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Operator: Thank you for standing by, and welcome to the PolyNovo First Half FY '26 Results Webcast. [Operator Instructions] I'd now like to hand the conference over to Mr. Leon Hoare, Chairman. Please go ahead.
Leon Hoare: Welcome, everyone, to PolyNovo's half 1 results update for the 2026 financial year. My name is Leon Hoare, and I'm the Chair of PolyNovo. I'll provide a brief introduction before I then hand over to our CEO, Bruce Peatey, for his overview, and we will then have our CFO, Jan Gielen, provide the financial update for the half year, and then we'll take questions. I'm very pleased to introduce our new CEO. Bruce joined us in December, so it was about 10 weeks into the role. He joins us with a highly impressive background in med tech executive leadership roles across Australia, APAC and the U.S.A. And he has now engaged with the PolyNovo team around the world, including a U.S.A. visit and has met with key clinicians and customers. Impressively, Bruce has rapidly built a strong understanding of the business and has identified several areas to enhance and many opportunities to pursue. The Board are delighted to have Bruce leading the business. PolyNovo is a company already generating strong results. You will see the financial results. Suffice to say, our momentum is very positive. We've completed our new factory and expanded our R&D capability, and we have a highly talented group of professionals driving our growth. PolyNovo is focused on growth. We're broadening our global reach. We are adding to our clinical indications. We have a highly innovative NovoSorb platform technology that we've only begun to leverage. We have a pipeline of opportunities. And importantly, our products and technology in clinicians' hands provide excellent clinical outcomes. PolyNovo is at an exciting point in its journey and well positioned for strong growth going forward. I now have pleasure introducing our CEO, Bruce, over to you.
Bruce Peatey: Thanks, Leon. Hello, everyone. Thank you for joining us today for our first half results, my first as CEO, and I'm extremely proud to be leading this great Australian company. Over the past few months, I've been impressed by the resilience and professionalism of the PolyNovo team during the leadership transition, and I want to acknowledge their efforts as well as the continued support of our shareholders. As PolyNovo moves into this next phase, you should expect to hear greater clarity, more consistent communication and decisive execution, things that ultimately shape long-term value. I'll start with an update on the executive leadership team. I'm genuinely impressed by the depth of experience across our management team. The balanced mix of tenure and fresh perspective gives me great confidence in our collective strength. We are delighted to welcome Amy Demediuk as our new Company Secretary and General Counsel. She joins PolyNovo this week after a stellar career at CSL, including a recent experience in Philadelphia U.S.A., but is now returning to her hometown of Melbourne. Reinforcing PolyNovo's commitment to quality, I would like to highlight that Allison Myers was recently promoted to the role of Chief Quality and Regulatory Affairs Officer. Allison joined PolyNovo last year after nearly 30 years with GSK, both in Australia and the U.K. Finally, we are progressing the recruitment of a Chief Scientific Officer for the organization. It's a critical role for PolyNovo's future to accelerate the pace of our core business expansion, pipeline productivity and strategic partnerships to fully unlock the value of the NovoSorb platform. To that end, we are building a global slate of candidates with the technical capabilities and leadership experience required to drive this next phase of growth. In the first half, group sales grew strongly to $68.2 million, up 26% year-on-year. The U.S. continues to be our key growth engine, delivering $51.7 million, an increase of 25.4%, reflecting strong execution and continued market penetration. The rest of the world delivered 28% growth. This is a good result and shows clear momentum across several markets, but I believe we have room to accelerate further. We see opportunities to strengthen execution to expand adoption and to better leverage our distribution footprint. Jan will walk through our profitability results shortly, including some timing-related and one-off items that we expect to normalize over the full year. Providing more color to the regional performance, APAC delivered an excellent first half with Australia executing well as we broadened adoption beyond traditional burn applications with both NovoSorb BTM and MTX. In India, while the team have faced a complex and slow-moving tender environment, the groundwork they've put in is beginning to pay off. We are seeing increased tender success and growing clinician adoption as more surgeons gain experience with NovoSorb products and share their results with their peers. Across North America, the U.S. continues to perform strongly, and Canada is contributing with solid growth, too. EMEA grew a respectable 22.9% with the U.K. demonstrating the versatility of our portfolio across multiple specialties. With MTX launching later this year, we are well positioned to build on this