Covalon Q2 FY’25 slides reveal 21% YTD revenue growth despite quarterly dip

Introduction & Market Context

Covalon Technologies Ltd. (TSXV:COV) presented its second quarter fiscal 2025 earnings on May 28, 2025, revealing a mixed quarterly performance but strong year-to-date growth. The medical technology company, which specializes in advanced wound care and infection prevention products, continues to focus on expanding its presence in the U.S. healthcare market, particularly in vascular access and surgical consumables.

The presentation, delivered by CEO Brent Ashton, Interim CFO Katie Martinovich, and COO Kim Crooks, highlighted Covalon’s strategic initiatives and financial performance against the backdrop of its growing influence in U.S. hospitals. The company’s stock closed at $2.80 on May 27, 2025, representing a 5.66% increase, with shares trading between $1.11 and $4.30 over the past 52 weeks.

As shown in the following testimonial from a healthcare professional, Covalon’s products continue to receive positive clinical feedback:

Quarterly Performance Highlights

Covalon reported mixed financial results for Q2 FY’25, with quarterly revenue of $7.5 million, representing a 10% decrease compared to the same period last year. Quarterly gross profit stood at $4.1 million (54.6% margin), while adjusted EBITDA was $0.6 million, resulting in earnings per share of $0.02.

Despite the quarterly dip, the company’s year-to-date and trailing twelve-month figures painted a more positive picture. Year-to-date revenue reached $15.8 million, a 21% increase over the previous year, with gross profit of $9.1 million (58.0% margin) and adjusted EBITDA of $2.1 million. On a trailing twelve-month basis, revenue grew to $33.8 million, representing a 29% increase, with gross profit of $19.9 million (58.8% margin) and adjusted EBITDA of $5.6 million.

The company’s financial position remains strong, with $18.0 million in cash on hand as of March 31, 2025, an increase of $10.8 million compared to the same period last year. This financial stability provides Covalon with flexibility to pursue its growth initiatives.

The following slide illustrates the company’s financial performance:

Strategic Initiatives

Covalon’s presentation emphasized its successful penetration of the U.S. healthcare market, particularly in vascular access and surgical consumables. The company highlighted that 8 of the 10 best U.S. Children’s Hospitals trust its products, and it has maintained a 100% retention rate among its top 50 hospital customers from fiscal year 2024.

Revenue from these top customers has grown by 38% year-to-date, while the company has acquired 50 new hospital customers in the past six months. This customer acquisition and retention strategy has contributed to a 33% three-year compound annual growth rate (CAGR) for U.S. product revenue.

The following slide details Covalon’s success in the U.S. market:

Covalon also highlighted several recent achievements that are expected to drive future growth. These include new clinical evidence supporting its products, a new agreement with Paul Hartmann USA for ColActive PLUS wound dressings, and participation in investor conferences to increase market visibility.

The company’s recent achievements are summarized in this slide:

Forward-Looking Statements

Looking ahead, Covalon outlined four key focus areas for 2025: growth-focused commercial advancement, market development acceleration, innovation and business development, and operational optimization. The company is particularly emphasizing clinical and health economic evidence generation, key opinion leader partnerships, and scientific organization collaborations to accelerate market development.

The presentation concluded with a summary of key points, stating that Covalon is making a significant impact on patients and clinicians, is in a stronger position than ever before, and is well-situated for multi-year growth with a clear path to becoming a major player in its market segments.

This summary slide captures Covalon’s vision for the future:

While the quarterly results showed a temporary slowdown, Covalon’s year-to-date and trailing twelve-month performance demonstrate the company’s ability to execute its growth strategy, particularly in the U.S. market. The strong cash position provides a solid foundation for continued investment in product development, market expansion, and potential strategic acquisitions.

Investors will be watching closely to see if Covalon can maintain its year-to-date growth momentum through the second half of fiscal year 2025, particularly as it continues to expand its hospital customer base and leverage its clinical evidence to drive product adoption.

Full presentation:

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