Thank you for standing by, and welcome to the Medical Developments International HY25 half year results call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question via the phones, 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 enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Brent MacGregor, CEO. Please go ahead.
Thank you very much. Good morning, everyone. Welcome to today's investor briefing for Medical Developments International FY25 half year results. I'm Brent MacGregor, 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 achievements in the year and take you through our drivers of future growth. Anita is then going to speak to the financials in more detail before I provide you with some closing remarks. As usual, there'll be plenty of time for questions at the end of the presentation. Let's move to slide three. In the first half of FY25, we delivered a step change improvement in revenue, in earnings, and in cash flow. Our group revenue was up 33%.
Our underlying EBIT was improved by AUD 8 million, and our free cash flow was improved by AUD 6.8 million over the prior corresponding period. As a result, we are in a much stronger financial position than we have been for several periods, and we're making good progress alongside this in our strategy as well. Our volumes are growing, our margins are higher, and our costs are lower. Of course, we're managing our balance sheet with discipline. There's work still to do, of course, but the foundations from which we are now building are strong. Let me take you through further detail of our progress in the slides ahead. Let's move to slide four and our key messages for the presentation this morning. As mentioned, we've delivered strongly improved financial results.
Our pain management and our respiratory segments have performed well. Our targeted pricing initiatives have been implemented, and the efficiency programs we put in place in the last year have made a meaningful impact on our costs. Now, alongside the improvements in our financial results, we have been making good progress on our strategy. Penthrox volumes are higher in most markets, and we have positive signals from the Irish regulator on our pediatric submission in Europe. In our respiratory franchise, we continue to generate share growth in the U.S. market, while our leading share is being maintained here in Australia. Overall, we maintain a positive outlook for the remainder of the year. Let me move to slide 5 now and our strategic priorities. We set four priorities for ourselves at the start of FY25, as you see here on the slide.
First, targeting a step change improvement in margins through pricing and efficiency. The second priority, to increase penetration of Penthrox in Australia. The third, about growing Penthrox in global markets, with the primary focus in the year being the U.K. and Europe. Overall, the next few slides I'm going to take you through, are progress toward these strategic priorities in a little more detail. Our fourth priority that you see here on the slide is to continue to grow our respiratory franchise with a particular focus on the U.S. We don't have a slide in the deck today that speaks to this. However, the results in the period illustrate the good progress we're making, and you will see that more clearly when Anita takes you through the financials. Okay, let's start going through it. Let me move to slide six.
Our target to achieve margins that fully reflect the value proposition of Penthrox in all markets and to operate with a strong cost discipline. That's what this priority is about. Again, our earnings in the first half include benefits of AUD 6.6 million pricing and efficiency, and this includes a benefit of AUD 2.6 million from enhanced pricing here in Australia, and that was aligned with changes to Penthrox pricing on the PBS. We have improved the economic terms in our U.K. and Ireland agreement. Annualized benefits from these initiatives will be AUD 3.5 million. Our earnings also reflect efficiency of AUD 4 million, and this is derived from efficiency initiatives that we implemented in the second half of FY24, as well as ongoing cost discipline throughout the year.
Now, we will realize leverage from our cost base over time as we continue to grow volume. Now, let's move to slide 7. We'll talk to accelerating penetration of Penthrox in Australia. We've been continuing to make progress on this front as well, with increasing penetration in the hospital segment. Demand from this segment in the first half of FY25 was up 52% on the same period last year. Now, granted, while that's off a smaller base, it does at least continue to affirm our belief in the opportunity for Penthrox in the hospital setting. Now, also during this period, the Queensland List of Approved Medicines, what we call the LAM, amended their listing of Penthrox to include use in all public hospital emergency departments.
The LAM is the official statewide formulary for medicines approved for use in all Queensland Health public hospitals and institutions. We're encouraged that this amendment can support the broader use of Penthrox in Queensland over time. Further to that, as we've spoken of previously, changing long-held behaviors in favor of a well-regarded product like Penthrox takes time and a targeted effort. Addressing how to influence and shift behavior has been a key focus of our strategic efforts this year. We have implemented on this front, several medical engagement initiatives to accelerate the behavioral change that is required to embed Penthrox as a standard of care in the hospital ED.
I want to draw your attention to a key initiative that we took in the first half of this year, which was an effort, a presentation that was delivered at the Australasian College for Emergency Medicine at their annual scientific congress. That was in November. We had our lead clinical investigator, Michael Barrett, from University Hospital, Dublin. He was the lead investigator of our MAGPIE pediatric study. He delivered a presentation on the results of that study on the main agenda, and we followed that up with a speaker tour through Melbourne, Sydney, and Adelaide, where the focus of all of the dinner meetings was on the use of Penthrox in emergency department settings for children.