momentum. Outside the U.K., we've expanded our geographic footprint with several new distribution partners, and our focus is now on accelerating adoption in these newer markets. I'm pleased to report that we are now in the final stages of our PMA submission for an on-label indication for NovoSorb BTM in full-thickness burns. This has been a significant undertaking in partnership with BARDA, enabled by strong cross-functional collaboration across the organizations. Securing PMA approval will strengthen our position in the U.S. burns market and unlock access to other major markets such as Japan and China. The team remains on track to finalize the submission by financial year-end, and we are working diligently to ensure we deliver a robust submission. So I'd like to provide a brief update on the CMS policy changes in the U.S. outpatient market and what they mean for PolyNovo. First to note, the inpatient hospital market remains a strong growth engine for us, and it is unaffected by these policy changes. It's important to clarify that we are committed to maintaining current momentum as we build a disciplined strategic entry into the outpatient setting. Considering the reimbursement changes, we are prioritizing specific outpatient procedures where the provider economics align naturally with the NovoSorb portfolio. In anticipation of the need, we developed a NovoSorb bilayer SynPath brand, specifically for the outpatient environment. SynPath already has an existing HCPCS code, giving us the fastest pathway into the market, closely followed by NovoSorb SynPath monolayer matrix once the code is received later this year. We are currently building inventory in new product sizes appropriate for these procedures with availability expected within this half. And our U.S. commercial team is well positioned to execute across both inpatient and outpatient settings. Often the same surgeons operate in both environments, which gives us strong continuity and leverage with the existing relationships. We are also progressing discussions with office-based distributors and building the go-to-market model to accelerate entry into physician office settings as appropriate. To drive the strategy, we are strengthening market access capabilities. Already supported by an experienced consultant, recruitment is well advanced for a Market Access Director and a Senior Product Manager in the U.S., roles that will significantly enhance our competitiveness in the outpatient market. From a clinical evidence perspective, our evidence base is robust. We now have 348 peer-reviewed real-world evidence studies supporting the NovoSorb platform, giving us a high level of confidence in its clinical performance across a wide range of applications. Importantly, 65 of these studies directly translate into outpatient use, reinforcing the platform suitability across care settings. This includes 5 published studies in the diabetic limb salvage, an area where SynPath has strong potential. And we're expecting data from a randomized controlled trial in diabetic limb salvage out of Adelaide over the next 6 to 12 months, which will further strengthen our evidence base. Looking ahead, we do anticipate the need for a dedicated RCT to support CMS reimbursement in the office setting, particularly for diabetic foot ulcers and venous leg ulcers. We have a robust protocol developed to execute as the clinical evidence requirements become clearer. Our growth priorities are clear. We are focused on maximizing the value of the NovoSorb platform and accelerating the momentum already visible in our core business. NovoSorb BTM and MTX continue to deliver strong performance, and we see substantial runway ahead, both in the U.S. and internationally. In the U.S., our footprint now spans more than 800 hospitals, supported by a highly capable commercial team of over 80 representatives. Importantly, adoption is expanding well beyond burns with clinicians increasingly using our products across a range of reconstructive applications. At the same time, we are progressing the key catalysts that will underpin the next phase of growth. Disciplined execution in the outpatient opportunity, advancing the PMA submission, strengthening our presence in priority global markets and adding velocity to our pipeline through the appointment of a Chief Scientific Officer. Together, these initiatives will give us clear visibility into sustained growth, both in the second half and over the medium term as we fully leverage the versatility of the NovoSorb platform. Today, we're launching our upgraded online investor platform designed to give shareholders clear visibility of our strategy, performance and key milestones. This new hub centralizes all ASX announcements, reports, video content and insights in one place with the ability for investors to subscribe for regular updates. The platform enhances transparency and improves the cadence of communication, making it easier for investors to follow our progress and engage directly with PolyNovo. Over time, this will help us build stronger investor relationships, broaden reach and ensure the market better understands our growth trajectory. You can scan the QR code on the screen or visit investors.polynovo.com to sign up. I will now hand over to Jan to present the financial results. Thanks, Jan.
