Medical Developments International Limited

Thank you for standing by and welcome to the Medical Developments International FY26 four-year results call. All participants are in a listen-only mode. If you wish to ask a question via the webcast, please enter it into the ask a question box and click submit. I would now like to hand the conference over to Mr. Frank McGregor, CEO. Please go ahead.

Thank you very much. Good morning, everyone. Welcome to today's investor briefing. for our FY26 full year results. I am Brent McGregor. I'm the CEO and I'm joined today by Anita James, our Chief Financial Officer. So today I'm going to share with you an overview of our results and the company's key achievements in the year and take you through our priorities for FY27. Anita will speak to the financials in more detail, after which I will give some closing remarks. And then, as usual, we'll have plenty of time for questions at the end of the presentation. So, on that note, why don't we jump to slide four and walk you through the key messages we want to convey today. So, in short, our strategy to grow Pentarox, it continues to gain momentum. And as evidenced by our results in FY26, we made some great progress. We delivered a solid financial performance with very strong cash flow generation. And earnings in both our pain management in Penfrox and in our respiratory segments were materially improved. And in that regard, free cash flow landed at $4.2 million. So Penfrox in-market demand, it continues to grow. and it continues to grow across all of our jurisdictions. But we achieved some really significant milestones in AFY 26. A significant one in Europe was achieving the approval for the expansion of the PANFROC syndication to children from six years of age, where it was prior, it was 18 years of age. The most recent approval was the second biggest market force, which was the UK, and that came in June. And speaking of which, our partners in the UK and in the other European markets have now launched their commercial plans to unlock growth in what is now a broader addressable market. So we are delighted by this approval, which frankly has been some years in the making. Now in Australia, we completed a health economics study. It's been mentioned before, and I hasten to add it was published yesterday. And it demonstrates that PENFROC's use in hospital emergency departments enables a whole department cost and operational saving compared to the standard of care. And this is important data that will support our commercial value proposition going forward. And we expect this momentum to continue with higher PENTROX demand in the year ahead. Now if we move to slide five, this is the usual slide which is meant to show give us the headline results for the year. And what are those results? We landed our group revenue at $42.6 million, which was a growth over the prior year of 9%. And this was driven by a strong performance in the pain management side, which is up 21%. Frankly, this more than offset the impact of what was ultimately soft demand in our respiratory segment, where the revenues were down 15%. Having said all that, EBIT and NPAT were both improved And a particular note, as I mentioned, was the free cash flow, which at $4.2 million was $5.8 million higher than FY25. So this is a strong result for the year that has ultimately increased our cash balances to over $21 million. Now, we move to slide six. And slide six is meant to walk you through the strategy milestones that we achieved during the year. So, as you know, our key priority is to accelerate volume growth for PenFrox while continuing to improve our margins. So, we're really proud of the progress we made in FY26 on several big initiatives that we expect to support increased adoption in our PenFrox business going forward. Now, this included a few things. The pediatric label expansion, I mentioned that earlier, which broadened the addressable market and strengthened the platform for future growth in Europe. Publication of the pediatric study data. We were always calling that magpie. That is what supported the label expansion. This publication strengthens our clinical evidence and our pediatric positioning. The health economic study that I just demonstrated in the cost and operational savings of PenFrox in a hospital EV setting, which supports the broader value proposition. Again, that's the publication that just came out yesterday. And we continue with real-world evidence generation including several studies assessing the benefits of Penfrox in the emergency setting. Lastly, I would add the extension of the PBS eligibility here in Australia for eligibility for Penfrox to nurse practitioners. That was to physicians, now it includes nurse practitioners. So this is all in addition to the ongoing efforts of our commercial and medical teams who continue to work ceaselessly to strengthen clinical engagement and to support increased adoption. And And part of this effort includes representation at key scientific congresses throughout the year, like the Australasian College for Emergency Medicine, the Council for Ambulance Authorities, and the Australian College of Nurse Practitioners, to name