By Samuel Indyk
Investing.com – Shares in Novacyt have fallen over 30% on Friday after the company’s supply contract with the UK Department of Health and Social Care (DHSC) was not renewed.
Anglo-French company Novacyt (LON:NCYT) makes the exsig Covid-19 direct kits and other products and had a previous supply agreement with the DHSC. Back in January this year, the company said it was in active discussions with the DHSC regarding an extension of the contract but an extension has not been agreed, although the company provided PROmate in Q1 2021 in accordance with demand from the DHSC.
The company has said the two parties are now in dispute regarding the contract which may have a material impact on Q4 2020 revenues. Novacyt is taking legal advice and believes it has strong grounds to assert contractual rights.
Trading update and outlook
The company reported Q1 revenue of EUR 83.0 million although noted that approximately 50% of that was driven by sales to the DHSC, predominantly PROmate.
Novacyt expects PROmate to continue to be rolled out in private settings, international markets and hospitals for the foreseeable future but Q1 PROmate sales may be sufficient to support the NHS current rollout plans for the rest of 2021.
“Whilst the Directors are confident new contract wins will continue as Novacyt expands international sales and into private sector testing, they believe revenue and profit for 2021 may be lower than current market expectations due to the absence of the DHSC contract extension,” the company said in a statement.
At 13:35BST, Novacyt shares were trading lower by 39% at 425p.