By Samuel Indyk
Investing.com - Omega Diagnostics Group Plc (LON:ODX), the UK listed diagnostics firm announced on Thursday it has agreed a contract with the UK Department of Health and Social Care (DHSC) to provide manufacturing capacity for Covid-19 lateral flow antigen tests. The manufacturing capacity should help the UK government reach its target of producing two million lateral flow tests per day.
“We are delighted to formalise our relationship with the UK government, and to utilise our lateral flow test production capacity to support the Covid-19 mass testing programme being rolled out across the country,” Omega CEO Colin King said in a statement. “These are very exciting times for the business and I am delighted that we can play a part in supporting the UK government’s national effort to control the spread of the coronavirus.”
The exact financial details of the contract are undisclosed currently but Omega expects it to provide a “significant contribution" to future performance. The timing of the contract being so close to the end of this financial year means it will have very little impact on results for the year ending 31 March 2021.
Supply
The intention is that as soon as the DHSC has access to a test that has passed performance and regulatory hurdles, the test will be licensed for Omega to manufacture. Omega anticipates that they will be able to produce approximately 2mln tests per week by the end of April which should be sufficient to meet demand for lateral flow tests.
Trading Update
The company also provided a trading update alongside the announcement. Sales in their food intolerance division were down 19% YoY. For the full year, group revenue is expected at approximately £9.3mln with an EBITDA loss in the region of £2.1-2.3bln.
“I appreciate that trading in our core business has been softer than expected for the current financial year, however the on-going opportunity for growth in CD4 testing and Food Intolerance revenues is unchanged,” King said. “The new financial year will see this growth opportunity realised, and will also see the full impact of COVID-19 antigen testing, and so we are likely to deliver substantial revenue growth compared to this financial year.”