a few. Now, look, we've said this before and I'll say it again. You know, we recognize that changing long-held behaviors in favor of a well-regarded product like Pentrox, it's taken time and it takes targeted effort. And so when I look at that and against that backdrop and looking back at FY26, really encouraged by the progress we're making. Now, in terms of margins, we implemented several targeted initiatives here as well. So in July last year, we increased Pantox pricing in Australia to those customers that had not received a price increase in FY25. And this delivered a $1 million benefit to our earnings for the year. Now, in other markets, we continue to implement pricing strategies that enable us to have a routine pass-through of inflationary movements as the opportunities arise. Can't do it everywhere, but where we can, we do it. In Europe, we finalized our transition of supply in France and in Switzerland to new partners. So, just a reminder, our partner in France is Edifarm. Our partner in Switzerland is Labatech. And both those partners made encouraging progress in in-market sales since taking on the marketing and sales of Pence Rocks in FY26. Now, having said that, while our margins in these countries are now lower, insofar as we now go through partners, this transition is enabling us to reduce our cost to serve those markets and is expected to accelerate product penetration in those markets over time. Finally, from a margin perspective, pricing in our U.S. respiratory business was increased And this was done to help mitigate the impact of the tariff regime that was affecting our business there. Now, speaking of the respiratory business, I mentioned at the start, the year was not without challenge. Our business faced a number of market headwinds, resulting in softer demand, particularly in the U.S. But despite all of that backdrop, we have reported higher earnings in this segment versus prior year. So, overall, a strong year that has yielded very encouraging progress in our strategy and our overall business. Now, on that note, let me move to slide seven. These are our priorities for FY27. Firstly, we're going to continue to work on initiatives to accelerate penetration of Pentrox in our existing markets. Now, this includes, of course, working with our partners to help unlock value from the pediatric label in Europe. leveraging the health economic analyses to drive faster adoption through our commercial strategies, and continuing to work on generating real-world evidence. Now, this growing bank of evidence will be critical to influencing that behavioral change and product adoption that I've mentioned before. Now, secondly, we're going to start to work on strategies to grow Panthrox in new markets and segments. Now, with several key milestones achieved in FY26, we believe we have the capacity and the confidence to push our boundaries further in FY27. So our ambitions now turn to discipline growth in new markets and segments, and I'll provide a little further color on the following slide. And then finally, maybe it goes without saying, but we say it anyway, we're going to continue to work to enhance margins and deliver operational efficiencies over the year. Okay, so let's go to slide eight. And this is a bit more of a drill down on those priorities I was mentioning. So, as I mentioned, we're going to continue our efforts to accelerate PENTROX growth globally, and this is going to include a few things. We're going to look at targeted entry into select new markets with a primary focus in Europe initially. We're going to do an evaluation of the potential to further expand the indication in Europe to procedures. Just expanded the indication to pediatric age. We're going to look at further expanding into procedural settings. And then we're going to do an initial assessment of growth potential in regions outside of Europe. So our learnings and our experience, the real-world evidence and data generated, it has applicability in all global markets, particularly in the hospital segment. What we have seen is there's, relatively speaking, a common adoption rationale for pentroxin hospitals globally, and particularly when supported by a pediatric indication, which we now have. Now, to deliver value from geographic expansion, that requires a few things. Very thoughtful market selection, identification, of course, of an ideal partner, and a go-to-market strategy with that partner that's deemed to be efficient and timely. Now, we have existing regulatory approvals in select markets. The decentralized procedure, the DCP framework in Europe, established partnerships, And through all that backdrop, that may offer efficient market entry and potentially accelerated penetration when we determine those markets that we want to pursue. Now, while opportunities that can leverage our existing platform and relationships will be prioritized, as I mentioned, evaluation of new market expansion opportunities and new partnerships will remain a focus. But we're going to keep you updated on progress in the year ahead. So on that note, let me hand over to Anita, and she's going to walk you through our results of the past year in more detail. Anita.