Jan-Marcel Gielen: Great. Thanks, Bruce, and thanks again, everyone, for joining the webcast today. I'll start with our commercial sales performance. NovoSorb product sales were $68.2 million for the period, up 26%, which is an increase of $14.1 million. You can see from the graph presented in dollar terms, $14.1 million of growth achieved this half was greater than what was achieved at the same time last year being $11.9 million. This is a good indicator of the momentum in the business as we head into the second half. We experienced continued strong growth in the U.S., achieving sales of $51.7 million, up 25.3% on the prior period. This growth was driven by strong account acquisition, adding 95 new hospital accounts during the period and continued penetration of existing accounts. In regard to the rest of world results, we reported sales of $16.5 million, up 28.3%. This includes some exceptional results in a number of markets, some with growth rates of 50%, which I will highlight a bit later in the presentation. NovoSorb sales for the group was $6.2 million, up 195.2% with the majority of sales being in the U.S. Moving on to additional highlights for the U.S. As mentioned, the U.S. achieved 25.3% sales growth for the period. NovoSorb MTX sales in the U.S. were $6 million, up 193%. Surgeon adoption of NovoSorb MTX continues to grow and will accelerate across the customer base as more clinical evidence is generated and shared. NovoSorb MTX is now being used in over 240 accounts in the U.S. We recorded strong sales growth in our contracted U.S. networks with GPO sales up 37.8%, IDM sales up 34.1% and federal account sales up 87.2%. Contracted accounts represent 39.9% of total sales in the U.S., and these growth rates are an important indicator of the momentum in the U.S. business. The U.S. business is profitable and growing, generating strong cash flows, and we ended the period with over 800 customer accounts. Moving on to rest of world results. As mentioned, sales were up 28.3% on the prior period. We achieved some exceptional results with -- both in relatively new and well-established markets. In particular, Australia, our home market that we entered several years ago, grew by 52%, which is an excellent result. Other well-established markets such as Canada and Germany grew by 50.8% and 28.3%, respectively. These results are a good indicator of the adoption by surgeons using NovoSorb BTM, not just in large burns, but across a range of indications. Turkey's strong growth continued, up 91.3% for the period. In Turkey, they have reimbursement for NovoSorb BTM for the treatment of burns, but BTM is being increasingly used outside of burns without government reimbursement. This demonstrates the rapid seeding of BTM when we start with reimbursement in a market. India performed well, recording 49.1% growth in what was always going to be a challenging market to develop, but we are making progress. rest of world share of global sales now stands at 24%. We see significant opportunities for growth, particularly in Europe and the Middle East in the short term and new market entries such as Japan and China in the medium term. Moving on to cash flow and the balance sheet. We ended the period with $29.2 million cash on hand. Cash flow from operations of $9 million improved significantly compared to the prior period where a $12.5 million cash outflow from operations was recorded. We turned around the [ aging ] debtor days issue in the U.S. from over 90 days outstanding down to 56 days currently, which is a great result. The impact on cash flow is evident. We completed construction of the new manufacturing facility in Port Melbourne, with CapEx payments of $10.8 million for the period. $2.2 million in CapEx remains outstanding for the new facility and will be paid during the second half. It's obvious from the graph presented, aside from the one-off CapEx spend, the business would have generated free cash flow for the period. With only $2.2 million in CapEx remaining to be paid for the new manufacturing facility, we will be generating free cash flow in the second half, which will be an important milestone achievement for the business. We ended the half period with a strong balance sheet and cash flow, which will enable us to focus further investment on driving revenue growth. Moving on to the P&L. I want to start off by highlighting the underlying EBITDA performance for the period. After adjusting EBITDA for significant items being the impact of the R&D lab fire and unrealized ForEx impact on translation of the balance sheet due to the strong Australian dollar, adjusted EBITDA was $4.7 million, up 82% on the prior period. There are a number of one-off items impacting the reported net profit after tax result, which I'll now explain. BARDA revenue is down on the prior period as expected. The pivotal trial -- pivotal burns trial is near completion as we move closer to submission for premarket approval with the FDA. In connection with the BARDA pivotal trial nearing completion, the trial costs have reduced, which explains the lower R&D expense for the period. Other income includes a $4.6 million interim insurance claim related to the R&D lab fire. This offsets the $4.4 million asset write-off recorded further below in the P&L. Employee-related costs were up 12.2%, which includes $700,000 for restructuring costs in Australia. Employee headcount at the same time last year was 254, which then increased to 301 in June 2025. Since then, headcount has remained steady. Currently, we have 302 employees. Corporate admin and overhead expenses were up only 4.7% after excluding the unrealized ForEx movement on translation of the balance sheet. Due to the Australian dollar appreciating during the period, an unrealized ForEx loss of $761,000 was recorded for the period compared to a $4.6 million unrealized gain in the prior period. During the period, with inventory at comfortable levels after building them up during FY '25, we took the opportunity to bring forward attending to various tasks in our manufacturing facilities in preparation for the premarket approval submission and FDA audit that will follow later this year. To do so, we temporarily reduced manufacturing output, which in turn reduces production recovery to cover manufacturing overhead costs, resulting in an unfavorable manufacturing variance for the period of $3.7 million and gross margin of 88.8% for the half. With these activities now complete, manufacturing output in January has already ramped up without interruption and will improve our production recovery result in the second half. This will increase our gross margin back up to above 90-plus percent for the full year FY '26. And looking forward, we expect to achieve a much improved profit result in the second half. Now we're going to turn to questions. We've got covering analysts dialing in to ask questions, and then we'll move to the web platform for written questions from all our shareholders. So Operator, if you could please connect through the first caller. Thanks.
Operator: [Operator Instructions] First question today comes from Shane Storey from Canaccord Genuity.
