Strong momentum continues with a record quarter of revenue growth.
Medicinal cannabis, CBD and hemp healthcare products company, Bod Australia Limited (ASX: BDA) is pleased to provide this update to shareholders for the quarter ended 30 June 2020 (Q4 FY2020).
The Company is pleased to report that it has achieved record revenues for the quarter, driven largely by the continued uptake of its medicinal cannabis product range, MediCabilis™, across both Australia and the UK, steady sales of CBD products in the UK through CBll, and hemp-based
products in collaboration with Swisse Wellness in over 2,000 Australian stores. Pleasingly, Bod also decreased its operating expenditure significantly, allowing the Company to progress closer to a cashflow positive position. Further details on the Company's performance for the quarter have been outlined below.
Bod achieved record revenue of $2.74m for the quarter, a 118% increase on Q3 FY2020 revenue (Q3 FY2020: $1.25m). Further, total FY2020 revenue of $6.14m increased ~358% on total FY2019 revenue (FY2019: $1.34m).
The notable increase in revenue was generated by uptake of Bod's CBD products in the UK and hemp based products under the Swisse Wellness brand in Australia. Ongoing sales of MediCabilis™ in Australia and the UK also added to sales.
Pleasingly, Bod continued to further reduce its cash burn during the quarter to $0.73m, marking an ~11% decrease on the previous quarter (Q3 FY2020: $0.82m) and a 55% decrease on the previous corresponding quarter (Q4 FY2020: $1.61m). Reduced cash burn has been achieved through stringent controls of all operating expenditure, without compromising Bod's
investments in innovation, R&D and key recruitments.
The Company anticipates that these favourable trends in revenue and operating expenditure will continue into FY2021 and beyond, outlining a path towards a cashflow positive position.
This is an excellent result for the Company and provides validation of the investments that Bod has made in its medicinal cannabis and CBD and hemp consumer product divisions, which are now generating growing, diversified and sustainable revenue streams.
Bod has retained a strong cash balance of ~$6.3m at the end of the quarter, which provides the flexibility and confidence to continue driving growth. The Company has several value-accretive initiatives planned for roll out over the coming months that will continue to grow its revenue profile substantially.
During the quarter the Company made payments totalling $0.18 million to related parties representing remuneration paid to Directors.
First medicinal cannabis prescriptions in the UK:
A major milestone delivered during the quarter was the receipt of first prescriptions for MediCabilis™ in the UK. The prescriptions came from a leading medicinal cannabis organisation, which has a number of clinics in London and the UK.
The group focuses on patients living with chronic and debilitating conditions, whose previous treatments have not been sufficiently effective. The organisation provides premium care through innovative and effective treatments, which is overseen by leading medicinal cannabis specialists.
The UK has approximately 7.3m consumers using CBD annually and represents a major market opportunity. The UK market is
expected to grow in value to US$3Bn per annum by 2024i and to €8.8Bn by 2028ii. This would represent a market four times larger than Australia in 2028 (estimated Australian market value in 2028: €1.9Bniii).
Bod worked collaboratively with its distribution partners in the UK during the quarter to ensure all necessary infrastructure is in place and that it can scale operations rapidly. The Company is continuing to engage with physicians and medical organisations across the UK and expects patient demand to increase over the coming months and beyond.
Initial medicinal cannabis prescriptions from Project Twenty21:
Underpinning further growth in its medicinal cannabis division, Bod filled its first MediCabilis™ prescriptions as part of Project Twenty21. This is a major milestone as it provides Bod with an additional, reliable sales channel for MediCabilis™ in this market.
Project Twenty21 is Europe's largest medicinal cannabis registry, targeting 20,000 patients. The registry intends to reach patients suffering from a range of conditions including chronic pain, Post Traumatic Stress Disorder, Tourette's Syndrome, anxiety disorders and issues arising from substance abuse in an aim to generate the largest body of evidence for the efficacy of
Bod is one of five companies participating and expects to supply a minimum of 1,000 patients during the registry. The Company is selling its unique 5% MediCabilis™ CBD product for £150.00 per unit during Project Twenty21 and is confident that sales will add to its growing revenue profile.
The registry is expected to conclude at the end of 2021, but may continue into 2022 due to current conditions. Bod will provide ongoing updates on prescription volumes received from the initiative.
Ongoing MediCabilis™ product uptake:
Uptake of Bod's MediCabilis™ products with physicians and patients continued, with 990 units sold during the quarter. This marks an ~808% increase on the PCP (Q4 FY2019: 109 prescriptions) and takes the total number of prescriptions filled to ~4,000.
The Company continues to achieve a very high rate of return patients. In June, 80% of MediCabilis™ sales were to repeat customers, highlighting product satisfaction within the medical community. Prescription volumes are expected to increase in the next quarter and throughout FY2021 as Bod fills orders from Project Twenty21, it's Australia-wide open label study and as additional agreements with clinics are secured in the United Kingdom.
Effects of COVID-19:
Bod has not experienced any adverse effect on operations from COVID-19. The Company has developed a workplace safety policy, designed to ensure the safety of staff and will continue to evolve practises to reflect the operating environment. The Company has not made any redundancies because of the pandemic, instead of creating three new positions to aid growth.
Given Bod's MediCabilis™ products are used by patients with chronic conditions and are available on a prescription-only basis, sales channels remain uninterrupted by the effects of COVID-19. Further, Bod's consumer product ranges are centred on preventative healthcare, and following the outbreak of the pandemic, Bod has seen consumers move further towards supplementation to support wellbeing, allowing the Company to further benefit.
The Company is not reliant on a single contract manufacturer, and its raw material suppliers have adapted appropriate contingencies to ensure all aspects of the supply chain remain uninterrupted despite broader conditions.
Bod is focused on delivering several important growth objectives this quarter and throughout FY2021, including:
- International market and product expansion initiatives with new and existing H&H Group brands, including Swisse and CBII;
- Further growth in MediCabilis™ prescription volumes in Australia, the UK and other target markets;
- Collaborations with research groups to advance insight into the application of CBD and the use of MediCabilis™ on chronic conditions.
CEO Jo Patterson said: "This is a great result for Bod and validates the strategic investments made towards key growth opportunities over the past 12 months. Most importantly, Bod now has two core divisions that are generating growing, diversified and sustainable revenue streams and we enter FY2021 with considerable momentum.
"Cash used in operating activities continues to decrease, while demand for our products continues to increase. We are confident that revenue will only continue to build as we add line extensions, introduce new innovative products and enter new markets. We expect revenue will continue to grow during FY2021 and well beyond, while cash burn will continue to lower.
"We look forward to providing ongoing updates on new product launches, R&D initiatives, partnerships and revenue growth in
the coming months."
To learn more about Bod Australia, visit the company HQ here.
Disclaimer: Past performance is not an indicator of future performance.
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