Thank you, Grant, and good morning, everyone. The results we've released today reflect good momentum in our PEMSROC strategy. The financial results are pleasing. Despite some headwinds in our respiratory segment, we have reported improvements in most metrics. On our top line, we delivered 9% growth, with revenue at $42.6 million. Pain management was up 21%, mitigating the impact of lower revenues in the respiratory segment, which was down 15%. Overhead cost management was strong. While we had some adverse impact from FX, EBIT and NPAC were both improved on the prior year. Moving ahead to slide 11 in our pain management segment, Revenue for this segment was up 21% with higher volumes and improved pricing in Australia. In Europe, revenue was up 12% to $9 million. This included growth in in-market volumes of 18%, a timing benefit of $1.2 million relating to partner stocking in the period, offset by lower transfer prices in France and Switzerland following transition from direct supply. In-market volumes were higher in every market. Volume in the UK and Ireland was up 20%, France was up 11%, and the Nordic region was up 19%. In Australia, revenue was up 16% to $17.9 million. Volume was stronger, up 9%, with the hospital segment up 28%, and the ambulance segment modestly improved. The Victorian government's decision to make Penthrox free for IUD procedures within its women's health hubs also positively impacted demand. Average selling prices in Australia were improved with the pass-through of FY25 PBS pricing to the remainder of the market, delivering a $1 million benefit to revenue and earnings. In rest of world markets, revenue was up strongly at $4.1 million. This included higher underlying demand of 13%, and a favourable timing benefit of $1.1 million from changes in partner stock holdings. Segment EBIT was strongly improved at $9.4 million, reflecting net volume and pricing benefits and disciplined cost management. Overall, a very pleasing result. Our respiratory segment on slide 12 had a challenging year. Revenues here were down 15% with the benefit of higher pricing in the US, more than offset by softer demand in most markets. Pleasingly, we were able to respond to softer demand and adjust our costs and stock levels accordingly. This, plus a refund of US tariffs, lifted earnings higher than the prior year, which was a great result. Moving now to slide 13 and the key changes to EBIT in the year. The strong contribution to earnings of our Penthrox strategies is clear on the chart. Higher in-market demand for Penthrox in all markets delivered an improvement to earnings of $1.8 million. This was the benefit from underlying growth in use of Penthrox. In the year, we also received a benefit from an increase in partner stock holdings. While this resulted in a $1.1 million benefit to earnings in FY26, It is unlikely to repeat in FY27. Higher average Pensox pricing, mostly in Australia, improved earnings by $1.1 million. Offsetting these benefits was the impact of lower transfer prices in Europe following transition to partner supply of $1.4 million and the impact of lower demand in our respiratory segment of $500,000. Other costs and revenue changes increased earnings by $700,000. This included the refund of U.S. tariffs of around $400,000, reduced commercial investment in the U.S. respiratory business, and lower amortization, which more than offset higher investment on Penfrox commercial initiatives and inflationary impacts. The net change in foreign exchange gains and losses in the period was $2.5 million. We had a loss of $0.9 million in FY26 compared to a gain of $1.6 in the prior year. Excluding the FX in both years, EBIT was improved $2.8 million, a great result. Moving now to slide 14 and cash. We are very proud to report free cash flow for FY26 of $4.2 million, $5.8 million improved on the prior year. Operating cash flow was strong at $5.8 million, up from a break-even result in the prior year. This included an improvement in our underlying cash earnings of around $1 million and favourable changes in working capital of $5.2 million. This included a reduction in working capital of $2.2 million in FY26 compared to an increase of $3 million in the prior year. The reduction in working capital in FY26 relates to timing of sales to our international partners and a reduction in inventory needs in our respiratory segment due to softer demand. Our working capital metrics are strong and are where we expect them to be. So we do not expect a similar improvement in working capital to benefit cash flow in the year ahead. CapEx in the year was slightly lower and cash at the end of the period was $21.4 million. Disciplined financial management and improved operational performance over the last two years has strengthened our balance sheet. With confidence in the underlying business and greater understanding of our growth opportunities, the company is assessing a range of capital management alternatives to maximise long-term shareholder value. This will include investments in our manufacturing facilities to support our growth ambitions, in addition to the expansion opportunities that Brent has spoken to. That concludes my comments on the financials. I will now hand over to Brent to close.