Shane Storey: I'm going to start with Jan, please. Jan, when I back calculate and look at U.S. BTM sales over the period, you see that there's quite a bit of a reversion between after a very strong Q1 and it looked a little bit softer in Q2. And I suppose surgeons are telling us that November was quiet. So the first question was, was that just your general observation? And then I guess, looking ahead, how are you looking at sort of growth rates for BTM specifically over the next couple of years, please?
Jan-Marcel Gielen: Sure. Thanks, Shane. Good to hear from you. So look, the second quarter this year was a little bit softer in the U.S. in November itself across a large number of accounts. We just didn't have as many large burn cases come through as we would on average. And also Thanksgiving. So generally, we see lower activity in that month. It bounced back though in December, and we had a solid result for the half, as you can see. Looking forward, I think BTM growth will continue. We still have a lot of growth left in large burns in the U.S. And when we get the PMA approval, that will assist further with penetrating that market and grabbing more market share. And with that, NovoSorb MTX, the release of that is actually assisting sales. It's not cannibalizing sales of BTM. It's enabling them to a large extent. So we've got surgeons now using BTM with MTX where before they wouldn't have used either because MTX wasn't available and the type of wound that they need to heal that needed some packing like 2 or 3 layers of MTX, they couldn't do that with BTM because it's got the temporizing film on it. So it's actually assisting our sales of BTM. So we're still bullish on sales of BTM in burn to an extent, but then we've seen great traction outside of burn. And Bruce will talk a couple of examples of that where we've got some reps are doing some outstanding sales results outside of burn in their territories. But hopefully, that answers your question, Shane.
Shane Storey: Yes. I mean we were aware of that sort of adjunctive use of the 2 products together. I guess I'm pretty interested though, outside of that, maybe early observations as to what use cases or indications do you think it's winning, [indiscernible]?
Jan-Marcel Gielen: Sure. And Bruce, just as with regards to MTX, you might want to jump in as well and add some color to that, but just where the product is being used. So we are seeing it being used in cases where there are large deficits and you need to stack the device. The idea of MTX as well without the temporizing film is it opens up wounds that can be treated in one step. So with BTM with the temporizing film, you need to go back into surgery after it's been applied to have the film removed. And that's why it's generally used in large burns because it temporizes the wound to the patient and gives the surgeons time to deal with other issues that the patient might have. With MTX, it opens up the opportunity to any type of wound. We know the product can heal a wound where you're missing a dermis. So now from skin cancer excisions to you falling off a motorcycle or whatever it may be, where a surgeon just wants to treat the patient and get them in and out in 1 day or overnight and not have to go back into surgery to have the film removed like with BTM. You don't have to do that with MTX. So it opens up a whole wide range of indications and basically anywhere where you've lost your dermis. We know our product works. MTX can be used.
Bruce Peatey: And I'll add a couple of a words -- and I'll add a couple of words to that, Shane. The BTM in that burn space is already doing very well in terms of share and growing. But the opportunity to Jan's point, is that plastic and reconstruction space. And we're broadening into that and the trauma space as well. We're broadening into that, but that will -- that's a much bigger lateral journey for the team. And clearly, it's not as significant in individual patient experiences because you get smaller square centimeter areas of repair required, but there's a much higher volume of patients versus an acute burn. So the team is broadening into that and doing that gradually to put adjunct into our growth rate over and above major burns. If that answers your question.
Shane Storey: It does. That's very clear. My last question, just if you could please remind us where the new manufacturing facility takes the business to in terms of the annual revenue demand that it could service.
Jan-Marcel Gielen: You dropped out there a little bit, Shane. Is that something about manual processes or...
Shane Storey: Yes, the new manufacturing facility, once that's embedded and operational, where does the whole business sort of get to in terms of the...
Bruce Peatey: I think it gives us somewhere around 5x our previous capacity. Hopefully, Shane, we're using that over a journey at growing capacity. But it certainly allows us to scale our volume. That's correct, isn't it, Jan, about that sort of ratio?
Jan-Marcel Gielen: Absolutely. And it just helps with the complexity as we bring in release different types of devices, different sizes, different SKUs. The modular setup of the new facility gives us a lot of flexibility in how we run shifts and how we make product. So there's that added benefit as well.
Bruce Peatey: And we should have that operational in a building mode in the second half of this calendar year.
Jan-Marcel Gielen: It's actually -- yes, it's complete, built. We're just going through validation and qualification activities. And July onwards is when we're looking to start firing up the facility.
Operator: Your next question comes from Lyanne Harrison from Bank of America.
Lyanne Harrison: Bruce, I might start with you. I know you've only been in the seat for 2 and a bit months now. But can you comment on where your 3 key focus areas might be for the next 12 months?
