Biotech group emerges from testing year to register record first quarter revenues

Manchester biotech company Yourgene Health said results for the year to March 31, were in line with expectations, and that the first quarter of the new financial year has seen record revenues.

The firm specialises in COVID-19 testing and non-invasive pre-natal testing (NIPT) systems.

Revenues rose 10% from £16.612m to £18.288m and last year’s pre-tax loss of £3.382m widened to £12m, reflecting a goodwill impairment charge arising from pandemic-related challenges in Asian markets, compared with a £2.3m loss in 2020.

Cash used by operations increased to £3.8m from £2.1m, including a £1.6m inventory build primarily for COVID testing products which have bolstered revenues in the first quarter of fiscal year 2022.

Yourgene also invested around £7.4m of cash in the acquisition of Coastal Genomics, in the expansion of Genomic Services laboratory facilities, in NIPT instrumentation for key clients transitioning to IONA NX – including strong European growth of 38% – and in internally generated intangible assets from research and development activities. This compares with an investment of £9m in 2020, mainly on acquisitions.

The company generated £15.5m from financing activities, principally an equity raise in August 2020 to facilitate the acquisition of Coastal Genomics and generate additional working capital. In 2020 it generated £12.6m for acquisitions.

Net cash improved to £6.8m at March 31, 2021, from £2.4m the same time last year, and it said it has invested £2.4m in future growth projects, from which it is already seeing substantial benefits in the new financial year.

During the reporting period Yourgene was accredited for UK Government travel-related testing schemes and struck partnerships with Newcastle Premier Health Limited and others for airport and community testing.

It also invested approximately £1m into laboratory testing capacity, and is now capable of around 100,000 tests per month and is suitable for non-COVID services in the future.

So far, in the first quarter of the current financial year, unaudited results show that revenues were more than £6m, up 80% against the same quarter last year, driven by COVID-related services and product sales as the UK reopens after lockdown restrictions.

The estimated first quarter adjusted EBITDA profit was around £0.7m, to be enhanced through a further £1.0m of identified, annualised operating expense savings already being implemented via a business refocus programme.

COVID-19 testing routes to market have been strengthened in the travel sector and expanded into consumer-facing partnerships.

US market penetration continues with a multi-year licence and supply agreement for NGS-based reproductive health screening, and there is a second strategic partnership for Coastal Genomics, again US-focused mainly in the field of non-COVID-19 infectious diseases demonstrating the versatility of the acquired technology.

In a joint statement, chairman Adam Reynolds and chief executive Lyn Rees said: “The last financial year presented many operational and financial challenges to our business operations as a result of the COVID pandemic.

“Despite a challenging year operationally, we have maintained focus on our long-term objectives as well as effectively navigating the pandemic in the short term, and as a result have established a broader platform with increased growth prospects to deliver shareholder value in the medium term.

“Achieving double digit growth was a significant achievement, and our accelerated investment in existing and new technologies has positioned us very well for the anticipated strong post-pandemic growth in the global molecular diagnostics market.”

They added: “Despite the impact on group profitability in FY21, this investment is already reaping rewards as demonstrated by the momentum seen in Q1 which is continuing into Q2.

“After strengthening our in-field commercial resources last year, we have also identified opportunities to refocus our cost base during the current financial year. As a result we look forward to a resumption of profitable growth at group level, with continuing impetus in the US market specifically.”