Omega Diagnostics pivots to rapid development of COVID-19 tests
The group reported a revenue increase of 12% to £9.82m (FY19: from £9.76m) with Food intolerance revenue up almost 14% while Allergy & Autoimmune and Infectious disease revenue decreased 0.6% and 18.4% respectively.
Gross profit margin was maintained for continuing operations at 64.1% (FY19: 64.3%) with rising raw material costs mitigated by the slightly higher sales mix towards the higher margin food intolerance products.
Administrative overheads from continuing operations increased by £0.67m to £5.37m (FY19: £4.70m). The majority of this increase relates to the commencement of intangible asset amortisation charges of £0.56 million (£0.43m relating to Allergy and £0.13m relating to VISITECT® CD4).
Selling and marketing costs reduced marginally to £1.49m (FY19: £1.53m) with increased headcount costs of £0.1m being offset by reduced marketing spend of £0.14m.
Exceptional costs in the year comprised of an impairment charge of intangible assets following the decision to stop all future expenditure on the Allergy development programme.
The company therefore reported a loss before tax of £8.2m, down from 2019’s profit of £1.5m, due to the impairment charges which totalled £7.7m.
Despite the loss, William Rhodes, Interim Non-executive Chairman of the group said he believes that the group’s projected outlook for the upcoming fiscal year remains “excellent.”
Shares in Omega Diagnostics were trading 14.47% lower at 32.5p on Tuesday morning.
He said Omega is “rapidly developing” new COVID-19 tests with its partners which it intends to sell “in the hundreds of thousands of units, if not millions” despite halted development of its allergen product lines and slower revenues in the Food intolerance division.
The group said it is in the process of ‘significantly increasing capacity’ in both its manufacturing sites at Alva and Littleport as part of its contribution to the UK Rapid Test Consortium to manufacture rapid antibody self-tests for the UK government.
Analysts at house broker finnCap said it still expects strong growth and a profitable FY 2021, with multiple value inflections points driven by WHO’s prequalification for VISITECT CD4, the COVID-19 antibody test CE marking and Chinese approval for Food Detective self-test.
Despite disruption to the group’s Food intolerance division due to COVID-19, finnCap said it expects near-term Chinese approval of the Food Detective self-test to drive growth.
“With the potential market of c.1m tests (c.£12m) per annum by 2023, this approval should be a significant catalyst for sustained growth,” analysts highlighted in a research note.
“China has already demonstrated a profound ability to return to normal in many of its activities and markets, and we, together with our partner, anticipate returning to growth in Food intolerance as the pandemic ebbs,” said Rhodes.
“Omega has been well positioned and highly proactive in playing a key role in developing and manufacturing much needed COVID-19 tests for use throughout the world and, more specifically, to also be able to serve the needs of the people of the UK and Scotland,” added Rhodes.
Omega Diagnostics is a key component of our CV-19 Index.
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