Life sciences firm Omega Diagnostics swings to H1 loss as ‘reshaping’ continues

Alva-based medical testing kit firm Omega Diagnostics remains optimistic despite swinging to a half-year loss and citing “not inconsequential” hurdles.

The business, which is quoted on the Alternative Investment Market, saw shares slide on publication of the results for the six months ending 30 September. They closed down by 14.4 per cent at 14.3p.

There was a 27 per cent year-on-year drop in revenue to £5.23 million, and an adjusted pre-tax loss of £510,000 compared to a profit of £220,000 12 months previously. Adjusted loss per share came in at 0.5p, compared to earnings per share of 0.3p in the first half of the previous financial year.

The company said it is now a “smaller business focused on long-term profitability”, with its core areas allergy, food intolerance and infectious disease, and its flagship Visitect CD4 product enabling people with HIV to test their immune systems. And chief executive Colin King told The Scotsman that the firm’s three key areas are “where we expected them to be” while it is pleased with its progress to-date.

Omega said the latest results reflect its “reshaping”, and follow the shuttering of its German business unit and Pune manufacturing facility in India, plus the disposal of its legacy infectious disease business to Lab 21 Healthcare for up to £2.175m with a gain on sale of £1.09m. It also hailed progress regarding commercialisation plans for the Visitect CD4 350 cut-off test. Coverage now extends to 11 countries, and negotiations are ongoing in a further five.

Turning to food intolerance, revenues in this division were up by 12 per cent from the prior six months to £3.84m, with King highlighting confidence in further growth throughout the year. Omega added that the commissioning of a new 35,000 sq ft facility is proceeding to plan with an expected move mid-2019. “The upgraded facility underpins our view that the food intolerance division offers longer term growth opportunity, particularly in the US and China.”

Chairman David Evans said in summary regarding the latest results: “Our short-term outlook is dominated by our efforts to realise value for shareholders whilst at the same time successfully accelerating our efforts to commercialise our CD4 offering.

“The challenges are not inconsequential but I remain confident that in those areas where we can control our own destiny that we will succeed in delivering our objectives. In those areas where we are not masters of our own destiny then, by definition, the outcome will always be less certain. I believe it is best for our statement to reflect that reality as it stands today. Rest assured we will continue to work towards achieving success for all our stakeholders.”

The firm also outlined projections for the current half-year period, in which it expects to post a £200,000 pre-tax profit. Mark Brewer, director of research at FinnCap, said: “We have made no changes to our forecasts.”