Omega Diagnostics cuts Covid lateral flow capacity after government leaves it hanging
Losses were much increased in the first half of the year, but with capacity reduced they are expected to fall in the second half
Omega Diagnostics Group PLC -
Omega Diagnostics Group PLC (AIM:ODX) said it has been disappointed in the lack of progress in talks with the Department of Health and Social Care (DHSC) about what COVID-19 tests are needed.
The test kit company, which quickly adapted its technology to provide COVID-19 lateral flow tests during the pandemic, said its revenues from these kits in the six months to the end of September were up 136% to £1.29mln.
This contributed to total group revenue increasing 81% to £5.73mln, while group losses before tax surged to £2.75mln from £0.28mln a year ago.
Chief executive Colin King said, “while COVID-19 revenues remain extremely difficult to predict they are expected to be more reliant on commercial partnerships than UK government supply opportunities and are impacted by the timing of pending regulatory approvals being granted.”
The company said it has “not yet had confirmation from the DHSC regarding which test they require us to manufacture”, while talks with other companies introduced by the DHSC “have not resulted in a commercial agreement to manufacture tests that will be procured by the UK Government”.
As a result, it said efforts have been stepped up to secure manufacturing and supply agreements for the commercial sale of COVID-19 lateral flow tests, which led to the securing of a partnership agreement with DAM Health Limited, one of the UK's fastest growing and largest in-clinic and mobile test providers for COVID-19.
DAM has so far made an initial purchase order to supply VISITECT professional use COVID-19 antigen tests worth over £750,000.
“As our tests are rolled out to DAM Health's over 100 clinics throughout the UK and Europe, we expect to receive further stocking orders, particularly as DAM Health clinics currently undertake around 200,000 in-clinic COVID tests every month.”
Given the uncertain outlook on COVID manufacture for the UK government, the company has decided it is prudent to reduce the size of its lateral flow test manufacturing capacity in the second half.
As this is expected to lead to a lower cost base in the second half of the year, the board’s full-year expectations are for an improved sales performance across the group, with losses reduced in the second half.