Thank you for standing by, and welcome to the Medical Developments International FY 2026 Half-year Results. All participants are in listen-only mode. There will be a presentation followed by a Q&A session. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via webcast, please enter it into the Ask a Question box and click Submit. I would now like to turn the conference over to Mr. Brent MacGregor, CEO. Please go ahead.
Thanks very much, good morning, everybody. I want to welcome you to today's investor briefing for our FY 2026 half-year results. I am Brent MacGregor, I'm the CEO, and I'm joined today by Anita James, our Chief Financial Officer. Today I'm going to share with you an overview of our results and the company's key achievements in the half year, and I'll take you through the drivers of our future growth. Anita will speak to the financials in more detail, after which I'll give you some closing remarks. Of course, there'll be plenty of time for questions at the end of the presentation. On that note, let's go to slide three. Thank you very much. Starting here, these are our key messages.
The results we have released today really illustrate the progress we are making on our strategy. Having put the business on a sound financial footing in FY 2025, our key priorities in FY 2026, our key priority in FY 2026 has been accelerating Penthrox's volume growth. I'll come to that. Overall, our financial performance in the period was improved. If you take out foreign exchange movements, underlying earnings in our first half were stronger, and we're pleased to report positive operating cash flow for the period. It's a great result that reflects the margin improvements we've been implementing over the last 18 months, and a stronger underlying performance for our pain management business.
We've progressed important initiatives that will support delivery of our future growth ambitions, and this includes progressing approvals for the pediatric label in Europe, and some great initiatives related to data generation and real-world evidence to differentiate Penthrox from the standard of care. Our measure of progress is ultimately the demand for Penthrox, and on this, it has been encouraging to see volume growth in all of our regions. Moving to slide four. Here we have our headline results for the period. As you can see, group revenue was up 8%. Pain management specifically delivered strong growth, with the revenues up 18%. With our respiratory business, that's performed below expectation, with revenues down 10%, and this has been driven mostly by soft demand in the U.S., where the market conditions have been particularly challenging.
When you look at EBIT and NPAT, they were slightly down on the prior period. Last year's results did benefit from significant unrealized foreign exchange gains. If you exclude those FX movements, EBIT and NPAT were both improved by AUD 500,000 in the period. A particular note is operating cash flow, which was improved by AUD 1 million, with positive cash flow delivered in the period. Moving now to slide five, these are our FY 2026 priorities. You've seen these before. As I mentioned already, our key priority in FY 2026 and beyond is to accelerate volume growth for Penthrox while continuing to improve our margins. On this slide, we want to share the key initiatives we're undertaking this year to support this long-term growth.
In our pain management segment, the growth will require us to continue driving behavioral change and to embed Penthrox as a standard of care, particularly in that hospital ED setting. We have several initiatives to drive an acceleration in Penthrox adoption. First, and you've heard it before, we will leverage the MAGPIE study data, that's the pediatric study, that supports our partners in the launch of that pediatric label following all the approvals. Second, we'll generate real-world evidence that demonstrates the benefit of Penthrox from a patient and a healthcare provider experience perspective, but also from an efficiency perspective. This growing bank of evidence will be critical to influencing behavioral change and product adoption. Third, we'll expand commercial and medical investment overall to support these initiatives.
Enhancing our margins also remains a key priority, and I'll take you through some of the progress we have made in relation to these priorities in the coming slides. Lastly, here, our third priority is about growing share in the U.S. spacer market. On this, we have clearly had some challenges, as I already mentioned. We expect the soft demand conditions experienced in our first half to persist in the near term. That evolving tariff regime in the U.S. also brings an added challenge, and we will continue to navigate the uncertain conditions with caution and with discipline, as we've been doing thus far. Let's move to slide six. Slide six includes the progress we've made on several important initiatives that will support acceleration of Penthrox penetration in the future.
