- Nanosonics (NAN) has revised the sales model for its flagship trophon product with the healthcare arm of General Electric as the expiry date of its contract approaches
- Nanosonics will manage all inventory, shipping, and installation of trophon as the company begins to operate in a much more direct sales model
- While the Nanosonics-GE Healthcare contract comes to an end in June 2022, Nanosonics said the two parties were in talks about forming a new OEM capital reseller deal in July
- Nanosonics is predicting a one-off revenue hit of between $13 million and $16 million as GE transitions away from being a stocking distributor and stops holding inventory
- Shares in Nanosonics are down 9.72 per cent in morning trade today to $4.55 each
Infection prevention specialist Nanosonics (NAN) has revised the sales model for its flagship trophon product with the healthcare arm of General Electric as the expiry date of its contract approaches.
The sales deal between Nanosonics and GE Healthcare will come to an end in June 2022, though Nanosonics said the two parties were in talks about striking a new original equipment manufacturer (OEM) capital reseller deal from July 1.
In the meantime, Nanosonics has revised its sales model with GE to take more control of the sales process. The new deal will see Nanosonics manage all inventory, shipping, and installation of trophon, and the company will train new GE trophon customers, who will become Nanosonics customers moving forward.
GE will also begin to transition all existing GE trophon customers to Nanosonics for the ongoing provision of all consumables.
Nanosonics said it was important to note that consumables and service revenue accounted for roughly 76 per cent of total North American revenue over the 2021 financial year. Further, consumables and services made up 80 per cent of total sales to GE in North America, with the remainder being capital sales.
This is a large chunk of Nanosonics revenue the medtech firm will now be managing directly.
While Nanosonics said it did not expect the sales model revision to impact the sales of consumables to customers, it was predicting a one-off revenue hit of between $13 million and $16 million as GE transitioned away from being a stocking distributor and stopped holding inventory.
Nevertheless, Nanosonics said it was predicting to table around $60.6 million in revenue for the first half of the 2022 financial year, which is 41 per cent higher than the prior corresponding period.
Nanosonics President and CEO Michael Kavanagh said the revision of the sales model in North America represents a “significant milestone” in the ongoing growth of the company as it worked towards an increasingly direct sales model and OEM capital reseller strategy.
“Through this new sales model and expansion of our direct operations, Nanosonics will now manage all trophon customers with the expectation that the majority of future capital sales will come through the direct channel as well as 100 per cent of consumables,” Mr Kavanagh said.
He said as it expanded direct operations, the company would be growing its North American staff to roughly 100 people across sales, clinical, marketing, service and logistics.
“This sets up the organisation for ongoing success as we continue to grow our trophon franchise and plan to introduce new products to market.”
Nanosonics said it planned to expand its direct sales operations by the end of the 2022 financial year, with an increase of some $1 million in operating expenses associated with the expansion of its North American teams.
However, investors seemed concerned about the implications of the changing relationship between Nanosonics and an established health sector giant like GE, with NAN shares tumbling in early trading action.
At 11:47 am AEDT, shares in Nanosonics were down 8.33 per cent to $4.62 each. The company has a $1.37 billion market cap.