Pro-Dex(PDEX) - 2025 Q3 - Quarterly Report

Sales Performance - Medical device product sales increased by $2.1 million, or 22%, for the three months ended March 31, 2025, and by $7.5 million, or 28%, for the nine months ended March 31, 2025, compared to the prior fiscal year [92]. - The largest customer’s revenue contribution from orthopedic sales increased by $1.8 million and $7.5 million for the three and nine months ended March 31, 2025, respectively, due to the launch of a next-generation handpiece [92]. - Repair revenue rose by $666,000, or 15%, for the three months ended March 31, 2025, and by $3.3 million, or 29%, for the nine months ended March 31, 2025, primarily due to an increased number of repairs of orthopedic handpieces [95]. - Medical device products accounted for 68% of total net sales for the three months ended March 31, 2025, and 69% for the nine months ended March 31, 2025 [92]. - Orthopedic sales represented 72% of total medical device sales for the three months ended March 31, 2025, and 72% for the nine months ended March 31, 2025 [92]. - Sales of compact pneumatic air motors increased by $54,000, or 26%, for the three months ended March 31, 2025, but decreased by $15,000, or 3%, for the nine months ended March 31, 2025 [93]. - Dental products and components sales decreased by $17,000, or 27%, for the three months ended March 31, 2025, and by $28,000, or 19%, for the nine months ended March 31, 2025 [94]. Financial Performance - Cost of sales for the three months ended March 31, 2025, increased by $1.3 million, or 13%, compared to the same period in the prior fiscal year, consistent with a 22% increase in revenue [97]. - Gross profit for the three months ended March 31, 2025, increased by approximately $1.8 million, or 45%, primarily due to increased medical device and repair revenue [98]. - Gross margin as a percentage of sales increased by approximately 5 percentage points for the three months ended March 31, 2025, compared to the prior fiscal year [98]. - Operating expenses for the three months ended March 31, 2025, totaled $2.2 million, representing 12% of net sales, an increase of 21% year-over-year [102]. - Research and development costs for the three months ended March 31, 2025, increased by $187,000, or 25%, compared to the prior fiscal year [104]. Cash Flow and Working Capital - Cash and cash equivalents increased by $1.9 million to $4.5 million as of March 31, 2025, compared to $2.6 million at June 30, 2024 [111]. - Net cash used in operating activities was $1.5 million for the nine months ended March 31, 2025, primarily due to an $8.2 million increase in inventory [113]. - Net cash provided by financing activities for the nine months ended March 31, 2025, totaled $2.6 million, primarily from an increase in borrowings of $6.4 million [117]. - Working capital as of March 31, 2025, was $31.6 million, indicating sufficient funds to meet cash requirements for at least the next 12 months [119]. Strategic Focus - The company continues to focus on expanding manufacturing capacity and investing in research and development for new medical devices [90]. - The company plans to continue investing in development programs that are expected to contribute to profitability while monitoring expenses [120]. Backlog - The backlog at March 31, 2025, was approximately $49.5 million, with $12.8 million scheduled for delivery in the fourth quarter of fiscal 2025 [96].