Wellnex Life grows revenue despite challenging trading conditions
Wellnex Life has accelerated inventory purchases to minimise major supply chain disruptions.
Health and wellness company Wellnex Life (ASX: WNX) is continuing to grow revenue and expand its branded product offerings despite recent difficult trading conditions and is taking preventative measures to minimise supply chain impacts.
In its December quarterly report, the company today posted unaudited revenue of $8.8 million for the first half of FY2022, up 18.5% on the previous corresponding period.
Margins reportedly increased to around 33% and the company also received $1.6 million in purchase orders during the quarter for its liquid paracetamol product to be invoiced in the second half of FY2022.
Lockdowns and supply chain impacts
Wellnex continued to grow its presence in the fast-growing health and wellness market during the last quarter, in spite of challenging trading conditions as a result of COVID-19 lockdowns in New South Wales and Victoria.
The company was also impacted by supply chain issues with the late delivery of a particular line resulting in delayed sales to the March quarter of around $500,000.
Wellnex has now taken steps to minimise any further major supply disruptions by investing significantly into boosting its stock levels.
While cash receipts for the quarter increased significantly to $4.7 million compared with the previous corresponding period of $345,000 (and an additional $325,000 was received in early January), the company’s net cash loss for the period was $2.9 million. This was largely driven by this acceleration of inventory purchases amounting to around $5.2 million at cost.
“Wellnex is now able to withstand these issues in the medium term, with the increased investment in inventory along with a reduction of purchases over the next six months to circa $3 million per quarter,” the company stated.
Quarter highlights
Highlights of the quarter include the launch of its Wakey Wakey (energy gummies and effervescents) and The Iron Company (slow-releasing iron gummy) brands into Australian pharmacy channels.
Major national retailers and wholesalers include Chemist Warehouse, Terry White Chemist, Australian Pharmaceuticals Industries (API) and Symbion. Both brands will also soon be ranged in Coles and selected Woolworths stores.
During the quarter, Wellnex launched its Pharmacy Own brand with a supply agreement signed with one of Australia’s largest pharmaceutical distributors, CH2.
In December, the company also established a joint venture with Australian Dairy Nutritionals (ASX: AHF) to launch the first 100% Australian-made organic A2 infant formula range.
Australian Dairy Nutritionals will be responsible for the manufacture of the organic A2 infant formula range with Wellnex being responsible for the sale of the new range across its distribution network. This is anticipated to begin by the end of FY2022.