Abingdon Health plc

("Abingdon" or "the Company")

Interim Results

Now positioned as a fully integrated CDMO focused on lateral flow testing, with strong commercial traction

York, U.K. - 31 March 2023: Abingdon Health plc (AIM: ABDX), a leading international lateral flow contract development and manufacturing organisation (CDMO), announces its unaudited interim results for the six months ended 31 December 2022.

Operational highlights (including post-period):

·    The Company has successfully transitioned its activities away from COVID-19 and is now operating as a fully integrated CDMO maintaining its full focus on lateral flow testing.

·    Strong revenue traction from a diverse range of customers across all aspects of Abingdon's fully integrated CDMO solution, including contract development, technical transfer, manufacturing, and regulatory, quality assurance and commercial support.

·    The Company's opportunity pipeline remains robust and the Board believes Abingdon's lateral flow CDMO proposition will continue to yield further contract service opportunities over the course of 2023 and beyond.

·    The Company's product revenue growth, including the Abingdon Simply Test™ range, is encouraging with further own brand and third-party product launches. New product launches, including Salistick™, the first ever saliva pregnancy test, are planned in due course.

·    The Company is currently working with a number of new customers across 11 different contract service projects in multiple areas (vs three as at 1 July 2022) with two additional contracts signed, work on which will commence in Q4 2023.

Financial highlights:

·    Revenue of £1.1m for the six months to December 2022 (H1 2022: £1.7m) expected to be significantly improved in H2 2023 and FY 2023 revenues are expected to be materially higher than FY 2022 revenues of £2.8m.

·    At 31 December 2022, the Company had £4.4m cash. Current cash is in line with the Board's expectations and is expected to be £3.7m as at 31 March 2023. The primary objective of the Board is to move the Company to a breakeven and cash flow positive position which it forecasts will be achieved in FY 2024.

·    Gross margin increased slightly to 25.9% when compared to the prior year (2022: 25.4% when adjusted for stock provisions of £1.6m for comparability) which represents the cost savings from the reduction in headcount in the year as well as the positive impact from sales mix.

·    Reduction in adjusted¹ EBITDA loss of £2.2m in the period (H1 2022: adjusted² EBITDA loss of £4.8m) predominantly driven by cost-savings, mainly due to a reduction in headcount.

Outlook

·    Successfully transitioned the Company towards a non-COVID customer base with a solid pipeline of opportunities.

·    Signed another two CDMO contracts post-period end and these projects are in the process of onboarding.

·    Based on current trading to date and contracted business in H2 2023, the Board is confident that second half revenues will be materially ahead of H1 2023.

Chris Yates, CEO at Abingdon Health plc, commented: "Our dedicated lateral flow CDMO service continues to gain traction with a number of new customers onboarded in recent months. Importantly, all of our CDMO activities are non-COVID-19 and are spread across a range of sectors including clinical and animal health. We believe our fully integrated CDMO service is offering customers a straightforward solution to bring their products to market in the most cost-effective and efficient manner. We are also pleased with the progress that our lateral flow product portfolio, including Abingdon Simply Test™, is making; and whilst we are still in an early phase of our strategy, the distribution channels we have worked hard to build are beginning to generate repeatable revenues.

"Our focus is to continue to grow our commercial pipeline, increase our revenues and ultimately achieve profitability and a positive cash flow position. I would like to thank the Abingdon team for their unwavering commitment and support during a period of significant change which has been greatly appreciated by me and the rest of the Board."

Dr Chris Hand, Non-Executive Chairman of Abingdon Health plc, said: "Abingdon continues to build revenue across lateral flow development, technical transfer and manufacture. In addition, the Company's regulatory support gives customers an end to end offering of lateral flow expertise. The Abingdon Simply Test™ range brings this expertise and knowledge in lateral flow testing to the consumer and we will continue to expand our offering including unique products such as the Salistick™.

"The next phase of growth for the business brings the Company towards the Board's primary objective of the achievement of a cash flow positive position.  On behalf of the Board of Abingdon Health plc, I would like to thank our colleagues, customers, partners and shareholders for their continued support."

¹ adjusted for amortization, depreciation, share based payment expense and non-recurring redundancy costs and professional fees as well as adjustments relating to IFRS 16

²adjusted for amortization, depreciation, share based payment expense and non-recurring legal fees

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This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

About Abingdon Health plc

Abingdon Health is a leading lateral flow contract development and manufacturing organisation ("CDMO") offering its services to an international customer base across industry sectors that include clinical, animal health, plant health, and environmental testing. Abingdon Health has the internal capabilities to take projects from initial concept through to routine and large-scale manufacturing; from "idea to commercial success."

The Company's CDMO division offers product development, regulatory support, technology transfer and manufacturing services for customers looking to develop new assays or transfer existing laboratory-based assays to a lateral flow format. Abingdon Health aims to support the increase in need for rapid results across many industries and locations and produces lateral flow tests in areas such as infectious disease, clinical testing including companion diagnostics, animal health and environmental testing.

Abingdon Health's Abingdon Simply Test™ range of self-tests is an ecommerce platform that offers a range of self-tests to empower consumers to manage their own health and wellbeing. The Abingdon Simply Test^TM ecommerce site offers consumers a range of information to support them in making informed decisions on the tests available. In addition, the site provides Abingdon's contract services customers with a potential route to market for self-tests. The Abingdon Simply Test™ range is also sold through international distributors and through other channels in the UK and Ireland such as pharmacy chains.

