Omega Diagnostics Gp - Trading update

Cambridge Nutritional Sciences

18/01/2023 07:00

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RNS Number : 0469N  Omega Diagnostics Group PLC  18 January 2023

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE UK VERSION OF THE MARKET ABUSE REGULATION (EU) NO.596/2014, WHICH FORMS
PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK
MAR").

 

OMEGA DIAGNOSTICS GROUP PLC

("Omega", the "Company" or the "Group")

 

Trading update

 

Omega (AIM: ODX), the specialist medical diagnostics company focused on
promoting a personalised and functional approach to health and nutrition,
provides a trading update which reflects lower than expected revenue,
significant back-end phasing of orders, but a stronger opening order book for
FY24.

 

Whilst demand for Omega's food sensitivity tests remains strong and the order
book continues to grow, the Company has faced a several headwinds that have
impacted the ability to fulfill orders ahead of 31 March 2023. Whilst the
current order book is £2.5 million and further orders are expected, a number
of orders will move into FY24.

 

With the later than anticipated receipt of customer orders, it has now become
apparent that the Company has insufficient manufacturing capacity in the
Littleport site to meet anticipated demand over the remainder of the current
financial year, primarily due to the availability of machine time for
FoodPrint® manufacture and COVID-related staff absences within key production
functions.  Potential stockbuilding opportunities have been limited in recent
months, given the shelf life required by customers and the close management of
working capital ahead of the receipt of the £4 million of CD4 deferred
consideration.

 

The current and forecasted orders are no longer able to be fulfilled before
the year end, but will contribute to a stronger than expected opening order
book for FY24.  This gives much improved visibility into FY24 which is still
expected to be a year of significant revenue growth and a return to positive
EBITDA.  Full year revenues from the Health and Nutrition business are now
expected to be in the range of £7.5-£8.0 million for the year ended 31 March
2023. This will result in an EBITDA loss from continuing operations of c.
£1.0 million. Year-end cash levels are expected to remain substantial and
will be c. £5.0 million, a level that is more than adequate to allow Omega to
deliver against its growth strategy from existing funds.

 

The Company has identified a number of opportunities to improve operational
efficiency and manufacturing capability in the near term. The Board also
believe that longer term technology investment in production equipment
associated with FoodPrint® slide manufacture will improve capacity,
flexibility and overall production yield and that a capital investment
programme of c. £1m can be delivered from existing funds and deliver
improvements once executed next year.

 

Finally, further to the recent announcement regarding US expansion, the
Company confirms it is now pursuing a partnership route into the territory as
a first step. Working via an established partner network in the territory will
ensure Omega can benefit from established commercial infrastructure and
relationships whilst helping to gain a better understanding of the market
before committing the necessary capital and revenue expenditure to set up its
own laboratory as originally envisaged.

 

Jag Grewal, Chief Executive Officer of Omega, said: "Whilst we have
experienced production challenges in recent months, this is being addressed
and we still are extremely confident of growing our service revenue and our
installed base. Introducing our new digital platform and signing new
partnership agreements will help expand our footprint and drive revenue
growth. We are now bringing forward our plans to improve our manufacturing
capabilities in order to meet expected demand. We remain confident in our
decision to focus our growth plans on the US market, as it remains the largest
market for food sensitively testing globally. We still fully expect FY24 to be
a year of significant revenue growth and a return to positive EBITDA."

 

Contacts:

 

 Omega Diagnostics Group PLC                              www.omegadx.com (http://www.omegadx.com/)
 Jag Grewal, Chief Executive Officer                      via Walbrook PR
 Chris Lea, Chief Financial Officer

 finnCap Ltd                                              Tel: 020 7220 0500
 Geoff Nash/Edward Whiley/George Dollemore (Corporate Finance)
 Alice Lane/Harriet Ward(ECM)

 Walbrook PR Limited           Tel: 020 7933 8780 or omega@walbrookpr.com (mailto:omega@walbrookpr.com)
 Paul McManus                  Mob: 07980 541 893
 Lianne Applegarth             Mob: 07584 391 303
 Sam Allen                     Mob: 07502 558 258

 

About Omega Diagnostics Group PLC

Omega (AIM: ODX) is a specialist medical diagnostics company focused on
promoting a personalised and functional approach to health and nutrition.

www.omegadx.com (http://www.omegadx.com/)

 

 

 

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