Dynatronics Corporation (DYNT): 5 FORCES Analysis [Nov-2025 Updated]

You're assessing Dynatronics Corporation (DYNT) and seeing a business under serious strain as of late 2025. Honestly, the numbers tell a tough story: net sales fell 15.8% to just $27.39 million in fiscal 2025, resulting in a net loss of $10.90 million, which points directly to intense market pressure. We're looking at a classic squeeze where powerful customers and deep-pocketed rivals are hammering margins, even as high regulatory hurdles keep new competition somewhat at bay. Keep reading to see how the five forces are defining the immediate operational reality for Dynatronics.

Dynatronics Corporation (DYNT) - Porter's Five Forces: Bargaining power of suppliers

You're looking at the supply side of Dynatronics Corporation's business, and honestly, the power held by their suppliers is a significant lever in their current financial picture. Given the company's operational challenges, any increase in input costs or disruption from a key partner hits the bottom line hard.

Reliance on third-party manufacturers for key components

Dynatronics Corporation relies on a network of third-party manufacturers and suppliers for essential components and raw materials, which inherently grants those suppliers leverage. As of the fiscal year ended June 30, 2025, approximately 98% of total product sales were from products manufactured either by Dynatronics Corporation or its contract manufacturers. While Dynatronics Corporation operates manufacturing facilities in Northvale, New Jersey, Eagan, Minnesota, and Cottonwood Heights, Utah, they still depend on external sources for custom components. This dependence means that any failure by a contract manufacturer to maintain high standards or capacity could directly impair Dynatronics Corporation's ability to supply its electrotherapy products at required levels.

Here's a quick look at the financial context surrounding their production costs as of late 2025:

Risk of cost increases from U.S.-China tariff changes

Geopolitical shifts translate directly into supplier cost risk for Dynatronics Corporation. Management has explicitly flagged that recent tariff changes between the U.S. and China are expected to increase the Company's cost of goods sold. While the impact in the first quarter of 2025 was noted as not material, the anticipation of potential universal tariffs announced in April 2025 suggests a significant adverse impact on future costs of revenue. The company is proactively working with its suppliers to mitigate these potential tariff-related costs, but the uncertainty remains a key pressure point.

Dynatronics is moving therapeutic modality production in-house to reduce supplier markup

To actively push back against supplier power, Dynatronics Corporation is implementing a strategic shift. The company is in the process of transitioning the production of the majority of its therapeutic modalities from contract manufacturers to internal operations. The primary drivers for this move are clear:

• Reduce costs by eliminating third-party markups.
• Enhance quality control through direct oversight.
• Improve supply chain reliability to mitigate disruption risks.

This move is a direct attempt to internalize value and reduce reliance on external pricing structures. It's a capital-intensive decision, but one made under pressure to control COGS.

High switching costs due to specialized medical device components

The nature of the products themselves contributes to supplier power. Electrotherapy products, for instance, require precise, high-quality manufacturing, meaning switching a supplier for a critical component isn't a simple plug-and-play operation. Dynatronics Corporation holds patents on specialized technologies, such as thermoelectric technology (until February 2033) and combination traction/phototherapy technology (until December 2026). Components tied to these patented or highly regulated medical devices carry an implicit high switching cost because any change requires rigorous re-validation and regulatory clearance, which is time-consuming and expensive. If onboarding takes 14+ days, churn risk rises, especially with working capital at only $718,000 as of June 30, 2025.

Dynatronics Corporation (DYNT) - Porter's Five Forces: Bargaining power of customers

You're looking at Dynatronics Corporation's customer landscape as of late 2025, and the numbers from the last full fiscal year definitely paint a picture of buyer influence. When customers hold sway, they can push prices down or demand better terms, which directly impacts your top line and profitability. For Dynatronics Corporation, the evidence points to significant pressure.

The top-line performance in the most recently completed fiscal year shows this dynamic clearly. Net sales for the fiscal year ended June 30, 2025, landed at $27.39 million, which is $27,393,000 in exact terms. That figure represents a year-over-year decrease of 15.8% compared to fiscal year 2024's net sales of $32,534,000. This substantial drop strongly suggests a reduction in customer volume or a successful push by buyers for lower prices, or both. Honestly, when sales volume shrinks that much, you know the customers are calling the shots on price or order size.

The customer base for Dynatronics Corporation is diverse, but it includes large entities that inherently carry more negotiating leverage. You sell products to a mix of direct users and intermediaries:

• Orthopedists, physical therapists, and chiropractors.
• Clinics and hospitals.
• Retail distributors and OEM (Original Equipment Manufacturer) partners.
• Professional sports teams and universities.

