Next Science Ltd

ASX:NXS

Next Science Sees Mixed Product Sales Amid FDA Response

In the first quarter of FY '25, Next Science reported product sales of $5.3 million, a decline of 3% year-over-year. Although direct product sales fell 14% to $3.7 million, growth in the XPERIENCE and BLASTX lines—up 84% and 23% respectively—partly mitigated the drop. The gross margin improved to 84%, driven by increased XPERIENCE sales. Cash receipts decreased 13% to $4.7 million, with a closing cash balance of $1.3 million. The company is actively addressing an FDA warning letter received in February, while assuring that their products remain safe and effective.

Quarterly Sales Overview

In the first quarter of FY '25, Next Science reported product sales of $5.3 million, reflecting a slight decrease of 3% compared to the same period last year. This dip was influenced mainly by a decline in DME (Durable Medical Equipment) sales even though the company saw solid growth in its XPERIENCE and BLASTX product lines. XPERIENCE sales surged by an impressive 84%.

Direct Sales Trend

Direct product sales for the quarter amounted to $3.7 million, marking a more significant decline of 14% year-over-year. However, this was somewhat counterbalanced by the strong performance of XPERIENCE and BLASTX. Direct sales accounted for 70% of the total product sales, indicating a significant reliance on this sales channel.

Gross Margin Highlights

The gross margin for the first quarter was recorded at 84%, up from 83% in the fourth quarter of FY '24 and considerably higher than 79% from the previous year. This increase in margin can be attributed to the favorable product mix, particularly with the higher sales contribution from XPERIENCE, which yields better margins.

Cash Position and Financial Health

During the first quarter, cash receipts totaled $4.7 million, down by 13% compared to $5.4 million a year prior. The closing cash balance for the quarter was $1.3 million, a decline from $1.7 million at the end of December '24. The company's debt status stands at $3 million, which adds a layer of financial obligation that investors should keep an eye on.

Regulatory Response and Production Continuity

Next Science is also navigating a recent FDA warning letter received in February 2025. Despite this regulatory challenge, the company has assured stakeholders that it continues its operations, including the manufacture and sale of its products, which it states remain safe and effective.

Looking Ahead

As the company progresses, it is important to watch out for updates during their upcoming Annual General Meeting (AGM) on May 9, which could shed light on strategic directions, improvements in sales channels, and any responses to regulatory challenges that may affect long-term growth.

[Francoise Dixon, executive]

Welcome to the Next Science First Quarter FY '25 Results Briefing. My name is Francoise Dixon, and I'm Head of Investor Relations for Next Science. Today, our CEO, I.V. Hall; and CFO, [ Marc Zimmerman ], will provide an overview of the first quarter results. We will then open it up for questions. [Operator Instructions]

I'll now hand over to I.V.

[Harry Hall, executive]

Thank you, Francoise, and good morning, everybody. Thank you for joining our call. And let me take you through a full -- a few bulleted highlights, and then we will open it for questions and answers.

So to start off, for first quarter of FY '25, our product sales of USD 5.3 million were down slightly 3% on the prior corresponding period, as stronger XPERIENCE, BLASTX and Partner sales were offset by the decline in our DME sales.

Our first quarter FY '25 direct product sales of USD 3.7 million were down 14% on prior [ corresponding ] period as growth in direct sales of XPERIENCE of 84% and BLASTX of 23% partly offset a decline in the DME sales. Direct sales in the quarter represented 70% of product sales overall.

The first quarter FY '25 gross margin of 84% reflects a shift in product mix due to the higher proportion of XPERIENCE sales, where in fourth quarter of FY '24 gross margin of 83% for quarter-over-quarter, where first quarter FY '24 of 79% was over prior period.

The cash receipts of the quarter of USD 4.7 million were down 13% over prior period of first quarter FY '24 of $5.4 million and then closing cash balance of USD 1.3 million compared to end of December quarter of '24 of $1.7 million and a debt status of USD 3.0 million.

We've also responded to the FDA warning letter that we received in February of 2025. And throughout this entire process of working with the FDA on the warning letter, the company has continued to manufacture, ship and sell its products, which are safe and effective for their cleared intended uses.

So with those discussion bullet points, happy to open the webinar session up for questions-and-answers, where Marc and I can address what's on your mind. So Francoise? You're on mute, sorry, Francoise.

[Francoise Dixon, executive]

Thank you, I.V. We don't have any questions on the live chat at the moment, but I'll just wait a couple of moments in case any come through. I.V., we haven't got any questions at this stage. Would you like to make some closing remarks?

[Harry Hall, executive]

Okay. Well, first of all, thank you all for your support of Next Science and attending our webinar session today, and we look forward to addressing you at our AGM coming up on May the 9th. And thank you all once again, and have a great day. Thank you.