Firstly, once again, the MAGPIE study and the launch of a pediatric label in Europe. During this period, the first half of this fiscal year, the MAGPIE pediatric study was published. This is an important recognition of the outcomes of the study and of the application of Penthrox to children. It enhances the clinical evidence we already have, and it supports pediatric positioning where approved. On the regulatory front, we are nearing the final steps in having Penthrox approved for use in children aged six years and over in Europe. As you'll recall, Penthrox is currently approved for use in adults only, 18 plus . Just last week we received a device approval, and we expect all final country-level approvals by August. We already have some country-level approvals. In August is the expectation is our largest market, the U.K..
As I said, for most countries, the launch plans are already well advanced and waiting for those final approvals to be in hand. Now, the extension of the indication will broaden the addressable market for Penthrox, and it also addresses a barrier to entry in select ambulance trusts in the U.K.. It is an important milestone that will underpin future growth for the product. Now, the second area of focus for us has been on evidence generation. We spoke about this with the last raise. That was in July of 2024. Improved data and real-world evidence supports differentiation of Penthrox versus the standard of care and will help drive clinical adoption.
Now, we have completed a health economic study that provides further evidence that Penthrox use in hospital emergency departments enables whole-of-department cost and operational savings, and we expect this study to be published by the end of FY 2026. In addition to all of that, we're supporting several studies that will provide real-world evidence of the benefits of Penthrox in the emergency department setting. Now, even though these studies are going to be generated in Australia, the outcomes of these studies will also support growth in other global markets and certainly with all of our partners around the world. Finally, we've also increased on-the-ground efforts of our medical and our commercial teams. This includes targeted medical and commercial initiatives to expand formulary access, to support protocol inclusion, and to strengthen clinical engagement across the hospital segment.
As examples of this engagement, our team has represented the company and Penthrox at important scientific congresses, including the Australasian College for Emergency Medicine, The Council of Ambulance Authorities, and the Australian College of Nurse Practitioners. Speaking of nurse practitioners, a highlight in the period was the extension of Penthrox PBS prescriber bag eligibility to nurse practitioners in Australia, and this is going to enable an important healthcare professional group to have expanded access to the product. We recognize that changing long-held behaviors in favor of a well-regarded product like Penthrox takes time and a targeted effort, but I'm encouraged by the progress we're making. Moving to slide seven. A critical strategic pillar for us has been to establish a sustainable margin structure.
Our target has been to achieve margins that fully reflect the value proposition of Penthrox in all markets and to operate with strong cost discipline. We made great strides in FY 2025 and delivered materially improved margins and cost structures. Our work has continued on this front. In July of last year, we increased Penthrox pricing in Australia to customers that had not received a price increase in FY 2025. This represented around 25% of our Australian volume. All of our customers in Australia have moved to the new pricing, and this pricing is aligned with PBS pricing. As a result of all of this, we should see the margin improvement of around AUD 1 million in FY 2026. In other markets, we will continue to implement pricing strategies that enable routine pass-through of inflationary movements as those opportunities arise.
Switching to Europe, we successfully transitioned supply in France and in Switzerland to partners. We have Ethypharm in France and Labatec in Switzerland, and they've been making good early progress in growing Penthrox in those markets. While our margins in these countries are now lower, we have to share it with them, the transition is enabling us to reduce our cost to serve and is expected to accelerate product penetration over time. Our new partners bring greater market access and deeper customer relationships, and with stronger long-term volume outcomes now possible, we expect the financial impact of the operating model change to be positive over time. Okay, at this point, let me hand over to Anita, and she's going to walk you through our financial results for the first half in more detail. Anita?
Thank you, Brent. Good morning, everyone. Today's results reflect the good progress we are making in growing Penthrox and the financial discipline we continue to apply. Notwithstanding the challenges of our respiratory segment in the half, our group results illustrate underlying improvement. At the top line, we delivered 8% growth. Pain management was up 18%, mitigating the impact of lower revenues in the respiratory segment, which was down 10%. EBITDA, EBIT and NPAT were slightly down on the prior year. If we exclude the impact of foreign exchange movements, all were improved. Moving to slide 10, our Pain Management segment. Revenue for this segment was up 18%, with higher volumes and improved pricing in Australia. In Europe, sales volumes were higher, driven by growth in underlying demand and inventory stocking of our new partner, Ethypharm.
