Omega Diagnostics in recovery mode after 'extremely challenging year' including sale of Alva site

Healthcare firm Omega Diagnostics has told investors that it is in a stronger position following an “extremely challenging year” which led to the disposal of its Clackmannanshire facility.

Releasing full-year results, the group said the past 12 months had been dominated by a Covid-19 opportunity that “ultimately did not come to fruition” and which destabilised the whole business.

At the start of last month, Omega sold its CD4 testing business to the same Chinese-owned firm that bought its Clackmannanshire manufacturing facility earlier this year.

The group confirmed that it had completed the disposal of the loss-making CD4 operation to Accubio, a wholly-owned subsidiary of Zhejiang Orient Gene Biotech, for a total cash consideration of up to £6.1 million, before costs.

At the start of last month, Omega sold its CD4 testing business. CD4 is the part of the business that manufactures and supplies tests of Visitect CD4, which measures the amount of CD4 protein in human cells.

Accubio acquired Omega’s Alva site in early March and had been providing manufacturing services to the group for its CD4 operation since that date.

CD4 is the part of the business that manufactures and supplies tests of Visitect CD4, which measures the amount of CD4 protein in human cells.

Having announced the withdrawal from Covid-19 testing in March, the disposal of the CD4 business means the group no longer operates in the global health market.

The results for the year to the end of March show that revenue increased by 25 per cent to £8.5m.

Operating losses from continuing operations widened to £900,000 from £500,000 the year before.

The firm accounted for losses from the discontinued global health operations of £9.9m, including a £400,000 loss on the disposal of the Alva site.

Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) from continuing operations amounted to £200,000, up from £100,000 a year earlier.

Chairman Simon Douglas said: “Last year was an extremely challenging year, dominated by the Covid-19 opportunity that ultimately did not come to fruition and which destabilised the whole group.

“The actions we have taken this year to withdraw from the Covid-19 market, to dispose of the Alva site to reduce losses and, subsequent to the year end, to complete the disposal of the loss-making CD4 business, have left the group in a much stronger position.

“We currently have approximately £2.5m in the bank and fully expect to receive the £4m CD4 deferred consideration later this year, which will be used to accelerate our growth plans. Our existing health and nutrition division is profitable and cash generative, with opportunities for expansion both geographically and in terms of product range.”

Chief executive Jag Grewal told investors: “After a tumultuous year, Omega has re-emerged as a more focused and significantly better funded company, dedicated to delivering personalised nutrition diagnostics.

“We operate in an exciting market where it is increasingly being recognised that improving gut health and avoiding food-driven inflammation are key to achieving a healthy weight and maximising your energy.

“As healthcare systems creak under the burden of chronic disease and an aging population, society is increasingly turning to prevention through wellness. Gut health is at the very frontier of this change and we in turn sit at the heart of this movement.”