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SourceBio International hails ‘considerable growth’ in 1H21

06:58, 27th July 2021
Francesca Morgan
Vox Newswire
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In an update for the half year to 30 June 2021, SourceBio International (SBI) FOLLOW) said it has seen ‘considerable growth’ over the period with both revenues and EBITDA up on 1H20. 

SourceBio, which provides integrated laboratory services and products on a global scale, saw group revenue increase by almost four-fold in value to c. £37.3m (1H20: £10.6m). 

Meanwhile, the London-listed group also reported adjusted EBITDA at approximately £11.2m - that’s an almost seven-fold increase in value from the £7m reported back in 1H20. 

The Company reaffirmed in today’s statement that its long-standing business units - Healthcare Diagnostics, Genomics and Stability Storage - have returned to pre-pandemic trading levels with ‘all business divisions being challenged to accelerate their growth.’ 

In particular, SourceBio’s cellular pathology testing services division saw a ‘very solid recovery’ in the second quarter of 2021. The Company said this was driven by the demands created as inroads were made to tackle the significant backlog of elective surgeries. 

As previously reported, the Company anticipates a strong second half bias to revenues, earnings and cash generation, which is said is largely driven by the phasing of COVID-19 testing revenues generated through its newest business unit, Infectious Disease Testing.  

The Group has described 1H21 as ‘solid’ after completing more than 600,000 PCR-based tests from Nottingham-based lab, in addition to tests delivered through mobile units, generating divisional revenues in the half year of around £28.4m vs £2.2m in 1H20.  

The Group said it is planning for ‘a significant uplift in demand’ in the third quarter driven by the anticipated increase in COVID-19 testing as travel restrictions continue to be lifted.  

To date, SourceBio has already seen a marked uptick in this month with daily testing volumes rising from under 4,000 tests per day in June to around 9,000 tests daily at present.  

The Company informed investors that testing demand is expected to rise further and, accordingly, it has made preparations to expand its capacity to over 20,000 tests per day.  

Should demand exceed these levels, the Group highlighted that it has made further arrangements to leverage surplus capacity within a third party owned laboratory. 

Addressing shareholders, SourceBio said trading during this quarter will be ‘a key indicator to the full year outturn’. Whilst the current environment remains fluid with ever changing travel restrictions, the Board believes the Group is currently trading in line with expectations, it said. 

Jay LeCoque, Executive Chairman of SourceBio, commented: "We are pleased with progress in the first half year and are looking forward to capitalising on the further opportunities we expect in the second half. More specifically, travel related COVID- 19 testing services and the increased pace of elective surgeries leading to greater Cellular Pathology services demand. We are already seeing and expect a very busy second half year.” 

SourceBio expects to announce its 1H21 results on Tuesday 28 September 2021. 

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Since the onset of the pandemic, SourceBio International has pivoted to broaden its infection disease testing business unit to prepare for peak earnings from travel related COVID testing. As a result, it is focused on expanding its existing capacity as well as acquiring further labs.  

Addressing shareholders back in June 2021, the company stated that the indicated demand of travel related testing, if materialised, would heavily weigh FY21 earnings to 1H21.  

Acquisitions remain firmly on the options for the Company also, particularly to segment and expand the company’s current growth trajectory with additional strategically relevant services.  

The rest of the group has returned to pre-pandemic levels, with cellular pathology being driven by the need to reduce NHS patient waiting lists and the backlog of elective surgeries. 

In regard to today’s update, H1 EBITDA came in at £11.2m (£12.5m H2’20) on sales of £37.3m (£40.1 H2’20), with net cash closing at £17.2m (Dec’20 £8.4m), or 23p/share. 

Moreover, PCR testing volumes have jumped to 9,000/day in July vs 4,000 June, with a total in-house capacity of 20k available as demand for overseas holidays heats up.  

SBI price chart

SourceBio International is an international provider of laboratory services to clients in the pharmaceutical industry, the NHS and to private healthcare providers. The Group is headquartered in Nottingham, with additional facilities in the UK, Ireland and the US.   

The company saw a positive start on its first day of trading on AIM, adding around £8m to its initial £120m market capitalisation while the £35m raised at 162p is intended to be used by it to scale up COVID-19 testing capacity as well as paying off shareholder and bank loans.    

“We are delighted by the strong support we’ve received from institutional investors. Our IPO on AIM allows us to significantly increase our COVID-19 testing capacity, accelerate earnings growth in our core business and execute on potential M&A opportunities,” said LeCoque.    

He said at the time of the IPO: “It’s an exciting time for our business and we  look forward to executing on our ambitious growth plans and delivering value to our shareholders.”     

In November 2020, SourceBio unveiled that its funds from its IPO were enabling it to further scale its COVID-19 testing services to deliver against expected increases in future testing.    

SourceBio previously forecasted total revenue of around £50m (FY19: £21.2m) and EBITDA of c.£14m (FY19: £3.0m) for the year ending 31 December 2020, with the vast majority of this increase in expected earnings driven by the contribution of COVID-19 testing revenues.    

The group said in November 2020 that it had been accepted into the Increasing Capacity Framework Agreement for cancer testing services to NHS England, designed to reduce the significant backlog of elective surgeries impacting the NHS due to the pandemic which is expected to support the growth of the Healthcare Diagnostics business unit in 2021.    

SourceBio entered into a strategic commercial partnership with Oxford Nanopore Technologies to offer a COVID-19 testing solution to corporate customers at scale via its own lab facilities. Last month, the group entered into a supply agreement to provide ‘state of the art’ products and lab services to an unnamed high street retail and pharmacy group.   

Since December 2020, SourceBio has been supplying COVID-19 antigen RT-PCR testing services to the DHSC. It is currently awaiting a potential formal award under Public Health England's National Microbiology Framework in relation to further COVID-19 testing services.   

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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