Biotech’s EBITARD hype risks impairing its growth

Prenetics Global

14/04/2022 04:10

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Jennifer Hughes
    HONG KONG, April 14 (Reuters Breakingviews) - Prenetics,
supplier of Covid-19 tests to cruise lines, airports and
England’s Premier League, has won U.S. approval to float by
merging with a blank-cheque firm. But the fast-growing outfit
excludes R&D costs from a key financial metric. That’s a warning
sign for investors.
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    CONTEXT NEWS
    - Genomic and diagnostic testing group Prenetics on April 11
said it had approval from U.S. regulators to list in New York
via a merger with blank-cheque firm Artisan Acquisition, backed
by Hong Kong billionaire Adrian Cheng.
    - Hong Kong-based Prenetics gained prominence in the global
pandemic when the English Premier League in 2020 used the
company to manage testing when its football matches restarted
after lockdown. The company also provides testing facilities at
Heathrow and Hong Kong airports, among other contracts. Revenue
more than quadrupled in 2021 to $276 million. 
    - Prenetics’ valuation of $1.25 billion via the merger puts
it on 30 times its preferred measure of adjusted EBITDA, which
strips out research and development expenses.

 (Editing by Antony Currie and Katrina Hamlin)
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