Half-year Report

Renalytix plc

("Renalytix" or the "Company" or the "Group")

Half Year Report

LONDON and NEW YORK, 18 March 2025 - Renalytix plc (LSE: RENX) (OTCQB: RNLXY), a precision medicine company with lead testing service kidneyintelX.dkd, the only FDA-approved and Medicare reimbursed prognostic test to support early-stage risk assessment in chronic kidney disease, announces its unaudited results for the six months ended 31 December 2024 ("H1 FY25").

Renalytix's precision medicine technology relies on the combination of proprietary blood biomarkers, advanced machine learning algorithms and clinical data to generate accurate measurements of chronic disease progression and therapeutic drug response. The Company's first FDA validated prognostic test, kidneyintelX.dkd is recommended in the international clinical care guidelines and is available to help prevent the worst effects and unsustainable costs associated with diabetic kidney disease ("DKD") in an estimated 14 million patients In the United States today.

Key Financial Highlights

· On track to meet, or potentially exceed, target of 20% average quarter-to-quarter growth

· Forward guidance on expected revenue remains: $3.2m in FY25, $8.5m in FY26 and $17.5m in FY27

· Revenues of $1.3m

- Continued quarterly sales growth moving into Q3 FY25

- With full Medicare insurance payment beginning in July 2024, commercial insurance reimbursed testing revenue increased 28% over the H1 FY24, and now accounts for 80% of total testing revenues.

- The total number of commercial payers increased by 51% over H1 FY24.

- Additional integrated testing service with ACPNY, a large doctor practice in New York

· Significant progress to reduce overall cash burn rate to c.£560,000 ($710,000) per month by end of FY FY25 as stated in the Company's FY24 results announcement

- Disciplined cost controls have led to a 56.5% reduction in administrative costs to $8.0m (HY 2024: $18.4m)

· Cash and cash equivalents as at 31 December 2024 of $9.2m (30 June 2024: $4.7m)

Strong progress against commercial strategy

· Approximately 850 individual doctors have now ordered over 15,000 kidneyintelX.dkd tests to date

· Revenue and ordering doctor base has further diversified with full roll-out of ACPNY care network New York

· Time from submitted bill for test to payment received has been reduced by 65% during H1 FY25

· Operational improvements have also resulted in a 50% reduction in laboratory test turn-around time

· Increasing depth of pharmaceutical collaborations applying KidneyIntelX technology in precision medicine therapeutic development 

· Series of data release scheduled for calendar year 2025

· Progress with discussions for:

- additional care provider implementations

- additional insurance payors for coverage contracts and supported deployment of testing services

- collaborations with Pharmaceutical and Clinical Research to incorporate kidneyintelX technology in their clinical development and commercial programmes

- third-parties to generate value from our intellectual property assets

James McCullough, CEO of Renalytix commented: "With Medicare coverage and additional insurance contracts in place this fiscal year, we are now seeing a significantly higher portion of our total revenue coming from commercially insured testing versus clinical study work. We expect this trend to continue during the next reporting period. Further, we expect to expand distribution of kidneyintelX.dkd with initiatives from both new insurance payors, care networks and hospital systems this year."

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About Renalytix (www.renalytix.com)

Renalytix (LSE: RENX) (OTCQB: RNLXY) is an artificial intelligence-enabled in vitro diagnostics company, focused on optimizing clinical management of kidney disease to drive improved patient outcomes. Renalytix has received FDA approval and Medicare reimbursement for kidneyintelX.dkd which is now offered commercially in the United States.

Unrecognized and uncontrolled kidney disease remains one of the largest barriers to controlling cost and suffering in the United States and the United Kingdom's medical system, affecting over 14 million and 8 million people, respectively. After five years of development and clinical validation, kidneyintelX.dkd is the only FDA-approved and Medicare reimbursed prognostic tool capable of understanding a patient's risk with kidney disease early where treatment has maximal effect. kidneyintelX.dkd is now being deployed across large physician group practices and health systems in select regions of the United States.