Bruce Peatey: Okay. Yes. Thanks, Lyanne. Great to be here. I think like you say, just new in the role, clearly, working with the key stakeholders in the business, like I mentioned already or Leon mentioned, going to the U.S. was an important part of understanding the business with the majority of the revenue coming from there, but also making sure that we're getting -- building a high-performing executive leadership team is probably another focus area for me. I think there's definitely opportunity to sharpen our strategy. The strategy is working well. But as I mentioned previously, is that my focus really is on disciplined execution of the strategy and making sure that we've got a very clear path forward for the team. So really early days, very positive signs for me and what I'm seeing in the organization, but definitely some areas that we can tighten up and look forward to doing that.
Lyanne Harrison: Okay. And with, I guess, the strategy outside of the United States, are you comfortable with the markets that PolyNovo is in and growing? Or is there any chance you might change or tweak that a little bit over the next few -- over the next 12 to 24 months?
Bruce Peatey: Well, I think the team have done a good job expanding into markets. I think we're over 46 countries around the world now. Clearly, through my experience in Asia, I'm interested in what we can do in Asia, particularly the discussions around Japan and even China, moving forward. I think exploring that opportunity is important for me. But again, for me, it's not really a measure of how many countries we're in. It's how we're performing in those countries. So particularly the work that we've done in EMEA to expand the footprint, it's about making sure we're executing in those markets and supporting our third-party partners to help them grow the business like we've done successfully in our direct markets.
Lyanne Harrison: And Jan, you talked about, I guess, some of the softness in November of last year. But can you comment on trading to date in this half, in particular, January and what you're seeing in February?
Jan-Marcel Gielen: It's in line with the year-to-date result at the half. So we're trailing well, but we're only early into the second half, as you know. But I guess that should give you a good indication.
Lyanne Harrison: And then if I could comment on just some of the rest of the world growth there. Australia, in particular, we saw some quite significant growth there. And you've been in Australia for a number of years now. So what's really changed to get that sort of momentum? And can we expect that to continue in the future?
Bruce Peatey: I'll take that one. I think looking into the results in Australia, yes, very positive, and I'm very say, encouraged by what's possible in a market that we've been in for some time. Part of it is, it's a fluctuating type of business when you're in the burn space, of course, and that's, I think, well known. But clearly, I'm very impressed with what the team have been able to do expanding the footprint outside of burns, so into new indications, whether it's BTM or MTX, they've done an excellent job in that space.
Operator: [Operator Instructions] Your next question comes from Andrew Paine from CLSA.
Andrew Paine: Just coming back to the growth you're seeing in new markets outside the U.S. that you've listed in the presentation. Can you work through the outlook for some of these regions that you see as the key drivers of medium-term growth and really wanting to understand what the investment is or the required investment to ramp up these opportunities?
Jan-Marcel Gielen: Bruce, do you want to take that?
Bruce Peatey: Yes, I'll start with you, Jan, and I'll come in.
Jan-Marcel Gielen: Yes, no problem. Yes. So Andrew, thanks for your question. Good to hear from you. Look, I think as I sort of outlined in one of the slides in the deck when we're covering rest of world. But in the short term, we still see a lot of opportunity in Europe, Middle East, to be quite honest. That's an area where I know Bruce, the chats we've been having since you've arrived that we really want to dig into and focus on. There's a lot of opportunity left in that region. In the regions we're already in and like the U.S. and markets like Australia, but particularly the U.S., and we've seen what we've done in the U.K. and Australia, there's so much more we can do outside of burn, and we're already doing it. And I'm going to steal Bruce's thunder, but we've got one rep in the U.S. who sold last year over $2 million worth of product outside of burn. He doesn't have a burn center in his territory. So that's an example of real success, expanding into indications outside of burns. So there's a lot more depth in left in the U.S. to go, enormous amount. There's -- in Europe, Middle East, there's a lot of that opportunity as well that we need to dig into with our distributor networks. And they're doing well, but there's more we can do. And then in the medium term, Japan, followed by China will be the 2 next big markets, but Japan particularly being one of the most advanced markets in terms of med tech, that's going to be really important for us. But Bruce, you want to add any color to that.
Bruce Peatey: Thanks. The one thing I'd add to that is the example of the U.K., a majority of the revenue in the U.K. is outside of burns and the team has done a great job there as well. And it gives us really a best practice or a benchmark that we can work towards in the other markets. So for me, that gives us a lot of -- not just potential, but examples of where it's a reality in markets that we're already in.
Andrew Paine: And just, I guess, progressing that a little bit in terms of the investment required for those opportunities. Is that -- is there any insights you can give us there? Just trying to understand the profile going forward?
