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(Sharecast News) - Rapid medical test developer Abingdon Health described a "disappointing" full-year performance in a trading update on Monday, with revenues expected to be in the region of £2.8m, and a "substantial loss" anticipated.
The AIM-traded firm recorded revenue of £11.6m in the 2021 financial year, or £3.6m excluding revenue from the Department of Health and Social Care and a one-off Covid-19 customer order.
It said a "significant proportion" of the losses in the 2022 year ended 30 June related to the increase in operational infrastructure related to its 'AbC-19' test, as well as the DHSC contract and the subsequent unwinding of that investment.
As part of that , the company further restructured its operations early in the fourth quarter, with a reduction in headcount to 86 employees at the end of July from 123 at the end of December.
That, along with other cost-saving measures, had "significantly reduced" the ongoing monthly operational cash outflow, the board said.
Abingdon's cash balance at the end of July was £7.6m, following the settlement of the outstanding monies owed by the DHSC, including the £1.5m that was held in a blocked account awaiting the outcome of a judicial review.
The directors said they were of the opinion that the current cash balance gave the firm sufficient working capital beyond the end of the current 2023 financial year without material revenue growth.
Abingdon transitioned its focus back to its contract service business model in the year, and as and when the company began generating meaningful commercial traction, it said it would look to grow its headcount "sustainably" and in line with the anticipated growth of the business and revenues.
"Despite what has been a challenging year for the company, we are nonetheless encouraged by our progress, with a range of new Covid-19 and non-Covid-19 opportunities," said chief executive officer Chris Yates.
"We believe that 2023 will see a return to revenue growth and that our programme of investment will see us begin to generate meaningful commercial traction."
Yates said 2022 was "disappointing in many respects", particularly the distraction of the judicial review and the challenges in resolving the lack of payment from the DHSC.
"Despite this hindrance we have built a solid base of international opportunities and we look forward to the new financial year with a growing base of contract service customers."
At 1116 BST, shares in Abingdon Health were down 20.32% at 7.37p.
Reporting by Josh White at Sharecast.com.
