18 Apr 2019 16:35
FY2019 Trading Update
Immunodiagnostic Systems Holdings PLC
18 April 2019
Immunodiagnostic Systems Holdings PLCFY2019 Trading Update
Immunodiagnostic Systems Holdings PLC ("IDS" or "the Group"), a specialist producer of manual and automated diagnostic testing kits and instruments for the clinical and research markets, today provides an unaudited trading update for the Financial Year ended 31 March 2019 ("FY2019").
We are pleased to report that unaudited Group revenues for FY2019 are expected to be £38.5m, which represents a 1% growth over the previous year. On a like for like basis ("LFL"), that is at constant exchange rate and scope, Group revenue also increased 1% versus prior year. Thus the Group met its stated target of returning to LFL revenue growth for the first time since FY2014.
Revenue Performance in FY2019
The table below summarises the unaudited revenue performance of the core segments of the Group, and their evolution since FY2017.
| Revenue | LFL Change | |
| FY2019 | FY2019 v FY2018 | FY2018 v FY2017 |
Group | £38.5m | 1% | -8% |
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|
|
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Automated Business | £22.6m | -1% | 4% |
Automated 25-OH Vitamin D | £5.5m | -13% | -8% |
Speciality - IDS | £13.7m | 1% | 5% |
Speciality - Partners | £1.3m | 31% | 24% |
Instrument Sales and Service | £2.0m | 2% | 43% |
|
|
|
|
Manual Business | £12.3m | -1% | -6% |
Technology Business | £3.6m | 32% | -55% |
Automated business
Total Automated revenue declined by 1% on a LFL basis. This is due to a reduction in 25-OH Vitamin D assay volumes, predominantly from single assay analyser returns in the US.
Our Speciality business - IDS performance improved in the second half of the year delivering 1% LFL growth, after a relatively weak first half where we saw a 2% LFL decline versus the comparable period in FY2018.
Speciality - Partners revenue encompasses the sales of IDS branded assays developed and manufactured by IDS's partners. Revenue in this segment grew by 31% on a LFL basis. H2 FY2019 generated growth of 43% versus H2 FY2018, an acceleration of growth from the 17% generated in H1 FY2019 versus H1 FY2018. This is mainly driven by increased sales of Autoimmunity products, which were CE marked under the IDS brand during the first half of the year. We undertook the market launch of our range of IDS branded Allergy assays in March 2019 and expect to see the first sales from this product range during FY2020.
The other KPIs in this business unit developed as follows:
a) Disappointingly we did not release any new endocrinology assays in the year due to the development process taking longer than anticipated. The assays which were targeted for release in the second half of the year are now expected to be released in FY2020. At the end of FY2019 IDS offered 135 IDS branded assays with a CE mark, 22 of which are in-house developments. In the US the number of assays offered remains unchanged at 10. We expect the next launches of FDA-approved assays during 2020.
b) Due to a strong performance during Q4, we increased the number of machines placed or sold during FY2019 to 84 machines globally (FY2018: 70). This number excludes machine sales to our OEM partners, which are recorded within our Technology business.
In our direct sales territories, total placements were 37 (FY2018: 34) with instrument returns of 24 (FY2018: 25). Thus in our direct sales territories, net placements were 13 (FY2018: 9). We believe the number of returns is still too high and we are working on increasing the value of an instrument to the customer, mostly by upselling more assays from our portfolio.
In terms of gross and net new placements, our European business performed well. We completed the rebuilding of our sales team in Europe in the first half of the year. This helped generate strong momentum in H2.
As noted previously, in the US IDS continues to suffer from a limited menu of 10 FDA-approved assays. This makes it more difficult to renew analyser placements at the end of their contract and win new customers willing to invest in a new instrument. The majority of instrument returns during the year occurred in the US. This situation will continue until we resume launching additional assays to make our offering more attractive.
Within our distribution markets we sold 47 (FY2018: 36) instruments. There are no returns in this channel.
c) The average number of assays run per instrument continued to grow to 5.1 (FY2018: 4.7), reflecting successful cross-selling.
Manual business
During FY2019 we successfully stabilised the Manual business. Sales were flat on a reported basis, and declined 1% on a LFL basis. During the year we successfully reinvigorated and expanded our distribution base and were successful in winning new business in our direct markets - particularly the US. The underlying business is well placed to return to a moderate level of LFL growth in the future, however will be impacted adversely by the loss of distribution rights related to certain third-party products in the short term.
Technology business
LFL growth in the Technology business was 32%, and continues to be driven by large volume orders for analysers by one OEM partner, as they prepare for the commercial launch of their automated solution which is based on a white-label i10 instrument. Short-term revenues in this business unit will be dependent on the success of this OEM partner's product launch.
We are also pleased to announce the signature of a new OEM partnership deal with Theradiag, a leading provider of biotherapy monitoring products. Under this deal IDS will sell analysers and consumables to Theradiag, who will commence a project to automate their assays on the IDS analyser. Additionally, IDS have secured distribution rights to Theradiag's existing range of ELISA based biotherapy monitoring products, along with the upcoming automated products, in a selected number of territories including Germany, the Nordics and Latin America.
Cashflow
Closing cash and cash equivalents were £27.7m at 31 March 2019 (31 March 2018: £28.5m). Free cash flow, being cash flow before returns to shareholders, was an inflow of £1.3m (FY2018: outflow of £1.4m).
HR
At 31 March 2019 the Group employed 283 people on a full-time equivalent basis (31 March 2018: 281 persons).
We have continued our focus on improving the results delivered by our team. At the management level we continued to organise several workshops on leadership and corporate values throughout the Group. We will be performing a further engagement survey in April 2019 - the results of which will be summarised in our Annual Report and Accounts.
All employees in IDS have been driving extremely hard, particularly during Q4, working together with the goal of ensuring we returned the Group to revenue growth. We would like to thank all our teams for their efforts in FY2019 and look forward to continued success in FY2020.
Outlook
During FY2019 we achieved our short-term target of returning the business to positive revenue growth on a LFL basis. This was underpinned by a strong Q4 performance - in both sales and placements.
Our strategy moving into FY2020 remains unchanged. We will look to grow the Automated business through additional sales via distributors, coupled with accelerated growth of our partner disease panels - in particular autoimmunity. Unfortunately, we anticipate this expected growth will be partially offset by further declines in our US business. As set out above this situation will only improve with the launch of additional FDA-approved assays. Having successfully stabilised our Manual business, we target returning this to growth during FY2020.
We look forward to building on this success and momentum moving into FY2020, where we will target an accelerated rate of sales growth at a Group level.
For further information:
Immunodiagnostic Systems Holdings plc Tel : +44 (0)191 5190660
Jaap Stuut, Chief Executive Officer
Paul Martin, Group Finance Director
Peel Hunt LLP Tel : +44 (0)207 418 8900
James Steel
Oliver Jackson