Bruce Peatey: Sorry, so early days. As we've leaned on distribution partners in the majority of the markets in Europe, now it's the time to look at how do we support them with maybe some direct presence, not to necessarily go direct in the market, but to make sure we've got the right support for those -- our distribution partners to help grow into these other areas with a specific level of expertise. So early days, but that's the initial thoughts. I'll be in Europe for the first time with this team next month, and that's when we start shaping the way forward.
Leon Hoare: And Andrew, and in the medium term, as Bruce mentioned -- that's right. And Jan mentioned, we'll be looking at our investment requirements for our pathway to market in major countries like Japan. We await our PMA submission because that will be an important adjunct to how we sort of plan that journey, and that will require significant investment working out how we're going to actually enter that market. And longer term, that will be China as well.
Andrew Paine: And just one other on FX. Can you just give us any insights of how that's moving at the moment and how that will affect the coming, let's say, 12 months?
Jan-Marcel Gielen: Obviously, not helping us and a lot of other Australian, how I can I say, export. So if I had a crystal ball, I could tell you, Andrew. But at this point, with our forecast, we factored in a conservative approach. We allocate resources based on that to make sure we optimize our results, particularly for the full year coming up. So we'll see how things pan out, but we certainly keep it obviously front of mind because we do have a result we need to manage, and that's what we're focusing on.
Operator: Your next question comes from [ David Naygan from AMP ].
Unknown Analyst: if you could please just follow up a little bit on some of the questions around the manufacturing variance that you talked about. I believe you said that inventory fell 14.5% to 11.9% in the result. Are you comfortable with the current stock levels to support H2 demand, particularly given the growth trajectory? And is there any risk of a supply constraint whilst this new facility is being validated?
Jan-Marcel Gielen: Thanks, David, for your question. So look, no risk of any supply constraint, and it's all really well managed, and we plan everything with the intent of how it ends up coming out the numbers. So what happened for the half is we slowed down manufacturing after building up inventory levels last year, you would have noticed inventory levels got to a higher level than not where we'd normally keep them. But that was purposeful. We had to pause manufacturing and slow it down. We chose to do so in this half just to attend to some activities in preparation for the PMA submission and the FDA will follow later in the year. So we decided to bring that forward. So what that means is we just have less output than planned for the half. And when you have less output, you have less production recovery and less cost -- manufacturing overhead costs getting capitalized into inventory. So we ended up with this $3.6 million unfavorable manufacturing variance for the half. But what happens in the second half, we've ramped up production again. So already in January, it's fired up again, and the result is going to look a lot different for the full year. So for the half, gross margin was 88.8% as a result of that. But for the full year, we'll be up over 90% in line with our budget plan. So it was all premeditated but it is just, I guess, a timing issue. If we weren't reporting at the half, you would just be looking at the year-end number and gross margin will be well over 90%. So hopefully, that answers your question.
Unknown Analyst: I might ask a couple more if it's all right. On the CMS output -- outpatient opportunity, -- so I know you've submitted your clinical evidence package already and waiting a response. Just curious if any feedback from the FDA on the timing -- sorry, from the CMS on the timing for the decision. And if there's any revenue contribution that you might have already assumed for your outpatient opportunity in your internal planning for, say, H2 or for FY '27?
Bruce Peatey: Yes. So just on the response from the CMS, we're still waiting on that response. However, as I mentioned, we're moving forward quickly with the SynPath brand into the outpatient space. And that's going to be -- that's something that we have ready to go as far as the code is concerned. So now we're ramping up production of those specific sizes that you need for those smaller procedures that are linked to that outpatient setting. Jan, you can speak to potentially the forecasting.
Jan-Marcel Gielen: Sure. With forecasting for outpatient, it's all upside to what we currently got in our plans. So there's a lot of opportunities, not just in DFU and so forth. There's a lot of opportunity for our product outside of the hospital arena and even outpatient within the hospital. But right now, we're sort of working through the sales team and the marketing team to sort of shore up our plans and then what that means in terms of sales and production, but it's definitely an upside to our current forecast.
Unknown Analyst: Okay. We're treating as upside for now. Yes. Got it. And then last one for me is just on the PMA submission. Do you have any expectations for the FDA review? Is it standard review cycle, PMA review cycle? Or is there any indication that this could be expedited given BARDA's involvement?
Bruce Peatey: We haven't had any indication that it had been expedited. We're anticipating a standard review process.
Operator: Your next question comes from John Hester from Bell Potter.
John Hester: So gents, obviously, the stock has significantly underperformed in the last 12 months or so, it's underperformed the ASX 200, and you've just recorded the weakest period of revenue growth in recent history. So my question is, you spent the last 20 minutes talking about the growth story, but it really hasn't delivered. And I'm just thinking, what are you actually going to do to get that growth rate back above 30%, which sort of is required to justify the premium that this stock has historically been rated at.