Now, building an expert network like this in Australia, that, that can establish advocacy in key institutions and facilitate behavioral change, that's going to remain a key focus of our medical engagement efforts. As you can see from that, we are leveraging the data from that MAGPIE pediatric study, shall we say, as a door opener. But a broader arsenal of evidence that can fuel the medical engagement approach may be required in time, and the capital raise that we completed last July provides us with some of that funding capacity to address these needs going forward. Let me mention as well, that the development of an expert network in Australia can also be leveraged in support of our partner efforts in international markets. Speaking of which, let's go there now on slide 8. This slide 8 details our growth strategy for international markets.
We can see momentum here for Penthrox in these markets, and with still significant runway for further growth. Again, get repetitive, but as a reminder, for most of you, we submitted our pediatric application to the European Reference Regulatory Agency back in August of last year, August 2024. As I already mentioned, a successful outcome would broaden the addressable market for Penthrox in select markets to children from 6 years of age. A decision from that reference regulatory authority is expected by August of this year. This does offer an opportunity for a step change in demand over the coming years. Our priority in Europe is also to establish an operating model that is efficient and better to accelerate market penetration.
This has included the transition to a partner model in France and in Switzerland, and we have spoken to this on already on a number of occasions. During the period, excuse me, during the period, Penthrox's distribution arrangements for Switzerland were finalized with our new partner, Labatec. Labatec is a privately owned, Swiss-based pharma company that has extensive experience in the hospital segment. Planning for the transfer of distribution in Switzerland is tracking well, and we expect that transition to be completed in Q4 of FY25. We are also continuing to advance partner negotiations for distribution of Penthrox in France. This has taken time, we understand, but we feel very confident now that we're in the final step, and it is imminent.
Much so that we believe we will be able to transition, that distribution arrangement to occur, in Q1 of FY26. Our transition to a partner-supported operating model in Switzerland and in France is expected for us to accelerate product adoption in these markets. On that point, let me hand over now to Anita, and she'll walk you through our results over the past year in more detail. Anita?
Thank you, Brent. Good morning, everyone. I'm pleased with the results that we have. These results reflect the many levers we have worked on over the last 12 months to deliver a step change improvement in financial performance and drive the delivery of strategy. To recap the headlines: at the top line, we delivered 33% growth, pain management up 37%, and respiratory up 26%. Underlying EBIT improved by $8 million. We have delivered an underlying EBIT profit, albeit small, for the first time for several periods. Reported EBIT improved by $13 million, without the share-based payment expense of $5 million we recognized in the prior year. Net profit after tax was a profit of $300,000. Moving ahead to Slide 11 and the pain management segment.
Revenue here was up 37%, with strong growth in Europe and Australia, offset slightly by lower revenues in our rest of world markets. Pricing was strongly improved in Australia, the U.K. and Ireland, delivering AUD 2.6 million in higher revenues in the period, with an annualized benefit of AUD 3.5 million. Underlying demand in Europe was up 22%, with good growth in all markets. The Nordics was particularly pleasing, up 40%, and France continued to deliver growth despite limited commercial activity. Phasing of deliveries helped our European result in the first half, with deliveries into the U.K. and Ireland favoring the first half. However, timing had an adverse impact on our rest of world markets, with volumes here down slightly from the prior year. In our respiratory segment on Slide 12, we also delivered good growth. Revenue here was up 26%.
We have continued to grow share in the U.S., with revenues up 23%, and we saw improved demand conditions in Australia, with revenue up 25%. Another very pleasing result for this segment. Moving now to Slide 13, the key changes to underlying EBIT in the half. You can see the chart on this slide, the meaningful change delivered through pricing and efficiency. Pricing increased earnings by AUD 2.6 million in the period, and efficiency improved earnings by AUD 4 million. The overall impact to earnings from changes in volume was AUD 700,000, with growth in Penthrox in Australia and Europe, and growth in respiratory in the U.S. and Australia. Other cost and revenue changes were AUD 600,000 positive.
This included some favorable FX gains in the period, mostly on inflation and the absence of non-capital project costs that were incurred in the prior year. These benefits were partly offset by general inflationary impacts. Moving ahead to Slide 14, and our balance sheet and cash flow. In line with our improved earnings, operating cash flow was strongly improved. CapEx was down, with lower spend on MAGPIE and the pause in selfie and U.S. projects in the current year. Improved operating cash flow and lower CapEx delivered a AUD 6.8 million improvement to free cash flow. Cash at the end of the period was AUD 17.6 million. Following the raise earlier in the year and positive momentum in free cash flow, our balance sheet is well capitalized.