The presence of large retail distributors and OEM partners means that a significant portion of the volume comes from entities that are likely very price-sensitive, as they are looking to maintain their own margins in the healthcare supply chain.

The impact of customer pressure is visible when you look at the gross margin performance alongside the sales decline. For fiscal year 2025, the Gross Profit was $6.01 million ($6,011,000), which translated to a Gross Profit Margin of 21.9% of net sales. This margin is down from the 23.5% seen in fiscal year 2024. Here's the quick math: lower sales coupled with a lower margin percentage suggests that either the cost of goods sold (COGS) rose disproportionately, or, more likely in this context, Dynatronics Corporation had to accept lower selling prices to move product, which is a classic sign of high buyer power.

To give you a snapshot of the balance sheet health that might influence future pricing flexibility, consider the working capital situation as of the end of FY 2025, June 30, 2025:

The working capital of $718,000 and the current ratio of 1.1 to 1 show a tighter liquidity position compared to the prior year. This financial constraint can defintely increase the urgency to meet customer demands, even if it means accepting less favorable pricing terms, especially if there is excess inventory that needs to be converted to cash quickly.

Also, it is worth noting that no single product line represented more than 10% of total revenues in fiscal year 2025. While this mitigates risk from product failure, it doesn't reduce the power of a large customer who might buy across multiple product categories, effectively concentrating their spend with Dynatronics Corporation.

Finance: draft 13-week cash view by Friday.

Dynatronics Corporation (DYNT) - Porter's Five Forces: Competitive rivalry

You're looking at a market where Dynatronics Corporation operates against giants. Honestly, the sheer scale difference sets the tone for rivalry here. Information necessary to determine market share for Dynatronics Corporation or any competitor in this highly fragmented industry isn't easily found, but the financial results speak volumes about the pressure. Dynatronics Corporation competes against various manufacturers and distributors, some definitely larger and more established, possessing greater resources. As of November 12, 2025, Dynatronics Corporation's market cap stood at a mere \$720K with 16M shares outstanding. This small scale means pricing power is minimal when facing industry leaders.

The product portfolio, while broad, doesn't rely on a single blockbuster item, which is a defensive measure in this environment. Here's a look at the brand structure:

• Marketing under brands like Bird & Cronin, Solaris, Hausmann, and PROTEAM.
• Solaris Plus devices offer Electrotherapy and Ultrasound capabilities.
• ThermoStim Probe accessory allows Heat Therapy (Max 112° F) and Cold Therapy (Min 35° F).
• Solaris Plus can deliver up to 5 Stim channels concurrently.
• No single product accounted for more than 10% of total revenues in fiscal year 2025.

To give you a clearer picture of the financial strain this intense rivalry imposes, look at the Fiscal Year 2025 summary. You see the top line shrink, and the bottom line takes a major hit.

That \$10.90 million Net Loss for fiscal year 2025 really shows the severe margin pressure. This loss was primarily driven by goodwill and intangible asset impairment charges, which often surface when market expectations don't meet reality due to competitive headwinds. Competitors like Globus Medical, Boston Scientific, BTL, and Performance Health are constantly innovating and using their deeper pockets to secure market share, making it tough for Dynatronics Corporation to maintain pricing power across its product lines, including soft bracing and therapeutic modalities. Also, customer concentration is a risk; in FY 2025, two major customers accounted for 14.5% and 12.0% of total net sales, respectively. Finance: draft 13-week cash view by Friday.

Dynatronics Corporation (DYNT) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Dynatronics Corporation, and the threat from substitutes-products or services that fulfill the same need but come from outside your direct industry-is definitely a major factor. For Dynatronics Corporation, which sells restorative products for orthopedics, pain management, and physical therapy, substitutes aren't just other braces; they are entirely different treatment pathways.

The evidence from fiscal year 2025 shows this pressure clearly within your core product line. Demand for the orthopedic soft bracing category saw a general reduction in FY 2025. Dynatronics Corporation's Net Sales for the fiscal year ended June 30, 2025, fell 15.8% year-over-year, dropping to $27.39 million from $32.534 million in fiscal year 2024, with the company explicitly citing a general reduction in demand for orthopedic soft bracing as a primary reason. This trend continued into the first quarter of the subsequent fiscal year; Orthopedic Soft Bracing Products revenue for the three months ended September 30, 2025, was $2,835,716, down from $3,356,988 in the prior year period.

