SourceBio confirms stellar FY20 results and starts FY21 strongly
(SBI ) told investors that FY20 results will be in line with market expectations following a year of ‘considerable growth’ in both revenues and EBITDA.
The international laboratory service and product provider said it expects to report, subject to audit, revenues of around £50.7m for the year ended 31 December 2020 (FY19: £21.2m).
Meanwhile, the company stated that adjusted EBITDA was approximately £14.0m, an almost fivefold increase on the year prior (FY19: £3.0m).
Following a period of careful working capital management, SourceBio finished the year with a strong cash position that was ‘well ahead of market expectations’ at £8.4m (FY19: £1.2m).
At the year end, the Company confirmed that it had also eliminated all outstanding bank and shareholder borrowings, compared to borrowings on 31 December 2019 of £95.9m.
Figure 1: *Watch* Jay Jay LeCoque, Executive Chairman of SourceBio Discuss the key drivers for their Growth with Paul Hill at Vox Markets.
[Source; SourceBio/VoxMarkets]
OUTLOOK
The company said trading has ‘started strongly’ in FY21 after it signed a surge capacity agreement with the Department of Health and Social Care (“DHSC”) for the supply of COVID-19 antigen RT-PCR testing services using the group’s lab facility in Nottingham.
Under the DHSC agreement, SourceBio has been supplying testing services since mid-December, and could potentially process up to a maximum of 4,000 RT-PCR tests for COVID-19 a day. To date, SourceBio has already processed over 400,000 COVID-19 antigen RT-PCR tests for the DHSC and the NHS.
This surge capacity agreement, which has a maximum value of £7.6 million, expires on 13 February 2021 and may be extended for a further three months.
The company said it is also currently awaiting a potential formal award under Public Health England’s National Microbiology Framework in relation to further COVID-19 testing services.
However, as a result of a third national lockdown, coupled with the severity of the COVID-19 landscape which continues to cause delays in elective surgeries, SourceBio anticipates reduced demand for its Cellular Pathology testing services until the pandemic is under more control.
In response to this reduced demand, the Company will continue to explore additional COVID-19 testing service capabilities to expand the technology platforms it currently supports across the Cellular Pathology business.
As a result of this strategy, it highlighted that the Board’s expectation for significant earnings growth for FY21 for the Group as a whole remains unchanged.
"I am pleased to report to shareholders significant revenue growth with dramatically increased profitability in an extremely busy year for SourceBio, that included a successful AIM listing in October,” commented Jay LeCoque, Executive Chairman of SourceBio.
He added, “The results have been dominated by robust COVID-19 testing services and, given the impact of the COVID-19 pandemic, the Board remains pleased with performance across all areas of the business. The Company remains strongly capitalised with a loan free balance sheet which positions us well to deliver further aggressive growth in 2021.”
The Board is appreciative of the strong support from both long standing and new shareholders and we look forward to updating shareholders in more detail in due course."
Shares in SourceBio have increased by nearly 30% since the company floated on AIM in October 2020. Importantly for shareholders, today’s FY20 Trading update underpins the recent increase in the value of the shares, whilst positioning the shares for further appreciation with £8.4m cash on the balance sheet to fund its FY21 ambitions. The Company will publish full details of its financial performance for FY20 together with a fuller outlook for FY21 in its preliminary FY20 results, which it expects to announce in April 2021.
REASONS TO FOLLOW SBI
SourceBio International is an international provider of laboratory services to clients in the pharmaceutical industry, the NHS and to private healthcare providers. The Group is headquartered in Nottingham, with additional facilities in the UK, Ireland and the US.
The company saw a positive start on its first day of trading on AIM, adding around £8m to its initial £120m market capitalisation while the £35m raised at 162p is intended to be used by it to scale up COVID-19 testing capacity as well as paying off shareholder and bank loans.
“We are delighted by the strong support we’ve received from institutional investors. Our IPO on AIM allows us to significantly increase our COVID-19 testing capacity, accelerate earnings growth in our core business and execute on potential M&A opportunities,” said LeCoque.
He said at the time of the IPO: “It’s an exciting time for our business and we look forward to executing on our ambitious growth plans and delivering value to our shareholders.”
In November 2020, SourceBio unveiled that its funds from its IPO were enabling it to further scale its COVID-19 testing services to deliver against expected increases in future testing.
SourceBio previously forecasted total revenue of around £50m (FY19: £21.2m) and EBITDA of c.£14m (FY19: £3.0m) for the year ending 31 December 2020, with the vast majority of this increase in expected earnings driven by the contribution of COVID-19 testing revenues.
The group said in November 2020 that it had been accepted into the Increasing Capacity Framework Agreement for cancer testing services to NHS England, designed to reduce the significant backlog of elective surgeries impacting the NHS due to the pandemic which is expected to support the growth of the Healthcare Diagnostics business unit in 2021.
SourceBio entered into a strategic commercial partnership with Oxford Nanopore Technologies to offer a COVID-19 testing solution to corporate customers at scale via its own lab facilities. Last week, the group entered into a supply agreement to provide ‘state of the art’ products and lab services to an unnamed high street retail and pharmacy group.
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