Clinical diagnostics firm Novacyt (NYCT:AIM) reported first-half revenues over 900% to €72.4 million and said it expected to see significant on-going demand to continue into 2021. The shares added 3% to 275p and are up 1,800% year-to-date.
RISING COVID-19 CASES
Today’s unaudited update highlighted the rising number of global coronavirus cases which are up 69% since 11 June, topping more than 12.7 million after a number of countries started relaxing measures to contain the spread of the virus.
Novacyt launched one of the first commercial Covid-19 resting kits at the end of January and has since orchestrated a scale-up of operations to meet the expected demand and hired 45 people in the first-half. Revenue rose for the sixth consecutive month in June to €25.4 million with 91% of first half revenue accounted for in the second quarter.
The group estimates that earnings before interest, tax, depreciation and amortisation (EBITDA) was over €45 million giving a relatively high margin of 62%, which the company believes it can maintain during the rest of the year.
The resulting strong cash position of €20 million is reported after paying down all outstanding debt, leaving the firm debt free for the first time.
The company has signed a major distribution agreement with a new global strategic partner to accelerate already significant sales growth it is achieving stateside, with potential to expand into other markets.
Capitalising on its first mover advantage the firm says it is committed to building a world-class position for Covid-19 testing and more broadly for respiratory diseases.
Three new products have been launched to support laboratory testing and the firm will provide an update on its research and development (R&D) activities in the near future.
CAPITAL ALLOCATION
Good order visibility and the expected incremental sales from new products will result in greater revenues than the first-half and at similar margins. The resultant cash generation means the board are reviewing capital allocation policy to ‘enhance and accelerate long-term value creation.’
The company declined to specify how excess cash would be deployed between the ‘three-pillar strategy’ of organic, R&D and acquisitive growth opportunities.