Our underlying demand in Europe was up 10%, including growth in the U.K. and Ireland of 8%, growth in France of 10%, and growth in the Nordic region of 16%. Average transfer prices in Europe were lower, as expected, following the transition to partner supply in France and Switzerland. Revenue for the region as a result, was flat versus the prior year. In Australia, revenue was up 18%. Volume was stronger, up 9%, driven by growth in the Australian Hospital segment by 26% and timing of sales into the Ambulance segment. Average selling prices in Australia were improved, with the passthrough of the FY 2025 PBS pricing to the remainder of the market. Revenue in our Rest of World markets was up strongly, driven by growth in underlying demand and the benefit of order timing. Overall, a very encouraging result.
Our Respiratory segment on slide 14 had a challenging half. Revenues in Australia and other markets outside the U.S. were generally in line with the prior year. Demand in the U.S. was soft, delivering revenues here that were down 16%. Overall segment revenues were down 10%. We continue to watch this market closely and have been adjusting our costs and our stock levels to align with demand. Moving now to slide 12 and the key changes to underlying EBIT in the half. It is encouraging to see the benefit of earnings, two earnings of improved Penthrox volumes and pricing. Higher volumes in the Pain Management segment more than offset the impact of softer volumes in Respiratory, with net earnings benefits in the period of AUD 1 million. Higher average Penthrox pricing, mostly in Australia, delivered an AUD 700,000 benefit to earnings.
As expected, the transition to partner supply in France and Switzerland had a $600,000 impact to earnings. The earnings benefit of this transition will be realized in future periods as we reduce our cost to serve and our partners accelerate volume growth. Other changes, including higher spend on medical and commercial activities to progress strategies and inflationary impacts, reduced earnings by $500,000, and foreign exchange rate movements had a $1.1 million impact. Excluding exchange rate impacts in both periods, earnings were improved. Moving now to slide 13 in cash flow. We have made material improvements to our cash flow over the last 18 months, and in the half, we were very pleased to report positive operating cash flows. Operating cash flow improved to $300,000, an improvement on the prior year of $1 million.
Working capital management has been tight despite the challenges that uncertain demand in our U.S. Respiratory business has created. CapEx was slightly lower and free cash flow was improved. Cash at the end of the period was AUD 16.9 million, with plenty of capacity to support our growth strategy. That concludes my comments on the financials. I will now hand over to Brent to close.
Thanks, Anita. Just moving to the final slide of our presentation. In conclusion, we're encouraged by the momentum we've generated in the delivery of our strategy. In short, we've made good progress in our first half. Hope we can, hope we're able to demonstrate that in this slide deck. Penthrox volumes are stronger, our financials are improved, and our balance sheet continues to remain strong. We're progressing several important initiatives that lay the foundation for stronger growth in future periods. In terms of our second half, we expect to do a few things. We expect to finalize the approvals for the pediatric indication in Europe and to support that new label launch. More broadly, we'll continue to execute targeted medical and commercial initiatives to expand formulary access, to support protocol inclusions, and to strengthen that clinical engagement across the hospital segment.
In terms of earnings, as mentioned, seasonally softer demand conditions in the Respiratory segment are expected to result in earnings that are lower in the second half of FY 2026 compared to the first half. That's our story overall for the first half. I want to thank you all for coming on the call today, and now let's open the floor for questions.
Thank you. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask a Question box. The first question that we have on the webcast: Please comment on the early successes, including unit growth or otherwise, from your partner in France.
