Q3 FY26 Quarterly Update and Appendix 4C
Wellnex Life Limited has achieved a significant milestone by reporting its first quarter of positive operating cash flow since its turnaround strategy began, with operating cash flow reaching $0.41 million, a substantial improvement from the previous quarter's outflow of $0.16 million. This positive result was driven by a 30.8% increase in customer cash receipts to $6.67 million and disciplined cost management, including a 29% reduction in staff costs to $0.75 million and decreased advertising and marketing expenditure. Despite a 28.2% decline in total revenue to $5.1 million due to the cyclical nature of IP licensing and reduced marketing on non-core brands, the company is targeting stronger revenue growth in the final quarter of FY26.
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HIGHLIGHTS
- Milestone quarter Wellnex Life achieved its first quarter of positive operating cash flow since the current turnaround strategy commenced, marking a significant inflection point in the Company's ongoing progression
- Customer cash receipts increased 30.8% to $6.67 million (Q2 FY26: $5.10 million), reflecting strong commercial momentum and improved working capital conversion across the Company's brand portfolio
- Operating cash flow moved to positive $0.41 million (Q2 FY26: outflow of $0.16 million), a quarter-on-quarter improvement of $0.57 million driven by disciplined cost management
- Staff costs declined 29% quarter-on-quarter to $0.75 million (Q2 FY26: $1.06 million), reflecting the tangible and structural benefits of the Company's ongoing cost reduction programme
- Cost reduction strategy continued across advertising and marketing (down to $0.54 million from $0.62 million in the prior quarter) and administration, demonstrating broad-based operational efficiency gains
- The Board remains firmly focused on delivering Q4 FY26 with revenue growth, margin improvement and cash generation as its core priorities
Wellnex Life Limited (ASX/AIM: WNX) ("Wellnex Life" or the "Company") is pleased to provide its quarterly operational and business update together with its Appendix 4C for the quarter ended 31 March 2026 (all figures unaudited). The March 2026 quarter represents a defining moment in Wellnex Life's turnaround, with the Company returning to positive operating cash flow for the first time since the current management team's strategy was implemented.
Momentum accelerates
Customer cash receipts for Q3 FY26 improved to $6.67 million, representing a 30.8% increase on the $5.10 million recorded in Q2 FY26. This strong uplift reflects genuine commercial momentum across Wellnex Life's core brand portfolio, including Pain Away, Wakey Wakey and Nighty Night, as well as continued improvement in the Company's working capital cycle and cash conversion. Year-to-date customer receipts stand at $16.31 million.
Revenue in Q3 FY26 declined compared to Q2 FY26 due, in part, to the cyclical nature of IP licensing as well as reduced investment, in the short term, in the Company's non-core brands, in particular marketing and advertising. Notwithstanding this, the Company is targeting stronger revenue growth in Q4 FY26, benefiting from more focussed marketing effort and typically higher activity across the business in Q4.
| Revenue | Q3 FY26 | Q2 FY26 | % Change |
|---|---|---|---|
| Brands | $3.5 million | $3.8 million | -7.9% |
| IP Licensing | $1.6 million | $3.3 million | -51.5% |
| Total | $5.1 million | $7.1 million | -28.2% |
| Gross Profit | $1.5 million | $2.1 million | -28.6% |
Operating cash flow turns positive
The Company delivered net operating cash flow of positive $0.41 million in Q3 FY26, compared to an outflow of $0.16 million in Q2 FY26 - a quarter-on-quarter improvement of $0.57 million. This positive result reflects the combined impact of accelerating customer receipts and the sustained cost discipline implemented across the organisation throughout FY26. The achievement of positive operating cash flow is a key milestone in the Company's turnaround and validates the strategy being executed by the Board and management team.
Structural cost reductions deliver results
The benefits of the Company's cost reduction programme are clearly evident in Q3 FY26results. Staff costs declined sharply to $0.75 million, down 29% from $1.06 million in Q2 FY26, reflecting a leaner, more efficient organisational structure. Advertising and marketing expenditure reduced to $0.54 million from $0.62 million, albeit with a short-term impact on revenue, while administration and corporate costs also declined. Product manufacturing and operating costs increased to $3.60 million (Q2 FY26: $2.51 million), consistent with the sales volumes recorded during the quarter and ongoing investment in supporting the Company's core product lines.
Related party payments
Payments of $0.32 million were made to related parties during the quarter. These payments relate to directors' fees, executive remuneration and associated costs incurred in the ordinary course of business.
Outlook
The Board enters Q4 FY26 with confidence, building on the positive operating cash flow result and a targeted revenue trajectory in Q4 FY26. Management's focus for the final quarter of FY26, and beyond, is on sustaining revenue growth, continuing to improve gross margins through the Company's owned-brand strategy, and further strengthening the balance sheet. The Company believes it is well-positioned to deliver a strong finish to FY26 and to build on the turnaround foundations established during the year.
This ASX/AIM announcement has been authorised by the Board of Wellnex Life Limited (ASX/AIM:WNX).
| 5.1 | Bank balances | 217 | 975 |
| 5.2 | Call deposits | - | - |
| 5.3 | Bank overdrafts | - | - |
| 5.4 | Other (funds held in trust) | - | - |
| 5.5 | Cash and cash equivalents at end of quarter (should equal item 4.6 above) | 217 | 975 |
| 6. | Payments to related parties of the entity and their associates | Current quarter $A'000 | |
| 6.1 | Aggregate amount of payments to related parties and their associates included in item 1 | 317 | |
| 6.2 | Aggregate amount of payments to related parties and their associates included in item 2 | ||
| 7.1 | Loan facilities | 9,250 | (6,103) |
| 7.2 | Credit standby arrangements | - | - |
| 7.3 | Other (Director's loan) | 2,525 | (2,525) |
| 7.4 | Total financing facilities | 11,775 | (8,628) |
| 7.5 | Unused financing facilities available at quarter end | 3,147 |
- Secured Revolving Trade and Debtor Facility with Scottish Pacific of $3.8 million Interest Rate: BBSY plus 6.8%. 2. Secured loan facility with Reach Wholesale of up to $5.35 million at 14% per annum expiring August 2027. The amount shown in Section 7 is for the full amount drawn down ($5.35 million) at the close of the period
| 8. | Estimated cash available for future operating activities | $A'000 |
| 8.1 | Net cash from / (used in) operating activities (item 1.9) | 412 |
| 8.2 | Cash and cash equivalents at quarter end (item 4.6) | 217 |
| 8.3 | Unused finance facilities available at quarter end (item 7.5) | 3,147 |
| 8.4 | Total available funding (item 8.2 + item 8.3) | 3,363 |
| 8.5 | Estimated quarters of funding available (item 8.4 divided by item 8.1) | N/A |
| 8.6 | If item 8.5 is less than 2 quarters, please provide answers to the following questions: |
Compliance statement
2 This statement gives a true and fair view of the matters disclosed.
Date: ...................................................................................
The Board of Directors
Authorised by: ...................................................................................
(Name of body or officer authorising release - see note 4)
Notes
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