TIDMIDH
RNS Number : 6501V
Immunodiagnostic Systems Hldgs PLC
16 April 2021
FY21 Trading Update
Immunodiagnosti c Systems Holdings PLC
16 April 2021
Immunodiagnosti c Systems Holdings plc
FY21 Trading Update - Encouraging Trading Performance During H2
and Improving Outlook
Immunodiagnostic Systems Holdings PLC ("IDS" or "the Group"), a
specialist producer of diagnostic testing kits and instruments for
the clinical and research markets, today provides an unaudited
trading update for the Financial Year ended 31 March 2021
("FY21")
1. GROUP HIGHLIGHTS
IDS's trading in H2 FY21 has recovered strongly from the adverse
impact of the COVID-19 pandemic seen in the first half. Unaudited
revenue in H2 FY21 is expected to be GBP19.0m, up from GBP13.7m in
H1 FY21, representing 39% growth H2 on H1. Overall revenues for
FY21 amounted to GBP32.7m (FY20: GBP39.3m).
The development of the Automated Business strongly correlates
with the placement of new instruments, as each new instrument
generates recurring incremental revenues. Therefore, we are pleased
to report that instrument placements/sales in our Automated
Business unit were 79 during H2 FY21 (H2 FY20: 61) bringing full
year placements/sales to 100 (FY20: 93). This rate of placements
represents the strongest performance in eight years.
2. REVENUE
As explained in our H1 Trading Update in October, the COVID-19
pandemic had an extraordinary impact on global economic performance
and to healthcare systems around the world. Due to the resulting
drop in routine diagnostic testing, this materially impacted IDS
revenues recorded in H1 FY21. Therefore, in this trading update
focus will be placed on comparing H2 FY21 performance with H2 FY20,
as this best demonstrates the underlying trajectory of the
business.
H2 Automated Business Revenue: Record Speciality Business
Revenues
An analysis of the key revenue streams in the Automated Business
unit is set out below:
Revenue - GBPm H2 FY21 H2 FY20 Change
Vitamin D (25-OH and
1,25) 2.6 3.7 -29%
--------------------- --------------------- --------------------
Speciality - Endo 6.2 5.8 +6%
--------------------- --------------------- --------------------
Speciality - AI 1.2 1.1 +10%
--------------------- --------------------- --------------------
Speciality - Others 0.4 0.3 +21%
--------------------- --------------------- --------------------
Instrument and Service
Revenue 1.8 1.5 +27%
--------------------- --------------------- --------------------
Total 12.2 12.4 -1%
--------------------- --------------------- --------------------
Speciality revenue 9.6 8.7 10%
--------------------- --------------------- --------------------
Vitamin D revenues, encompassing both 25-OH Vitamin D and 1,25
Vitamin D assays, continued to decline. This decline continues due
to the structural change in this market as explained in previous
Annual Reports. Lower reimbursement rates, more focused
prescription guidance for Vitamin D tests, and the migration of
these tests to workhorse analysers have all impacted IDS's
revenues.
It is pleasing to see that all the IDS speciality business
streams (i.e. all business streams excluding Vitamin D revenues)
have grown, with overall 10% growth in the second half versus the
same period in FY20. We consider this particularly impressive as
the comparative period was the strongest second half performance
delivered in many years, thus the FY21 H2 performance represents
record revenues for our automated speciality business.
This strong performance masks the fact that the COVID-19
pandemic continues to have an adverse impact on the business,
particularly in emerging markets like Latin America and Asia. While
the quantitative effect of the pandemic on our routine testing
business is difficult to estimate, it is clear that the growth in
our speciality business would have been even stronger without this
impact.
From a strategic perspective, as a result of our diversification
strategy away from Vitamin D, speciality revenues have grown at a
CAGR of over 11% in the five years to FY20 and have returned to a
similar growth rate in H2 FY21. In H2 FY21, speciality revenue
amounted to 78% of the overall Automated Business unit revenues,
whereas six years ago they only comprised 43%. This performance
represents the successful efforts of the IDS team to diversify to
become a provider of numerous valuable speciality assays,
underpinned by a robust and flexible instrument platform.
H2 Manual Business Revenue: Swift Recovery from Pandemic
During H2 FY21 the Manual Business unit revenues amounted to
GBP5.2m (H2 FY20: GBP5.6m), a decline of 7%. This is a significant
improvement in trajectory compared to H1 FY21, when the rate of
decline stood at 37% versus H1 FY20. As H2 FY21 progressed, order
patterns from key distributors approached pre-pandemic levels and
as a result we expect this business to deliver similar revenues to
those seen in FY20 moving forwards.
H2 Technology Business Revenue: Customer Diversification Continues
Technology Business revenue in H2 FY21 was GBP1.6m (H2 FY20:
GBP2.5m). The reduction was mainly due to one-off license income
received in H2 of FY20 relating to a legacy contract.
As explained in the 2020 Annual Report and Accounts, revenues in
this business unit are contingent on the success of the development
and commercialisation of the assay panels of our partners. IDS
continues to focus on expanding the number of partners using the
IDS technology, to reduce the concentration risk inherent in this
business unit. To this end, during the year we have made good
progress on contractual discussions with two potential new
partners, where we have targeted reaching agreement of contracts
during the next few months.
3. AUTOMATED KPIs
Instrument Sales
We achieved sales or placements of 100 (FY20: 93) analysers in
our direct and distribution businesses, our strongest performance
since 2013. FY21 H2 performance was particularly strong, with 79
machines being placed or sold. The annualised performance is
summarized below:
FY21 FY20
Direct Gross Placements
[1] 38 43
------------------ ------------------
Direct Returns (23) (25)
------------------ ------------------
Direct Net Placements
[2] 15 18
------------------ ------------------
Sales to Distributors
[3] 62 50
------------------ ------------------
Total Installations
[1]+[3] 100 93
------------------ ------------------
Increase in Installed
Base [2] + [3] 77 68
------------------ ------------------
Returns in the year reduced to 23, from 25 in the prior year.
