure® clinical trial and FDA 510(k) submission progress?