Jan-Marcel Gielen: John, thanks for the question. Just from my perspective, you're right, we're talking about the growth potential in the U.S. looking into new indications, whether it's within BTM or MTX. We've spoken about the outpatient opportunity as well. And then most importantly, the rest of world, as I mentioned, even though growing at 28% is good. We think that there is opportunity to grow more in that space through that focused execution and partnership with our distribution partners. So whether it is in those new indications and then expanding MTX into the market as well in other markets outside of Australia and the U.S., that's where we see the potential. But ultimately, it's about execution, and that's what we'll focus on.
Bruce Peatey: And John, I'd add to that, in the medium term, we see opportunities outside of purely BTM, MTX, SynPath that may or may not be in our hands. So we still see lots of platform and pipeline product development opportunities that will add to what Bruce has just described.
Jan-Marcel Gielen: And I might add, Leon, to that. For the half, we added $14.1 million in sales and growth in dollar terms. I'm sure we're going off a lower base. But at the same time last year, it was $11.9 million. So there is a lot of momentum there. And last year was a challenging year. We've got a lot of focus in the business moving forward this year, particularly. And there's some real good examples of success. And like we talked about that rep before that selling product outside of burn $2 million worth a year one rep. So think about that and do the math. So the potential is there. We know what success looks like, and we're just going to -- with Bruce's help, make sure that we're all executing as we should be to make sure that happens.
Operator: There are no further phone questions at this time. I'll now hand back for any webcast questions to be addressed.
Jan-Marcel Gielen: Great. Thank you. We've got quite a few, and of that a few is complete. We've answered quite a few questions during the discussion so far. But bear with me while I scroll up. Some questions around India and just the prospects and how we've gone to date and what the future looks like there in terms of performance.
Bruce Peatey: Yes. So look, as mentioned, with India, yes, we show a significant growth rate off a low base from what I've seen so far working with the India team or connecting with the leadership there. I say they're putting the building blocks in place. More than likely, it's taken longer than anticipated originally to get through that complex tender process. I'm very familiar with the Indian market, have been for many years and not that surprised that it's taking time to get through. The good news is we are starting to see more and more frequent approvals coming through from these tenders. So as I mentioned, the groundwork has been done. It's a very solid and experienced leader that we've got in place there that's built a team ready to execute. We've actually got the largest burn conference that's occurring next week. We've got, I think, what is it, the 33rd Annual Conference of the National Burns Academy. We were there last year with more and more, you could say, evidence being generated and shared on BTM last year. We're very enthusiastic to see how that has progressed over the course of the year. From what we know anecdotally and working with the team, we're seeing more and more cases where surgeons are working with BTM and sharing those results with their peers. So we're quite confident. On top of that, we've got one of our KOLs out of Australia is there in the week leading up to the [ Navacom ] meeting. And Associate Professor Marcus Wagstaff is there. Also, we have [ MJ Panderwal ] from the U.S., actually touring around the U.S. and sharing their experiences with key surgeons around the country. So it's like early days. We expect good things out of India, but in my experience, that will build over time. And from what I see, the building blocks are in place.
Jan-Marcel Gielen: Great. Thanks, Bruce. I've got another question here just from -- regarding Beta Cell and just the progress of our relationship with Beta Cell.
Bruce Peatey: Yes. So we -- again, we mentioned before, we're very supportive of the work that's being done at Beta Cell. [indiscernible] I met the leaders of Beta Cell last week in Adelaide and again, reiterate that support as we have done in the past, supplying product to help with the development of that really novel technology. So we intend to continue that partnership as we have in the past.
Jan-Marcel Gielen: Great. Thanks, Bruce. We've got a question here around operating leverage, and I can take that one. If we look at the numbers themselves for the half, sales growth up 26%, corporate and admin costs, underlying up 4.7%. We removed that unrealized ForEx movement, which gets lumped in that category in the stat accounts and employees up only 12%. We did have some redundancy payouts and various things in the half, but headcount was steady at 302 employees. We had 301 employees at 30 June. So the leverage is there, and it hasn't come through, I guess, in the net profit after tax result because of that manufacturing recovery. But the adjusted EBITDA was $4.7 million for the half and was up 82%. So if you take that $4.7 million and if we didn't purposefully slow down manufacturing that we had to, to attempt certain things, you add on that $3.6 million and all of a sudden, it's over $8 million EBITDA for the half. So the second half is looking a lot more positive because of these one-offs that we don't have to deal with. But the operating leverage is there. And I think we'll see that coming through in the second half and next year as well as well as free cash flow, which would be an important achievement for the business. Just moving on. There's a question around the fire, and we probably should address that just on what caused the fire and if we can comment and if we can't, I think we can't. But maybe, Bruce, if you or Leon want to address that one.
