Dynatronics Reports 10.4% Decline in Q2 Revenue, Net Loss Improves

Dynatronics Corporation reported a decline in financial performance for the second quarter of fiscal year 2025, with net sales decreasing by 10.4% to $7.3 million compared to $8.2 million in the same quarter of the previous year. For the six months ended December 31, 2024, net sales fell 14.9% to $14.9 million from $17.5 million in the prior year. The decrease in revenue was attributed to reduced demand from original equipment manufacturer (OEM) customers and a general decline in the orthopedic soft bracing product category. Gross profit for the quarter also decreased by 9.6% to $1.6 million, representing 22.5% of net sales, while gross profit for the six-month period dropped to $3.6 million, or 24.3% of net sales.

The company’s selling, general, and administrative (SG&A) expenses saw a significant reduction, decreasing by 15.1% to $2.3 million for the quarter and by 13.7% to $4.5 million for the six-month period. This decline was primarily due to lower salaries and benefits, reduced sales expenses, and decreased professional fees. Despite the reduction in expenses, Dynatronics reported a net loss of $774,827 for the quarter, an improvement from a loss of $1,011,416 in the same quarter of the previous year. For the six months, the net loss was $1.1 million, down from $1.3 million year-over-year.

In terms of operational metrics, the company’s cash and cash equivalents increased to $791,010 as of December 31, 2024, compared to $483,918 at the end of June 2024. However, working capital decreased to $1.89 million from $2.85 million during the same period, raising concerns about the company's ability to continue as a going concern. The company has initiated cost-control measures, including reducing non-essential positions and optimizing its operational footprint, which are expected to yield annual savings of approximately $1 million. Additionally, management is working to reduce excess inventory levels to improve liquidity.

Dynatronics has also seen changes in its balance sheet, with total assets slightly decreasing to $25.77 million from $25.94 million. The company’s liabilities increased to $12.74 million, up from $11.78 million, primarily due to a rise in accounts payable and the outstanding balance on its line of credit, which increased to $2.35 million. The company is actively managing its debt and has entered into a Loan and Security Agreement to secure additional financing for operational needs.

Looking ahead, Dynatronics management is cautiously optimistic about the company's future, projecting that the implemented cost-saving initiatives will enhance liquidity and operational efficiency over the next twelve months. However, they acknowledge the ongoing uncertainties in the broader economic environment and the potential impact on cash flow and operational performance. The company remains focused on stabilizing its financial position while navigating the challenges posed by market conditions.