By Samuel Indyk
Investing.com – Novacyt (LON:NCYT) recorded a loss in the first half of the financial year as the contract dispute with the UK Department of Health and Social Care (DHSC) continues to impact revenue.
The clinical diagnostics company said group consolidated unaudited revenue fell to £54.0 million, excluding £40.8 million of DHSC revenues while the contract dispute is continuing. Non-DHSC revenue increased by 20% as the UK private testing market continues to grow.
Novacyt has also booked an exceptional cost of sales of £35.8 million in connection with the DHSC contract dispute to write down inventory and terminate supply agreements that they had built in anticipation of further DHSC demand and to book the cost of products supplied to the DHSC that have not been paid for. Earlier this month, Novacyt said they would not recognise the revenue from the DHSC while the dispute remains unresolved.
The group recorded a first half operating loss of £13.6 million compared to a profit of £42.2 million last year, driven by the write down and one-time exceptional cost of sales.
Despite swinging to a loss, outgoing CEO Graham Mullis remains confident that Novacyt is well positioned to capitalise from the evolving situation with the pandemic.
“During 2021, Novacyt has remained at the forefront in its response to the constantly changing global COVID-19 pandemic,” Mullis said.
“We have launched 18 new COVID-19 products since the beginning of 2021 and we expect Novacyt to continue to play a major role in COVID-19 testing well into 2022.
“I believe Novacyt is better positioned today than it has ever been, based on the capabilities it has developed over the last few years.
“I am immensely proud of what we have achieved, and I am confident the Company will continue to grow and cement its place as a leading global diagnostics player.”
At 09:52BST, shares in Novacyt were trading lower by 2.7% at 303.6 pence per share.