Most of these returns were in the US market, where we lost one
customer group which only ran 25-OH Vitamin D tests. This level of
returns is the lowest recorded in many years, and validates the
assay diversification strategy, which makes the IDS instrument a
more versatile and widely used piece of equipment, and hence more
likely to be retained by a laboratory at the end of the initial
contract. As there are now very few customers running only the
25-OH Vitamin D assay, we expect instrument returns to decline
significantly in future years.
Automated Assay Launches
Despite the operational challenges of the pandemic, FY21 was a
successful year in terms of the expansion of the IDS automated
assay menu in both Europe and the USA, as set out below:
Europe
During the year, 7 new automated assays were launched on the IDS
instrument platform for the European region and other territories
which accept CE mark accreditation:
-- The launch of the automated Cortisol assay has successfully
rounded out the IDS automated hypertension panel.
-- IDS entered the field of therapeutic drug monitoring, with a
panel of four new tests. These are the first such automated tests
on the market. They are used to monitor the efficacy of Infliximab
(trade name Remicade) and Adalimumab (trade name Humira) which are
multi-billion Dollar selling antibody-based drugs used in the
management of chronic inflammatory diseases.
-- COVID-19 fully automated IgG and IgM antibody tests were
launched, as set out in the COVID section below.
USA
In the US we achieved 510k approval for the IDS automated BAP
assay during H1 and made the first sales of this assay during H2 to
a major laboratory chain. The Cortisol assay achieved FDA approval
in April 2021, despite only being released to the European market
in August 2020 - this rapid approval is evidence that the revised
development process introduced by IDS produces assays "out of the
gate" which have performance characteristics and supporting data
sufficient for FDA approval.
Additionally, IDS gained emergency use authorisation for the IDS
automated SARS-CoV-2 IgG antibody assay, which allows this test to
be used for clinical testing purposes in the US.
The assays available for sale on the IDS automated instrument at
31 March 2021 now comprise:
Europe / USA
CE Mark
Speciality Endocrinology 23 12
--------- ----
Infectious Disease 25 1
--------- ----
Autoimmune Disease 29 -
--------- ----
Allergy 67 -
--------- ----
Therapeutic Drug 4 -
monitoring
--------- ----
Total 148 13
--------- ----
At the end of FY21 there were a number of assays in our
development pipeline very close to completion, thus we expect to
announce at least two new assay launches in Q1 of FY22.
4. COVID-19 PRODUCTS
IDS now has a comprehensive portfolio of COVID-19 tests
available - ranging across fully automated IgG and IgM antibody
tests, manual ELISA tests and distribution rights for a variety of
rapid antibody and antigen tests. Revenue from this product
portfolio has helped IDS deliver the strong performance seen in H2
FY21.
As explained in our most recent Interim Report, the focus of
health authorities is currently on antigen testing - to test for an
active infection of SARS CoV-2. IDS is working with our partners to
gain approval for more convenient antigen tests, which are not
reliant on the unpleasant nasopharyngeal swab sample collection
method, to the European market. We will be well positioned to
secure a share of this market assuming approval of these products
is forthcoming.
In terms of antibody testing, with the progression of the
vaccine rollouts globally, public health studies into antibody
levels in the population should increase to enable the success of
this program to be measured. This is likely to drive additional
demand for antibody testing, and because a fully automated solution
such as that offered by IDS provides better accuracy than rapid
tests, and better laboratory efficiency than manual ELISA based
tests, IDS is well positioned to win a share of the laboratory
business for these tests.
5. OPERATIONS
IDS has faced unprecedented challenges and restrictions arising
from the COVID-19 crisis - these have varied in each of our
operational locations, and across the territories where our
customers and suppliers are based. While the world is now more
accomplished at "living with" COVID-19 than in 2020, these
challenges have persisted throughout the year. However, our
operational team have coped superbly with this situation, and we
have managed to continue to provide a full service, along with
continuity of supply, to all our customers.
The impact of Brexit was also managed smoothly by the team;
while there were some minor problems due to the disruption to the
European logistics network, our planning served us well in this
regard, and customers were not impacted. The post-Brexit world
continues to create inefficiencies in our supply chain, however
these do not amount to anything that represents a significant risk
to the operational or financial performance of the IDS
business.
During the year we have carefully managed our cost base -fixed
costs will be around GBP3.5m to GBP4.0m lower than our plan as a
result of targeted cost actions and changes to working practices to
mitigate the impact of the pandemic on EBITDA. Closing cash and
cash equivalents were GBP23.3m on 31 March 2021 (30 September 2020:
GBP24.2m, 31 March 2020: GBP27.6m).
6. OUTLOOK
The performance of the business during H2 FY21 was extremely
positive as all key speciality revenue streams in our Automated
Business unit returned to growth and the accelerated rate of
placements of new analysers lays the foundation for future growth
from recurring assay sales.
We are now very confident that moving forward the revenue growth
seen in this business unit pre-pandemic will continue, and most
likely accelerate because the Vitamin D products which have
historically depressed growth rates are a progressively less
significant proportion of the product mix. Thus the underlying
growth in the speciality business should increasingly show
through.
For further information:
Immunodiagnosti c Systems Holdings plc Tel : +44 (0)191 5190660
Jaap Stuut, Chief Executive Officer
Paul Martin, Group Finance Director
Pee l Hunt LLP Tel : +44 (0)207 418 8900
James Steel
Oliver Jackson
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