LONDON (Alliance News) - LiDCO Group PLC on Monday said it expects "a much stronger second-half" as it has contracted a further three US clients to its recently launched differentiated high-usage programme business model.
The programme was launched in July last year and now has seven US customers, generating annualised recurring revenue of nearly USD1.0 million.
As a result, the blood flow monitoring company expects to report recurring revenue for the six months to the end of July, the first half of its financial year, at GBP2.5 million, up 11% from GBP2.3 million reported for the same period a year prior.
Total revenue is expected to fall 7.6% year-on-year, however, to GBP3.6 million versus 3.9 million, as reduced capital sales impacted short-term revenue recognition, LiDCO said.
On the regional basis, in the US recurring revenue jumped 61% to GBP580,000 from GBP360,000, driven by customer wins under the high use programme business model.
Although it is taking longer than anticipated to sign new agreements for the programme in the US, LiDCO said, there remains an encouraging pipeline of prospects and multi-year contract signings.
Meanwhile, in the UK, revenue declined 9.8% to GBP2.4 million from GBP2.6 million a year earlier, while recurring revenue remained flat at about GBP1.6 million.
The company said the fall was in line with expectations as it comes to the end of its contract with medical devices manufacturer Merit Medical, impacting total sales as LiDCO shifts to production from its own plant in Mexico. However, LiDCO said it expects strong second-half sales of products from third-party manufacturers, as it won a new contract with an unnamed customer for a 1,000 bed NHS hospital with over 100 critical care beds.
In addition, the company said it is in contract negotiations with a number of third parties. These distribution agreements are likely to be higher margin than the Merit Medical sales. Thus, LiDCo said it expects to replace the contribution, which it has historically earned on third-party product sales in the next two years.
In Continental Europe, sales were up 20% to GBP240,000, while in the Rest of World, sales grew by 36% to GBP420,000.
Sales to Japan continue to grow as the company benefits from having a focused distribution partner Merit Medical Japan. Also, LiDCO continues to expand its reach with new distributor sales to South Korea and Vietnam.
Looking forward, the company said it expects a much stronger second-half as more customers sign up to the high-usage programme. LiDCO also said it expects further sales growth in the full-year.
"We are continuing to make progress with growing recurring revenue, and have a significant pipeline of opportunities for our unique high usage programme, especially in the US," said Chief Executive Matt Sassone.
"In the second-half of the year we expect to benefit from this pipeline developing in the US, a higher level of capital sales in the UK and contributions from signing new third party distribution agreements," added Sassone.
Shares in LiDCo were untraded on Monday, last quoted at 6.00 pence each.
The company said it intends to announce its interim results on October 9.