Yeah, we're encouraged. The French partner, Ethypharm, they did their, they did their training. They put their people into the field in September, so they were by September, October, the 16 people in the field were fully engaged. We've seen volume up versus the prior corresponding period by 10%. We're encouraged by that, even though it's still early days. The medicine's approval for the pediatric indication has been received by the French authorities already. We're hopeful to see, you know, continuing growth through the second half of the year. We're happy with the with the first half performance of Ethypharm.
Our next question: What repositioning sales is being done by your distributors to assist the introduction of Penthrox across ambulance services once pediatric use is approved?
I'm sorry, I couldn't quite, I couldn't quite capture all of that question. Could you, Anita?
Pediatric use. What are our partners doing, Brent, in preparation for the pediatric launch?
Oh, okay. All right. Sorry. Yeah, we've had calls with our biggest partner is Galen. And Galen is, as you may recall, is U.K., Ireland, and the Nordic region. We had calls just in the last two weeks with them. They were sharing with us a whole range of activities on which they are ready to go. Collateral involving their, involving their sales force. Interactions they've already had with with ambulance services. They've had them for some time now. They need to be careful, of course, because you can't be speaking off label. What they can be doing, what they have been doing, is informing the different ambulance trusts. I'm speaking of the U.K. now in particular. Informing the ambulance trusts of the progress of the approvals.
As I said, in the U.K. in particular, which is our second biggest market after the home market, it's going to take a few more months, as it always does with the regulator, MHRA. The device approval is in hand. We informed our partners of that yesterday. They have a whole range of activities planned. They have all the collateral ready, all the pieces ready, to arm their sales force, and they've already trained their sales force. They are just waiting now for the medicines approval. In those countries that have the medicines approval, they were waiting for the devices approval.
There's a few additional administrative steps, but we're quite encouraged of all the content, all the training that's been done, all the preliminary interactions they've had, our partners have had with key customers, again, speaking of the U.K. in particular, but also in the Nordic region. We feel quite confident the start of fiscal goes off and our partners are ready to promote that broadened label. Hope that answers the question.
Our next question: We had strong Penthrox unit growth in ROW. The balance, the sheet suggests that there was no big jump trade receivable at December 31st. Can we assume that most of the cash had been received for the ROW shipments?
I'll, I'll take that, Brent. Rory, that is Rest of World. That's our Rest of World markets. A few moving parts there and, yes, I think it's reasonable to assume a good portion of that will have been received in the, in the half. We also had timing with that order shipment to France in terms of inventory stocking for Ethypharm. That will have been paid in the half as well, but equally, there will have been some shipments that have probably gone in November and December that will probably receive cash flow in the second half. But certainly, there, there's been benefits of that Rest of World invoicing in the first half.
Our next question: Can you explain why gross margins are lower today than they were in 2015, given today's much higher volumes and the introduction of continuous flow manufacturing?
I'll take that, Brent.
Yeah, lower today in 2015. Go ahead.
Firstly, I'm not sure we necessarily report gross margins, and I'm not sure back in 2015 what those gross margins may have been. I think fundamentally, the makeup of the business is quite different today than what it was in 2015. If you go back in time, the business had arrangements with partners where they would receive upfront milestones. They were accounted for through amortization in the P&L. Very difficult when you're looking at revenue there relative to the cost, because a lot of those revenues effectively had no cost, because they were amortization of something received in prior periods. The business is much bigger than it was today. Its portfolio is different in terms of the products that it has. We've exited the vet business.
It, it's very difficult to, to compare today to 2015, but certainly happy to take that question offline and we can dig into that a little bit more in detail.
Next question is for Anita. Just to be constant currency, EBITDA is around AUD 0.8 million versus AUD 0.2 million on PCP. Is that the right math? Could you give us a thought on 2H, FA, FX impact?
