Wellnex Life reports ‘transformational’ progress with surge in revenue

Wellnex Life (ASX: WNX) has reported a “transformational” six months to December 2021, with the acquisition of Brand Solutions Australia (BSA) securing the company’s position as a major participant in Australia’s $10.7 billion health and wellness market.

Revenue for the period increased to $8.56 million, reflecting a strong 1,099% increase compared to the previous corresponding period, while total income for the group was $8.76 million.

The company said it was pleased with the revenue uplift given the disruptions caused by sustained lockdowns in Australia’s two most populous cities, as well as delayed inventories and increased costs associated with global logistics issues.

It confirmed it had invested in increased stock levels to reduce the risk of supply and to mitigate costs, with inventory holding increasing by $1.3 million to around $5.3 million by the end of the period.

Purchase orders

During the reporting period, Wellnex received purchase orders of circa $1.6 million (yet to be invoiced) for its liquid paracetamol product.

Orders will be supplied in the second half of the year with further orders expected during the financial year.

Losses for the half year reduced by 87.2% to $2.15 million (compared to $12.22 million for the previous corresponding period) and the company lodged an earnings before interest, taxation, depreciation and amortisation (EBITDA) loss of around $1.8 million impacted by a total $750,000 in one-off expenses related to the $2.75 million BSA acquisition in July, ASX re-quotation and capital raises.

Net assets increased to $8.6 million from a deficit of $200,000 at 30 June 2020, giving the company a strong platform to execute its strategic objectives.

Wellnex confirmed an accounts payable amount of around $5.1 million was primarily from one supplier with payment terms of five months, in line with when stock is received and sold.

Innovative brands

Wellnex Life released six innovative brands during the period to complement its existing offerings.

Australia’s first Therapeutic Goods Administration (TGA) approved soft gel liquid paracetamol product was launched in October in a joint venture with retailer Chemist Warehouse under the Wagner Liquigesic brand.

The brand launch was complemented with a paracetamol-plus-ibuprofen product and strong initial sales were reported.

Australia’s first slow-release iron gummy was released under the brand The Iron Company and will be stocked in major pharmaceutical retailers as well as Coles and Woolworths later this year.

Energy brand Wakey Wakey was launched in an effervescent tablet and gummy format and will also be stocked in major pharmaceutical and grocery retailers.

Wellnex secured the Australia and New Zealand distribution rights to sports and supplements brand Performance Inspired through Chemist Warehouse, and launched its Pharmacy Own brand to provide consumers with equivalent products to major brands at competitive prices.

Finally, Wellnex and Australian Dairy Nutritionals Group (ASX: AHF) formed a joint venture to launch the country’s first locally-made organic A2 infant formula range under the Ocean Road Dairies brand.

Further improvements

Wellnex chief executive officer George Karafotias said the company remains on track for further revenue and margin improvements towards profitability in the short term.

“We are pleased to have grown our revenue substantially in a time of challenging market dynamics and can see the path to profitability ahead,” he said.

“We have been working hard to deliver value for shareholders and innovate new and exciting products and with six new brands launched and licensed during this half, we are proud of the progress we have made.”