Novacyt says FY21 revenues and EBITDA are in line with expectations 

Francesca Morgan
Vox Newswire
11:30, 25th January 2022

Novacyt (NCYT FOLLOW) said reported revenues and EBITDA for the year ended 31 December 2021 are expected to be in line with expectations and that the company is “well positioned” to accelerate investing in non-COVID-19 product development to tackle high unmet needs.

The clinical diagnostic specialist told investors that it had delivered a financial performance in line with expectations during 2021, excluding the company’s ongoing dispute with the DHSC.

Novacyt remains in dispute with the DHSC in relation to a supply contract entered into in 4Q20 At this time, the Company said it continues to engage with the DHSC to resolve the dispute and continues to believe that it has “strong grounds to assert its contractual rights.”

In today’s trading update, Novacyt highlighted the agility of the business to “rapidly respond” to the changing marketplace for its products, “with a noticeable increase in demand from the private market for COVID-19 testing in travel, sport, film, media, and workplace settings.”

Underlying revenue for FY21 was £95.8m vs £277.2m for FY20, excluding £40.8m of DHSC revenues under contractual dispute and in line with management guidance of around £100m.

Revenue from COVID-19 products accounted for 86% in FY21, compared to 95% in FY20.

It said the period saw ‘a significant shift’ away from large, centralised contracts towards independent testing, focused on private laboratories and non-governmental organisations.

Private laboratory revenues increased by 98% year-on-year from £28.3m to £55.9m in FY21, including £10.5m of revenue from non-governmental organisations (NGOs), while private testing accounted for 58% of FY21 revenue at £55.9m, compared to 10% in FY20 at £28.2m. 

The UK represented 45% of revenue in FY21 at £42.7m versus 79% in FY20 at £219.4m. As a result, group gross margin before exceptional items is expected to be in the region of 70%.

FY2021 EBITDA before exceptional items is expected to be above £36m (FY2020: £176.1m), a margin greater than 37%, in line with management guidance of around 40%, it reported.

Novacyt’s cash position at 31 December 2021 was £101.8m, compared to £91.8m in FY20.

Operationally, Novacyt hailed its development and launch of 15 new assays to support laboratories, clinicians, and private testing of COVID-19 since the beginning of 2021.

The Group cited the launch of VersaLab™ mobile processing laboratories and VersaLab™ Portable which had expanded near-patient testing opportunities in private sector testing. It also secured new contracts with WHO and UNICEF for the supply of COVID-19 products.

NCYT price chart

Since joining in October 2021, Novacyt said David Allmond has conducted an initial strategic review of the business during his first 100 days as CEO to outline some clear objectives. 

He outlined that Novacyt’s refined vision is to become ‘a leading, global clinical diagnostics company in the fight against infectious diseases through the three previously announced pillars of product portfolio expansion, geographic expansion and business development.’

Specifically, the core business of Novacyt will consist of COVID-19 and non-COVID-19 in-vitro diagnostics (IVDs), life sciences/research-use-only (RUO) products, and instrumentation

Whilst it will continue to invest in R&D to deliver new products in respiratory and other areas of high unmet need, it will shift from being a “development led” to a “market led” business.

In practice, this means that the company will put forward a consumer-first business approach.

In terms of outlook, the Board said it currently expects that COVID-19 reported sales could be reduced by around 50% throughout 2022, compared to 2021, which will be partially offset by new non-COVID-19 products which will start to come onstream in 4Q22, it told investors.

“I am convinced, as I was when I joined Novacyt in October 2021, that the Company has the key ingredients in place to build towards the next phase of growth and will continue making a significant contribution to global health while delivering value to our shareholders. 

As we invest in non-COVID-19 product development to tackle high unmet needs and bolster our business development efforts, I am excited about the future for Novacyt as a strengthened organisation with a clear strategic focus,” commented David Allmond, CEO of Novacyt Group.

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