Covalon Technologies Ltd. (TSXV: COV; OTCQX: CVALF), a Canadian-based advanced medical technologies company, has posted its fifth consecutive quarter of positive earnings, reinforcing its position in the competitive healthcare sector. The company’s latest financial results, for the second quarter of fiscal 2025, highlight not only steady profitability but also significant momentum across its core business channels and a clear strategy for future expansion.
For the first half of fiscal 2025, Covalon reported a 21% year-over-year increase in total revenue, reaching $11.54 million. This growth was driven by robust performances in the U.S. Vascular Access and Surgical Consumables segment, the U.S. Advanced Wound Care channel, and international markets.
The U.S. Vascular Access and Surgical Consumables channel stood out, with sales up 46% compared to the same period last year. This surge was largely attributed to the growing adoption of Covalon’s VALGuard® Vascular Access Line Guard, which is gaining traction among major U.S. hospitals. New clinical evidence supporting VALGuard® is set to be presented at two scientific conferences this fall and is under review for publication in a leading academic journal, potentially accelerating further adoption.
International sales also delivered a standout performance. Second quarter revenue in this segment hit $1.68 million, Covalon’s highest quarterly result in over five years, representing a 44% increase year-to-date1.
Covalon’s focus on operational efficiency has paid off. Adjusted EBITDA for the first six months of fiscal 2025 climbed 57% to $440,000, marking the company’s fifth straight profitable quarter. The company also generated $440,000 in free cash flow during the quarter, further strengthening its balance sheet.
Operating expenses for the first half of the year dropped by 8% to $5.52 million, thanks to disciplined cost management, particularly in sales and marketing, operations, and research and development. Covalon ended the quarter with over $13.5 million in cash and no debt, providing flexibility for future investments and potential acquisitions.
Covalon recently signed a major distribution agreement with Paul Hartmann USA, a longstanding strategic partner, for its ColActive Plus® and ColActive Plus® with Silver advanced wound care dressings. The U.S. Advanced Wound Care channel, despite a sequential quarterly dip in Q2 due to inventory normalization, has doubled its revenue compared to two years ago and remains a key growth driver.
The company has also retained Origin Merchant Partners as a financial and strategic advisor to explore merger and acquisition opportunities. This move reflects Covalon’s intent to expand its footprint and unlock further value for shareholders.
Covalon’s North American-centric manufacturing strategy has insulated it from recent global tariff changes. The company reported no tariff-related costs in the second quarter and sees its manufacturing base as a competitive advantage, especially as the largest North American producer of collagen wound care dressings.
CEO Brent Ashton remains optimistic about the company’s prospects, citing a strong pipeline of orders, new clinical evidence for its products, and ongoing market development efforts. With a clean balance sheet, growing sales, and a clear strategy, Covalon is positioned to capitalize on opportunities in the advanced wound care and vascular access markets.
As the healthcare sector continues to evolve, Covalon’s combination of innovative products, operational discipline, and strategic partnerships suggests it will remain a company to watch in the coming quarters.
