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ASX healthcare stock SomnoMed (ASX:SOM), a provider of sleep-related breathing solutions for the medical and dental markets, has declared a FY24 revenue downgrade while the stock remain in suspension.
FY24 revenue growth has been downgraded to range between 6-9%, down from an earlier estimate of 12%+.
But earnings before costs are now expected to dip into the negative
The company is blaming an inability to meet customer demand “due to manufacturing capacity constraints.”
At the same time, the company has also flagged a capital raising for $22.6M. SOM voluntarily suspended shares on the 2nd of April.
In a presentation released on Tuesday the company outlined its rationale behind the raise: revenue is down, costs are up.
Despite this, capex projections haven’t budged from their $5M mark estimated for FY24.
A newly appointed “co-CEO” recently visited manufacturing facilities in the Philippines to investigate the finer points of trouble on-site, the company reported. Milling machines have been identified as the issue.
“If a short-term solution to this manufacturing capacity constraint cannot be found, it is highly likely that the future revenues of the company will be impacted,” SOM wrote in its presentation.
The news is likely unwelcome to anyone still holding since COVID.
Right before COVID shut down the world, shares were worth nearly $2.80/sh.
By January 2021, shares were back to $2.05, and nearly hit $2.50 in October that year.
However, since Q4CY2021, the stock has suffered. Shares are worth 38.5cps at the time of writing this article.
One year returns are down -61.5% and the company has underperformed the healthcare sector on a 1Y basis by -57%.
SOM last at 38.5cps.
