REG - EKF Diagnostics Hldg - Trading Update

EKF Diagnostics HoldingsAnnouncement

01/08/2022 07:00

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RNS Number : 3387U  EKF Diagnostics Holdings PLC  01 August 2022

This announcement contains inside information for the purposes of UK Market
Abuse Regulation.

 

EKF Diagnostics Holdings plc

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

 

Trading Update

 

H1 2022 performance in-line with management expectations

Strong double-digit growth in underlying (non-COVID) revenue

 

EKF Diagnostics Holdings plc (AIM: EKF), the AIM-listed global diagnostics
business, provides the following unaudited trading update for the six months
ended 30 June 2022 ("H1 2022"), a period of strong underlying (non-COVID)
revenue growth, underpinning confidence in meeting full year expectations.

 

Trading Update

As announced in the 18 May 2022 AGM statement, trading in the first quarter of
2022 was strong. This has continued into the second quarter, where the focus
remains on our strategy to position the business for long-term sustainable
growth. Unaudited revenues for H1 2022 were £37.5m (H1 2021: £38.6m),
including c.£3.5m of revenue arising from cash received for US inventory as
reported on 13 June 2022. On an underlying basis, which excludes largely
COVID-related revenue from Contract Manufacturing and Laboratory Services, the
Group delivered double-digit growth compared to H1 2021.

 

The Company expects to report adjusted EBITDA(1) for the first half which is
in line with management expectations. More recently established activities are
expected to see improvements in adjusted EBITDA margin as they start to build
scale from the second half and into 2023. The Company remains on track to
deliver an adjusted EBITDA(1) result in line with its expectations for the
full year.

 

Group cash, net of borrowings, as at 30 June 2022 was £18.9m. Continuing
positive cash flows from operations in H1 2022 mean that, after recent
corporation tax payments, movements in working capital, the completed share
buyback and investment activities, the 30 June 2022 balance compares well
against the 31 December 2021 figure of £19.6m.

 

The Board remains confident that the Company will continue to deliver on its
growth strategy across all areas of the business. First half progress most
notably includes:

 

(1)  The established Point-of-Care & Central Laboratory businesses have
delivered growth compared to pre-pandemic levels and have made further
progress on new product and new market initiatives.

 

(2)  Life Sciences had a strong H1 2022 performance from its existing
fermentation capacity and the expansion plans into larger volume production
remain on schedule for completion by the end of the year, with encouraging
early meetings with large industrial partners who are looking to utilise this
additional capacity. Revenue from this area of investment is expected to build
materially in 2023 and to be a source of significant growth through to 2024.

 

(3)  The transition to non-COVID revenues in both Contract Manufacturing and
Laboratory Services continues. The Company is bringing on new partners in the
genomics and forensic space and successfully taking them through validation
and pilot scale batches for products expected to be launched later in 2022 and
into 2023. In addition, the Laboratory Services team recently launched a new
clinical toxicology method geared toward medication adherence, developed an
analysis of cannabis potency and has made major advances in establishing our
capability in Non-Invasive Prenatal Testing ("NIPT"). The expansion of testing
capabilities to create a broader suite of healthcare applications is
proceeding well against the Company's roadmap, and it is reassuring to see
early interest and new opportunities emerging as the team start to promote the
new testing services.

 

EKF expects to announce its unaudited results for H1 2022 on 20 September
2022.

 

Mike Salter, CEO of EKF, commented: "It has been an encouraging start to the
year and our adjusted EBITDA(1) expectations for the full year remain in line
with expectations. We are excited by the growth potential from our expansion
plans which will support growth through to 2024 and beyond, funded by
internally generated cash resources. EKF remains on track to deliver planned
expansions in capability and capacity in Life Sciences, as well as the further
broadening of our Laboratory Services offering beyond COVID. The Point-of-Care
and Central Laboratory businesses continue to recover well and provide steady,
cash generative growth. We look forward to reporting our interim results more
fully in September, as we enter the next chapter of EKF's growth with
increasing confidence."

 

(1)Earnings before interest, tax, depreciation and amortisation, excluding
exceptional items and share based payments.

(2)Comparative data relates to the comparable period to 30 June 2021 ("H1
2021")

 

The persons responsible for arranging the release of this Announcement

on behalf of the Company are Mike Salter, CEO, and Marc Davies, CFO.

 

 EKF Diagnostics Holdings plc                                   www.ekfdiagnostics.com (http://www.ekfdiagnostics.com)
 Mike Salter, CEO / Marc Davies, CFO                             Tel: +44 (0)29 2071 0570

 Singer Capital Markets (Nominated Adviser & Joint Broker)      Tel: +44 (0)20 7496 3000
 Aubrey Powell / George Tzimas

 Investec Bank plc (Joint Broker)                               Tel: +44 (0)20 7597 4000
 Gary Clarence / Daniel Adams / Ben Farrow

 Walbrook PR Limited                                            Tel: +44 (0)20 7933 8780 or ekf@walbrookpr.com (mailto:ekf@walbrookpr.com)
 Paul McManus / Lianne Applegarth                               Mob: +44 (0)7980 541 893 / +44 (0)7584 391 303

 

 

About EKF Diagnostics Holdings plc (www.ekfdiagnostics.com
(http://www.ekfdiagnostics.com) )

EKF is a leading global diagnostics business with custom manufacturing
facilities across sites in the US, UK and Europe for a variety of life science
products. EKF is focussed on the following areas:

 

 Point-of-Care           Providing a portfolio of Point-of-Care analysers and consumables, particularly
                         for use in the area of Hematology and Diabetes, for use in hospital and
                         research laboratories, doctor's offices, blood banks and for in-field anaemia
                         screening programmes. EKF has an estimated 80,000 hemoglobin, hematocrit,
                         HbA1c, glucose and lactate analysers in regular use across more than 100
                         countries.

 Central Laboratory      Clinical chemistry, Small lab analysers, Centrifuges

                         Beta-Hydroxybutyrate (β-HB) LiquiColor, Glycated Albumin, Glycated Serum
                         Protein, Nitro-tab, Procalcitonin

 Life Sciences           Enzyme fermentation, Custom products and Bulk fermentation

 Contract Manufacturing  Bulk formulation, Sample collection kits, Private labelling, Molecular and
                         forensic kits

 Laboratory Services     In September 2021, EKF completed the acquisition of Advanced Diagnostic
                         Laboratory LLC ("ADL Health"), a Texas based testing laboratory certified
                         under the Clinical Laboratory Improvement Amendments ("CLIA") for high
                         complexity testing. The laboratory provides testing for a variety of clinical,
                         forensic and microbiological sample types using a range of analytical
                         techniques. This acquisition positions EKF as a leading 'one stop' provider of
                         diagnostic products and services from sample collection to results.

 

EKF's growth strategy to 2024 and beyond can be summarised as:

 •    continuing innovation in products and services in Point-of-Care, Central
      Laboratory and Life Sciences leveraging new and existing routes to market and
      relationships;
 •    investment in expanded production and kitting capabilities to offer a suite of
      diagnostic Contract Manufacturing solutions to third party businesses;
 •    expansion of CLIA Laboratories Testing offering, building on the acquired
      capabilities in ADL Health; and
 •    concluding complementary earnings-enhancing acquisitions with key strategic
      value.

 

EKF will also continue to generate enhanced shareholder value through:

 •    a progressive dividend policy; and
 •    its agreement with Mount Sinai Innovation Partners ("MSIP"), which allows us
      advanced access to innovative commercial opportunities such as those already
      seen with Renalytix plc, Verici Dx plc and Trellus Health plc.

 

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