Non-equipment-based physical therapy and pain management alternatives exist and are gaining traction, especially as providers look for cost-effective, non-invasive options. The broader physical therapy services market, which encompasses non-equipment-based therapies, was likely valued at $74.5 Bn in 2025. Furthermore, physical therapy is increasingly positioned as an alternative to pharmaceuticals, with reports noting reduced opioid prescription rates due to this shift. Considering that over 1.3 billion people globally live with musculoskeletal conditions, even a small shift in preference away from bracing toward pure therapeutic intervention or pharmaceuticals represents a significant revenue risk for Dynatronics Corporation.

Emerging substitutes include AI-driven therapy planning and integrated robotic solutions, which represent the technological frontier of substitution. These digital and automated alternatives offer personalization and accessibility that traditional soft bracing cannot match. For instance, the AI-powered behavioral therapy market was valued at $992.1 million in 2025, with projections showing it growing to $2,741.8 million by 2035 at a Compound Annual Growth Rate (CAGR) of 10.7%. Similarly, the broader AI in Mental Health market, which touches on pain management and patient compliance, was projected to grow at a CAGR exceeding 22.8% from 2024 to 2033. These digital tools compete for the same patient care budget and time that might otherwise be allocated to a soft brace.

Patient choice of alternative care, such as pharmaceuticals or surgery, is always a factor influencing demand for restorative devices like those offered by Dynatronics Corporation. The decision point for a patient or clinician often involves weighing the immediate, localized support of a brace against systemic or definitive treatments. Here's a quick look at the competitive landscape of substitutes:

The adoption of technology in adjacent fields highlights where patient and provider focus is shifting. For example, in physical therapy services, there is a significant trend toward remote care, with 50% of PTs now using telehealth for remote consultations. This move toward virtual care can reduce the perceived necessity of in-person device fittings or follow-ups associated with equipment sales.

The threat is multifaceted, coming from:

• Pharmaceuticals that manage pain without physical support.
• Surgical interventions that offer definitive, though more invasive, solutions.
• Digital health platforms offering AI-driven therapy and monitoring.
• Basic, non-device physical therapy techniques.

If onboarding takes 14+ days, churn risk rises as patients seek faster non-bracing relief.

Dynatronics Corporation (DYNT) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for Dynatronics Corporation (DYNT) as a seasoned analyst, and the picture shows significant, though not insurmountable, hurdles for any new player trying to set up shop in the orthopedic and physical therapy device space.

The regulatory landscape acts as a substantial moat. New entrants must navigate complex Food and Drug Administration (FDA) approval processes, which demand significant time and capital before a product can legally reach a U.S. clinic or hospital. For a high-risk Class III device requiring Premarket Approval (PMA), the FDA's goal for total time to decision in FY 2025-2027 is approximately 285 days, with the average review time observed at 363.2 days. Even for moderate-risk Class II devices seeking 510(k) clearance, the standard FDA review goal is 90 days, though the average processing time was 108 days. Furthermore, these submissions carry direct costs; the standard FDA user fee for a PMA submission in fiscal year 2025 was \$579,272, while a 510(k) was \$26,067. Establishments also face an Annual Establishment Registration Fee, which for FY 2026 is set at \$11,423.

Beyond regulation, market access requires deep-seated relationships. Dynatronics already markets its portfolio, which includes brands like Bird & Cronin and Hausmann, through established distribution channels to a wide base including orthopedists, physical therapists, chiropractors, athletic trainers, sports medicine practitioners, clinics, and hospitals. A new entrant must invest heavily to build out a comparable sales force and secure shelf space or inclusion in purchasing contracts with these diverse end-users.

The industry's underlying attractiveness, however, tempers the deterrent effect of these barriers. Market growth is projected at a 6.66% CAGR (2025-2035), making the industry attractive. Still, the capital required to overcome the initial hurdles is high. For context on the capital intensity of the broader MedTech sector, venture investment in Q1 2025 reached \$2.6 billion across 132 deals, and the median M&A deal size for the top 15 MedTech companies between 2021 and 2025 was \$895 million. This signals that substantial funding is necessary to compete, especially for R&D and specialized manufacturing capabilities.

Here's a quick look at the forces shaping the entry environment:

The necessity for high capital investment is evident in the scale of financing seen in the sector. New entrants must secure funding comparable to the \$2.6 billion invested in Q1 2025 MedTech venture deals just to begin development, let alone establish the necessary distribution footprint that Dynatronics Corporation already services.

• High fixed costs for specialized manufacturing equipment.
• Need to build relationships with orthopedists and physical therapists.
• FDA PMA fee: \$579,272 (Standard).
• 510(k) review time goal: 90 days.

Finance: draft 13-week cash view by Friday.