Novacyt swings to first-half loss amid DHSC dispute

(Sharecast News) - Clinical diagnostics specialist Novacyt reported group consolidated unaudited revenue of £54m in its first half on Monday, down from £63.3m year-on-year, which excluded £40.8m of Department of Health and Social Care (DHSC) revenues, while that contract dispute continued.
The AIM-traded firm said non-DHSC revenue increased 20% for the six months ended 30 June, to £54m from £44.8m, supported by the growing UK private testing market.

It said it booked exceptional cost-of-sales of £35.8m in connection with the DHSC contract dispute, to write-down inventory and terminate supply agreements that it had built in anticipation of further DHSC demand, and to book the cost of products supplied to the DHSC in 2021 that had not been paid for.

The group's gross margin before exceptional items was 71%, delivering a gross profit of £38m.

After the exceptional DHSC-related cost of sales, Novacyt's gross margin dropped to 4%, delivering a gross profit of £2.3m.

Group adjusted EBITDA totalled £23.2m before exceptionals, down from £43.1m in the first half of 2020.

Novacyt reported an operating loss of £13.6m, swinging from a profit of £42.2m year-on-year, driven by the one-time exceptional cost of sales and stock write-down, while its loss after tax totalled £12.7m, compared to a profit of £35.1m a year earlier.

Cash at 30 June totalled £77.2m, with nil debt.

"During 2021, Novacyt has remained at the forefront in its response to the constantly changing global Covid-19 pandemic," said group chief executive officer Graham Mullis.

"We have launched 18 new Covid-19 products since the beginning of 2021 and we expect Novacyt to continue to play a major role in Covid-19 testing well into 2022.

"We also remain focused on strengthening our long-term position and executing against our strategy by building our product and instrument platforms and expanding our commercial infrastructure for growth beyond Covid-19."

At 0823 BST, shares in Novacyt were down 4.17% at 298.71p.