TIDMEKF

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 GBP37.5m (H1 2021: GBP38.6m), including c.GBP3.5m 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 GBP18.9m. 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 GBP19.6m.

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 
Mike Salter, CEO / Marc Davies, CFO                              Tel: +44 (0)29 2071 0570 
 
Singer Capital Markets (Nominated Adviser                        Tel: +44 (0)20 7496 3000 
 & Joint Broker) 
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 
Paul McManus / Lianne Applegarth                           Mob: +44 (0)7980 541 893 / +44 
                                                                          (0)7584 391 303 
 

About EKF Diagnostics Holdings plc ( 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 (<BETA>-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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