Yeah, that's about the right math. I think, if, if you look at the, the specific unrealized without worrying about impacts across the P&L in terms of in terms of currency, the currency movements I referred to were specifically around the gains and losses reported in the P&L on our monetary items. Looking at back math, EBIT last, last year, adjusted, was, was around an AUD 500,000 loss versus this year, which is which is breakeven. In terms of the second half, well, that's anyone's guess, really. Certainly the, the Aussie dollar has strengthened versus where it was for the same period last year, really getting us back to similar positions of where we were before the end of the, the, the first half of last year.
There's a lot going on in the world that, that probably will have an impact on that. In terms of our outlook, we're assuming that FX rates from here are stable and therefore no material gains or losses generated from where we are effectively in December, January.
The next question is for Brent. Can you please take us through the steps in the process between getting the approvals in August all the way till you get the device to the patient in those geographies with some indicative timelines?
Yeah, sure. Yeah, I know it's, it's, it's a, it's a convoluted process. I realize, it's the nature of a regulatory environment in healthcare, but I'll walk you through from last August until where we are today. Last August, the reference body, which is the HPRA, which is in Ireland, it granted its approval. What that did was it triggered, it triggered all the other regulatory agencies in the markets where we are registered in Europe to begin doing its own review. In some cases, those regulatory agencies conducted that review quickly. For example, ASMR in France, I think the medicine's approval for them came merely days after HPRA's approval.
Other regulatory authorities, whether they be across the Nordic region, Switzerland, Ireland, well, HPRA approved as a reference and then approved as well for their own home market, Ireland, those medicine approvals took a little bit longer. As we stand here today on the medicines front, we'll talk about devices in a second. As we sit here today on the medicines front, the only three markets that remain to approve the enhanced label are the U.K., as I mentioned, our most important market, plus Czechia and Slovakia. On the devices front, because that required approval, too, by a notified body, in this case, the DQS, that process began late last year, and that's what's been just received. That's been the rate-limiting step in those markets that already have granted a medicines approval.
In those markets, and as I said, it's all the markets except for U.K., Czechia, and Slovakia. For those markets, we are now close to being done. In terms of what are the next steps from this point, the next steps from this point are for the regulatory agencies, for the, the Summary of Product Characteristics, which is required to be updated. That needs to be uploaded onto the, onto the website of regulatory authorities. These are administrative steps now. They will take whatever amount of time they take. You may ask, "Okay, what amount of time?" Anywhere from a couple of days to two or three weeks. It's hard for us to know, but that's the step we're at right now, with all the markets except for U.K., Czechia, Slovakia.
To the question, where, where does it go from there? Once those updates are done and the, the enhanced label is now official, that's where the teams that I mentioned, our partners' teams, go out into the field. They go out the day of, and they are in a position at that very moment to begin promoting Penthrox much more broadly than they had the day before. That is all to say that ideally, within a few short weeks from now, maybe even before the end of this month, but again, I'm, I'm speculating. Within a few short weeks from now, those sales forces, those commercial and medical entities in the markets that have already approved the medicine, given the medicine's approval, they'll be out there.
As I mentioned in the answering the previous question, what we're encouraged by, the, the partners are all ready. All the work is done, all the approvals have been received, all the, all the revised collateral has been prepared, and they are ready to go. What remains and why. I'll give one last comment in answering the question. What remains, and what you heard earlier in the slide deck, when I think I made the comment around by the end of August of this year, all the approvals should be in hand. That's for the most part speaking about the U.K., which is the biggest market. It's far from inconsequential. It's very consequential. But that's why I said August.
All these other approvals, all these other markets, those efforts should be commencing forthwith, within a couple of weeks of right now.
Next question. You've stated in the presentation that costs remain controlled. However, comparing the Q2 quarterlies this year and PCP, your product manufacturing and staff costs are increasing exponentially. With these costs significantly up over PCP, what steps are being undertaken moving forward to achieve best-in-class manufacturing staff costs, so pricing is not the only lever available to you to achieve revenue growth?