Bruce Peatey: Yes. So I think at this stage, investigations are ongoing. We are not in a position to comment on the actual cause of the fire at this point. But I think that's all we've got to say on that topic unless you want to add some more, Leon?
Leon Hoare: Well, I mean, we're unhappy that it occurred. Clearly, the team and our insurers have done a thorough investigation. The teams are working through the rebuild project of what was the new R&D lab. The actual technical elements. We know where the focus was, but there are some technical investigations still ongoing by our insurers. On the other side, just to reinforce the point, we haven't compromised our R&D capability. All our projects are ongoing. We had our old lab that we hadn't done anything differently with. And so our team has been highly productive in the journey. We're a little frustrated that our brand-new R&D lab is now awaiting a minor rebuild, but that's where we're at. The good news is we're completely covered for those rebuild costs.
Jan-Marcel Gielen: Great. Thanks, Leon. Some questions just around the R&D pipeline and what we've got planned, what's sort of on the horizon?
Bruce Peatey: Yes. So it's early days. As I mentioned, I think there's a potential to accelerate our output from the R&D function. And clearly, the search for the Chief Scientific Officer and putting that critical role in place is going to help to that end. We've got a significant -- I think we've shared it before. The output from that R&D pipeline is there. We just need to get it -- say, get some more velocity into that pipeline and get that out into the market, whether it is through our commercial execution ourselves or through strategic partnerships. And that's another key decision to make to make sure that we're really maximizing the value we can extract from this wonderful NovoSorb platform.
Jan-Marcel Gielen: Great. Thanks, Bruce. Some questions here around the outpatient market in the U.S. and the requirement for an RCT, whether that's needed for DFU or not? And is that only just for DFU or can we sell the product SynPath for other indications right now?
Bruce Peatey: Yes. So we can sell SynPath for other indications right now. Actually, this year, we can sell it for DFU as well. The need for an RCT, we say, is anticipated, although we're still working to clarify the exact clinical evidence requirements with the CMS. So at this stage, we're anticipating it. Like I said, we've got a protocol that we've worked on to make that possible. And as we move forward, looking at how we could accelerate that as well, -- but right now, we can sell SynPath because we have the code into all of those care settings in the outpatient piece.
Leon Hoare: Important, just if I can add to that before we close on that point. As Bruce mentioned in his presentation, we're working through the hospital outpatient element of that market opportunity, if you like. And that likely would be in our team's hands, but Bruce and the U.S. team are working through that. And the outside of hospital element where in probably the easiest description would be investigation mode. We're likely looking at partnerships to get SynPath to market there. CMS is still very much in flux in terms of the industry's understanding of all the outcomes, and we're learning that as we do more discovery.
Jan-Marcel Gielen: Great. Thanks. Just 2 more questions. We're coming up on the hour. So let's run to the next one here. So a question on BARDA and just our relationship with BARDA and how that's going in light of the trial coming to an end and the support that we're getting from BARDA.
Bruce Peatey: Well, excellent support from BARDA. I appreciated meeting the leadership there as well. We're on regular meetings with them as we go through the process to finalize the submission. They've been a wonderful partner and they continue to be. So yes, it's all very positive. Cf Thanks, Bruce. We'll make our last question given the timing. Just a question on guidance. This comes up quite often, but we're happy to answer it again. We don't provide guidance in the past, but do we intend to in the near future?
Leon Hoare: I'll take that. I mean, at this stage, we're still very much a company on a rapid growth phase. As Bruce has said, we've got many opportunities in our growth going forward. We see very strong growth momentum. We see strong pipeline opportunities. We see strong market sector opportunities like CMS as one example. Medium term, we see other geographies like Japan. But near term, we're still also heavily exposed to the burn segment. and that's highly variable. So as we build a more predictable longer-term growth rate, and we'll consider guidance. But in the nearer term, we're not going to formally provide guidance for the period going forward.
Jan-Marcel Gielen: Thanks, Leon. And before I hand back to Bruce, just to call out to Rachel Harwood from Macquarie. He's based in Dallas and it's quite late. But 4 questions I've got, we've answered quite well, but I appreciate you sending the questions Rachel. So with that, I'll hand back to Bruce to close.
Bruce Peatey: Thanks, Jan, and thank you all for joining us today and for your continued support of PolyNovo. As you've heard, we are entering the second half with strong momentum, a clear strategy and a deep commitment to execution. Our focus remains on delivering meaningful clinical impact while scaling globally and unlocking the full value of the NovoSorb platform. I'm incredibly, incredibly proud of what the team has achieved and confident in the opportunities ahead. We look forward to updating you on our progress and appreciate your engagement today. Thanks, everyone.
Leon Hoare: Thank you.
Jan-Marcel Gielen: Thank you.