Operating cash flows in the second half are expected to be positive, though we will have movements in working capital in line with seasonal demands across the quarters. CapEx for the second half is expected to be higher than the first, with full year CapEx at around $2 million. Thank you. That concludes my comments on the financials. I'll now hand back to Brent to close.
Thanks, Anita. This brings me to our final slide of the presentation. Again, in summary, we are on track to deliver strongly improved earnings and cash flow in FY25. We've already generated $6.6 million in earnings benefits from pricing and efficiency, and we expect to deliver $8 million in benefits by the end of the fiscal year. Finally, to our earnings outlook. I want to mention that phasings and phasing and movements in foreign exchange rates are expected to result in earnings that are lower in the second half of FY25 compared to the first half. Notwithstanding that point, the group expects underlying EBIT for the full year to be strongly improved on FY24, driven mainly by the $8 million in benefits from the higher average Penthrox prices and the operational efficiencies.
Lastly, let me close on this point, that the group remains on track to generate positive operating cash flow for the second half of FY25. Thank you for coming on the call today. Let's open the floor for questions.
Thank you. If you wish to ask a question via the phone, you'll need to press the star key followed by 1 on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask a Question box and click Submit. We'll pause a moment for questions to register. Your first question is a webcast question from Matt Joass from Maven Funds, who asks: How much of the Australian emergency room unit uplift came from Queensland? What were the main drivers?
Yeah, I would say that the percentage is mainly from Queensland, is probably mainly from New South Wales. We've had good uptick, and some of the, some of our top customers on our customer list are New South Wales-based. Queensland, Queensland Health overall continues to be our most important customer in the world. I think there's been, I'd say from a hospital perspective, there's been a greater uptake in New South Wales, relatively speaking, through the first half of this year in the hospital segment. As for what the key drivers are, we continue to engage on a narrower set of hospitals. Some of those hospitals already were users of Penthrox, and they've increased their use. We've seen new hospitals coming on board.
I would say the primary driver, Matt, has really been, honestly around those key benefits that Penthrox represents. They are seeing the utility of putting Penthrox in the ED from, not just from an efficiencies perspective in terms of, of patient throughput, but just from the basic, benefits of using Penthrox for acute trauma pain relative to other dry, analgesic options that they have.
Thank you. Your next question is also from Matt, who asks: Can you talk more about why H2 is expected to be weaker? Again, what are the primary drivers?
Hi, Matt. Yeah, I'll take that one.
Yeah.
We've actually really called it out in the, the outlook phasing and.
Yeah
Movements in, in, in FX.
For us, yeah.
We spoke through the presentation just in terms of timing of deliveries into Europe, and that's the primary driver in terms of phasing between the two quarters. FX was a positive for us in the first half, mostly on translation and mostly really risen through sharp changes in the exchange rate really towards the end of December, between the Aussie and the euro and the pound. I wouldn't be banking on those in the second half. If they, if, if, if we did get benefits, that's great. I guess it's a little bit of a wait and see in terms of what happens there. They're the main drivers. In terms of, you know, the underlying pricing, environment and cost environment, we expect that to be largely in line.
Thank you. Once again, a reminder, to submit a question, please enter it into the ask a question box. Your next question is from Daniel Hurren, from MST Marquee, who asks: Anita, could you talk to potential quarterly volatility around cost lines for the back half of the year? Same question for working cap, please.
Hi, Dan. Yeah, for sure. Look, in terms of changes in costs across the second half, operating costs should be reasonably stable. As I said, reasonably consistent with the first half, but for a little bit of phasing. In terms of working cap, that will move around a little. We did see that in the first half, where we saw a working capital build in Q1, and a release in Q2. I expect something similar to occur between three and four or so. Exactly how that lies, you know, we'll wait and see. Across the two quarters, you know, working capital position will be well maintained, as we've demonstrated for several periods now.
As we guided, we do expect to achieve operating cash flow positivity in the second half.
Thank you. There are no further questions at this time. I'll now hand back to Mr. McGregor for closing remarks.
Okay, this may be a record for us in terms of half year results. Hopefully it's, hopefully it's a product of of, you know, the amount of good news that we're able to share, and how good we're feeling about our results through the first half of the year, and what we're projecting as the outlook for the for the full year. Yeah, all I'll say again is, thank you for coming on the call. Those of you who came on the call, you have any questions you want to flick to us afterwards, don't hesitate. Otherwise, we'll close the call. Thank you again, and we look forward to seeing you down the road.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.