Yeah, thanks. I'll, I'll answer this question initially, Brent. No, that's a great question, and draws us to an important point that is, that is really important to understand, is that the quarterlies and what is reported in the quarterlies is cash, is cash flow. That will be impacted in any particular quarter by our investment in working capital. What will come through in those quarterlies, in the manufacturing costs particularly, will be purchases for, for, for raw materials to, to supply our customers. There was a previous question earlier around Rest of World markets and the timing of sales. Some of our customers might only buy from us once a year or once a, you know, twice a year.
Our working capital movements are actually a little lumpy as we prepare for, for getting product available for those customers and those shipments. Depending on the timing of that, that will move from, from quarter to quarter. It is a little misleading to, to look at Q2, for example, of this year and against Q2 of last year, and use that as a guidepost to say things are either are better or worse. Cash, at the end of the day, is king, and so looking at cash improving over time is absolutely the right measure to look at. That's why we're particularly pleased about the results in the half, with operating cash flow actually improved on last year.
Probably a better thing to understand, I think the issue that you're getting at is, is in fact, the earnings and the P&L, in the half year accounts. If you look at the half year accounts, to something like employee costs, as an example, it will be up, and it will be up mostly because of inflation, and because we've put on two headcount specifically associated with delivering strategy, particularly around commercial and medical activities. We are being very controlled on headcount. We're being very controlled elsewhere in the organization, with a focus very much about progressing strategy. Ultimately, the greatest efficiencies we can get will come from improved volumes. On that, when you look at employee costs, we're actually starting to see some of those efficiencies come through now.
Effectively, we're manufacturing more volume. Our volumes are up, and the cost of the people involved in doing that manufacturing process, as an example, has been held strong. Sorry, just one other point to make on the manufacturing costs. In the half, when you look at the P&L, they will be up because our volumes are up. You look particularly in the Penthrox business, volumes are up quite strongly in most regions. You know, our raw material costs as a result, will be up. Absolutely, efficiency, reducing our cost, and our unit cost is absolutely a focus.
Whilst we can't see step change improvements this year, they are certainly there, and that certainly remains a key strategic focus for us.
The next question: What do you believe is driving the disconnect in the market value of the company and the future strategy you have communicated, given the share price is at best stagnant, or in reality, significant decline, while the ASX is at or near record highs?
Yeah, it's a it's a, it's a difficult one for us. It's one we, we grapple with, even as, you know, our primary focus on the day-to-day is on, on our operations and growing our business, which we're doing. Yes, it's not, it's not lost on us that even, you know, our quarterly cash reports, which we believe, are showing good progress towards the strategy that we're pursuing, is not translating into, into share price increase. What we see is it goes up for a period of time and then, you know, absent anything in particular, it goes back down. I know that, you know, we understand that the market, perhaps in the, you know, in the past couple of years, had anticipated a higher growth rate, than, you know, has been generated.
We've learned a lot about the growth and the challenge of bringing a product that works so well, like Penthrox, into those segments. We are, we are very committed to the, the strategic approach that we're taking, and we're very pleased with, with the achievements we made on, on executing those strategies into the ED. Continuing to grow volumes, getting the pediatric indication, which was years in the making, and we're on the, we're on the doorstep of doing it. We realize it hasn't shown through in, in our share price yet.
We are hopeful that as we continue to, to communicate, as we're doing today, and the confidence we feel in what we're doing and in, in the organization that we've sized to the aspiration that we have, we're hopeful that the market will respond accordingly and in a positive way to this news and to the progress we're making.
There are no further questions at this time. I'll now hand back to Mr. MacGregor for his closing remarks.
Okay. First and foremost, thank you to all of you for coming on the call today, and thank you in particular for the questions that you asked. We're very open to hearing from you, and even if there's a question or questions you have for us after this call, we do hope you will, you won't hesitate to send them through, and we promise we'll respond to them. On that note, I want to thank you again for being on the call. I hope the messaging we were trying to convey came through, and we're pleased with the performance of the first half and looking forward to continuing to drive our strategy former, forward in the second half and beyond. Thank you all. Have a good rest of your day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.