Pro-Dex, Inc. Reports 25% Revenue Growth, Net Income Turnaround in Q3 2024

Pro-Dex, Inc. reported significant financial improvements for the three months ended September 30, 2024, compared to the same period in the previous year. Net sales reached $14.9 million, marking a 25% increase from $11.9 million in 2023. This growth was driven primarily by a 27% rise in medical device sales, which accounted for 67% of total sales, and a 38% increase in orthopedic sales.

Gross profit for the quarter was $5.2 million, up 41% from $3.7 million in the prior year, with a gross margin increase to 35% from 31%. Operating income also saw a substantial rise to $3.0 million, compared to $1.8 million in the same period last year. The company reported a net income of $2.5 million, a significant turnaround from a net loss of $615,000 in Q1 2023. Basic net income per share improved to $0.76 from a loss of $0.17 per share.

Total current assets increased to $38.5 million from $36.6 million, while total assets rose to $54.3 million from $52.5 million. Current liabilities decreased to $11.3 million from $12.9 million, contributing to an increase in retained earnings to $29.4 million from $27.0 million.

Cash and cash equivalents at the end of the quarter were $3.1 million, up from $1.9 million a year earlier. Net cash provided by operating activities also improved significantly to $1.9 million from $392,000 in the same period of 2023. The company’s backlog stood at approximately $56.8 million, with $45.6 million scheduled for delivery in the remainder of fiscal 2025.

In terms of expenses, selling expenses rose by 92% to $48,000, primarily due to recruiting fees, while general and administrative expenses increased by 25% to $1.3 million, driven by higher payroll and personnel costs. Research and development costs increased by 5% to $800,000, reflecting higher internal project spending.

Pro-Dex also engaged in a share repurchase program, buying back 91,976 shares for $2.3 million during the quarter. The company secured a new $5.0 million term loan and repaid $3.0 million of an amended revolving loan, indicating a strategic approach to managing its debt.

Despite these positive developments, the company acknowledged a material weakness in its internal controls over financial reporting, specifically related to inventory existence controls, and is actively working on remediation efforts.