Founded in 2008, Abingdon Health is headquartered in York, England.

www.abingdonhealth.com

BUSINESS REVIEW

Strategy

Abingdon Health's mission is to make rapid testing accessible to all. We seek to achieve this in two ways. Firstly, by providing our customers with a comprehensive lateral flow contract development and manufacturing service ("CDMO") to bring their products to market in the most efficient and cost-effective way. Secondly, through the distribution of a range of lateral flow self-test products, both online and via third party distributors, the majority of which are branded Abingdon Simply Test™.

Lateral Flow CDMO services

Abingdon provides its customers with an integrated CDMO service. This covers feasibility, optimisation, scale-up, technical transfer and manufacturing. In addition, we offer a range of other services such as regulatory and commercial support, meaning that we can provide customers with all the services required to take their project from idea to commercial launch and large-scale manufacture.

We are pleased with the progress our CDMO service has made in the past period. As set out in our February 2023 trading statement, we commenced an additional two new technical transfer projects, three new R&D projects, and two new regulatory projects in December 2022, illustrating the growing commercial momentum in this offering. At the time of the trading statement, we noted we were working with a number of customers across 11 different contract service projects in multiple areas (vs three as at 1 July 2022). Since then, we have signed another two CDMO contracts and these projects are in the process of onboarding. The pipeline remains robust, and we anticipate bringing more customers onboard as we see the current projects transfer from development into technical transfer which will free up our development team to take on further projects. Importantly, all our activities in CDMO are now focused on non-COVID-19 sectors and we believe this offers a more stable and sustainable business pipeline.

We were pleased to announce our strategic partnership with Senzo Health (Senzo) in March 2023 which will see Abingdon support Senzo by providing CDMO services to Senzo's partners to enable them to develop and manufacture new rapid tests utilising Senzo's cutting-edge high-sensitivity Amplified Lateral Flow platform.

We remain optimistic on the prospects for the lateral flow market. Recent market estimates suggest the lateral flow market will reach nearly $23 billion by 2027 (Source: MarketsandMarkets) and we believe that this will be driven by new product development which will offer further opportunities for the Group to grow its CDMO business for the foreseeable future.

Abingdon Simply Test™ and related products

Abingdon launched the Abingdon Simply Test™ range of self-test products online in July 2022 and we continue to grow the portfolio of products sold on our e-commerce platform. The product range has recently expanded to include a Strep A test and a Flu/COVID combination test. We currently have 16 products for sale on the platform. The Company is broadening the channels to market to include retail chains and other e-commerce channels such as Amazon. Abingdon Simply Test™ launched in a major pharmacy chain in Ireland in February 2023 and we are pleased to see repeat orders from this customer. Further distribution channels have been established in H1 2023 and early in H2, including a number of country-specific distribution agreements. The Company is aiming to add further self-tests, including those developed through its contract service activities, over the rest of FY 2023. Abingdon anticipates launching one of its CDMO customer's tests, the Salignostics Salistick™ saliva pregnancy test, on the Abingdon Simply Test™ site, in due course. We were pleased to see Salistick™ achieve Medicines and Healthcare products Regulatory Agency (MHRA) approval in March 2023 and will therefore be available for sale in the United Kingdom and we remain on target for an exclusive launch of Salistick™ on the Abingdon Simply Test™ website and on Amazon before the end of this financial year.

People

During the six months to 31 December 2022, the Company further reduced its headcount to 74, from 93 at 30 June 2022. This was part of our planned restructure as we refocused the activities of the business towards the CDMO pipeline of opportunities. Post-period end, headcount has increased to 81 with recruitment focus on development scientists to support the strong revenue growth in the Contract Development revenue stream.

Financial Performance

Revenues fell in the period to £1.1m (2022: £1.7m) but on a like-for-like basis, excluding revenues from COVID related products in both periods, underlying sales grew 15% (and more strongly in Contract Development where non-COVID business increased 64%). 

The gross profit margin for the period improved slightly to 25.9% against the prior year which, when adjusted for the £1.6m stock obsolescence provision for comparability, gave an adjusted gross margin of 25.4%, (or -67% in H1 2022 including the provision). The gross margin continues to reflect the underutilization of the contract manufacturing infrastructure, however margins are expected to improve as revenue continues to grow from signed contracts already underway and the pipeline of opportunities in progress as outlined above.

Administration costs reduced to £2.6m (2022: £3.7m) from the cost saving measures taken such as reductions in headcount and in other costs such as the business reducing its lease obligations on its site in York, which resulted in a reduction in site space and associated lease costs. This resulted in a reduction in the total value of the lease liability, which, when adjusted for the carrying value of the right of use asset resulted in a net gain of £0.3m

Adjusted operating loss has decreased significantly from the prior period to a loss of £2.2m (2022: loss of £4.8m) from the savings resulting from the actions taken described above.

The Company's cash balance at 31 December 2022 was £4.4m and is expected to be £3.7m at 31 March 2023. We also anticipate our adjusted EBITDA loss to reduce in H2 2023 compared to H2 2022 due to increased sales and the cost reductions made.   The Group produces outward forecasts over a period of at least 12 months which are sensitised to reflect the companies expected cash position under various trading circumstances and believes that it has operating headroom for at least this length of time. 

Current Trading and Outlook

As set out in our trading statement in February 2023 the Board remains confident of achieving material revenue growth for FY23 compared to FY22, with revenues in H2 2023 significantly ahead of H1 2023.  In particular, growth in non-COVID-19 revenues in FY23 compared to FY22 will be a key indicator of the progress the Company has made in repositing itself as a CDMO service business in a post-COVID-19 environment.

Our key focus remains on continued revenue growth and progression towards profitability and a cashflow positive position. Our target is to achieve this in FY 2024 and we believe that this year will put the foundations in place to allow us to achieve this.

Consolidated Statement of Total Comprehensive Income

For the period ended 31 December 2022

Consolidated Statement of Financial Position

For the period ended 31 December 2022