Uscom Faces Operating Cash Outflow Despite Strategic Moves in China
Uscom Limited reports a 56% increase in cash on hand to $2.17 million for Q2 2024, driven by strategic moves in China and new product regulatory approvals.
- Cash on hand rose 56% quarter-on-quarter to $2.17 million
- Customer receipts increased 8% from prior quarter but down 20% year-on-year
- Operating cash outflow of $0.13 million compared to prior inflow
- New Chinese distributor SinoPharm appointed and regulatory approvals secured
- Staff and marketing expenses increased modestly during the quarter
Quarterly Cash Flow Highlights
Uscom Limited (ASX: UCM), a medical technology company specialising in cardiovascular and pulmonary devices, has released its Appendix 4C cash flow report for the quarter ending 31 December 2024. The company reported a notable 56% increase in cash on hand to $2.17 million, up from $1.39 million in the previous quarter, although this remains below the $3.18 million held at the same time last year.
Despite this cash boost, operating activities generated a cash outflow of $0.13 million, a reversal from the prior corresponding period’s modest inflow of $0.05 million. Receipts from customers rose 8% quarter-on-quarter to $0.64 million but declined 20% compared to the prior corresponding period, reflecting ongoing market challenges.
Strategic Moves in China and Product Approvals
Executive Chairman Professor Rob Phillips highlighted the company’s strategic progress in China, a key growth market. Uscom appointed SinoPharm as its Chinese distributor during the quarter and is actively onboarding the new sales team while developing tailored marketing materials. Crucially, regulatory approvals for Uscom’s BP+ central blood pressure monitor and SpiroSonic ultrasonic spirometers were secured in China, paving the way for product distribution in the second half of 2025.
These developments are expected to underpin revenue growth despite persistent international uncertainties, particularly in the US and Europe. China’s market is described as being in early recovery, and the company is positioning itself to capitalize on this momentum.
Operational Costs and Financial Position
Expenditure rose modestly, with staff costs increasing 3% year-on-year to $0.77 million and advertising and marketing expenses up 5% to $0.24 million. These investments reflect Uscom’s commitment to expanding its market presence and supporting its new distribution channels.
Uscom’s product portfolio remains focused on premium, non-invasive cardiovascular and pulmonary monitoring devices, including the USCOM 1A haemodynamic monitor, the Uscom BP+ central blood pressure monitor, and the SpiroSonic digital spirometers. These devices are positioned for use in clinical, research, and home care settings globally.
Funding and Outlook
The company’s cash runway is estimated at over 17 quarters based on current operating cash outflows, supported by a $1 million unsecured loan facility from the Executive Chairman at 8% interest. This financial buffer provides Uscom with flexibility as it executes its growth strategy.
Looking ahead, the successful integration of SinoPharm and the rollout of newly approved products in China will be critical to reversing the year-on-year revenue decline and driving sustainable growth. Market watchers will be keen to see how these initiatives translate into sales performance in the coming quarters.
Bottom Line?
Uscom’s strengthened cash position and strategic China expansion set the stage for a pivotal second half of 2025.
Questions in the middle?
- How quickly will SinoPharm’s distribution efforts translate into measurable sales growth?
- What impact will the new product approvals have on revenue outside China?
- Can Uscom sustain operating cash flow improvements amid rising expenses?
