16th Mar 2015 09:12
LONDON (Alliance News) - EKF Diagnostics Holdings PLC Monday expressed an overall positive outlook for 2015, although it cautioned about the situation in Russia, as it posted a swing to a pretax loss in 2014 on exceptional costs.
The medical diagnostic equipment company posted a pretax loss of GBP4.0 million for 2014, swung from a pretax profit of GBP607,000 in 2013, as administration costs rose on the back of costs relating to acquisitions and EKF recorded exceptional charges of GBP3.3 million from closing its Dublin facility and moving the manufacture of some of its products.
Revenue growth was boosted by acquisitions the company made during the year, which contributed GBP6.5 million in revenue.
During 2014, EKF bought DiaSpect Medical AB, as well as Selah Genomics Inc.
Selah provides panels of molecular diagnostic tests, including a panel of drug metabolising enzymes. However, shortly after EKF acquired Selah the business had a set-back as the US national social insurance programme Medicare significantly reduced the level of reimbursement it will pay for the drug metabolising enzymes panel.
This meant that revenue from the business was "materially lower" than EKF had hoped. The company worked to resolve this issue in 2014 but has ultimately concluded that the cost of pursuing drug metabolising enzymes revenue without reimbursement is too high compared to the PrecisionPath panel of validated biomarkers it also acquired with Selah. As a result, in 2014 it will focus on PrecisionPath, rather than drug metabolising enzymes testing.
Whilst this means the business still faces "some choppy waters in the short term", the shift in focus has led to increased opportunities, EKF said.
The lower than expected sales from Selah mean that EKF is unlikely to pay the USD17.5 million deferred consideration for Selaf for its first year.
EKF also cautioned that revenue in Russia for 2015 is likely to be no more than 30% of 2014's level due to the continued effect of sanctions and downward pressure on reimbursement globally. It posted GBP3.2 million in revenue from Russia in 2014.
"Our ambitions remain to achieve double digit growth and to be able to exploit the opportunities in front of us. We are under no illusion that we must deliver on expectations and that as we continue to seek to grow we must do this in a non-dilutory fashion," said Executive Chairman David Evans in a statement.
Shares in EKF are trading down 19% at 19.60 pence Monday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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