The over 15,000 patients that have been tested by kidneyintelX.dkd have produced a substantial body of real-world performance data. In patient populations where kidneyintelX.dkd has been deployed, a demonstrated and significant increase in diagnosis, prognosis, and treatment rates have been recorded. kidneyintelX.dkd now has full reimbursement established by Medicare, the largest insurance payer in the United States, at $950 per reportable result. kidneyintelX.dkd is also recommended for use in the international chronic kidney disease clinical guidelines (KDIGO). 

Chairman's Statement

Overview

As I approach 100 days as Executive Chairman, I am pleased to report that we continued to make strong progress against the commercial strategy outlined to shareholders at our fundraise in October last year. Most importantly, we remain on track to deliver against revenue and expense targets for the year ended June 2025 and beyond.

With new customers onboarding we continue to deliver quarterly revenue growth and I'm pleased to confirm that Q2 to Q3 quarterly revenue growth is in line with our 20% average growth expectations. Discussions regarding further distribution partnerships continue to advance and our cost control efforts remain on track.

I firmly believe Renalytix has the technology, reimbursement support and clinical care guidelines backing to change the course of one of the largest and costliest chronic disease classes in the US and ultimately beyond.

kidneyintelX.dkd, is the only kidney prognostic test that is FDA approved; has full Medicare reimbursement granted at $950 per test; is recommended in the international clinical care guidelines; is available to approximately 14m US diabetic kidney disease ("DKD") patients; and is able to address the needs of approximately ~250 million DKD patients globally.

For the first time an early prognosis is now available through kidneyintelX.dkd, and with the availability of new life saving medications, expensive dialysis for advanced kidney disease is largely preventable. kidneyintelX.dkd is able to identify early-on those chronic kidney disease patients at high-risk of ending up with kidney failure and on dialysis, before it's too late. Those receiving a kidneyintelX.dkd high-risk score are identified as being 18 times more likely to have a significant decline in kidney function or kidney failure than those with a low-risk result. Real-world deployment of KidneyIntelX has resulted in increased, but targeted, use (to higher risk patients) of kidney protective therapies, timely referrals to kidney specialists and risk assessment by KidneyIntelX is associated with improved clinical outcomes.

Renalytix has now generated over 15,000 patient risk reports and over 850 unique doctors have ordered KidneyIntelX - distribution milestones we intend to expand through advancing partnership discussions and our own direct sales efforts in 2025.

There are four key areas of our business where we have made good progress and which will support value creation for shareholders: 

1. Test Service Sales

At this stage in our growth I know that the most important short-term deliverable is to demonstrate consistent and accumulative test sales growth and ensure we hit our overall revenue expectations as set out at the end of last year. In H1 FY25 we recognised a total of $1.3m in revenues, and I am delighted to say that we have continued to demonstrate quarterly testing sales growth moving into Q3 FY25, and remain on track to meet, or potentially exceed, our target of 20% average quarter-over-quarter growth expectations across the full year and beyond. The team has been actively and successfully growing our customer pipeline and are confident that we will meet or exceed our $3.2m forecast for FY25, as well as providing a visible pathway to reaching our FY26 revenue target of $8.4m, and $17.5m in FY27.

It is also significant that we continue to expand the diversity of our revenue sources. In addition to our robust business which continues with Mount Sinai Health System, we have added integrated testing services with a large doctor practice ACPNY in New York, and an expanded programme with existing Gulf Coast customer Singing River and others. These have increased daily testing volumes and we expect to announce additional programmes in the near future, which will continue to grow the base of doctors deploying KidneyIntelX to fight kidney disease.

2. Pharmaceutical and Clinical Research Opportunities

Revenue diversification has received a boost in Q2-25 from increasing activity with our pharmaceutical collaborations and this has continued into Q3 and we expect to report additional activities over the coming months. KidneyIntelX is increasingly playing a role in understanding which patients will benefit from drug interventions and when. A "precision medicine solution" like KidneyIntelX is becoming more and more critical in the United States, where the availability of multiple therapies to treat kidney disease and diabetes has created a great opportunity for improved patient outcomes, but where inappropriate use can result in enormous expense running to thousands of dollars per month over a patient's lifetime. The recently released KDIGO guidelines stressed the importance of a validated, solution to understand risk earlier in the disease cycle, to inform complex and costly therapy decisions, and that this is absolutely essential for cost control and minimizing unnecessary side effects. KidneyIntelX is the only available product that does just that!

We believe our close working relationships with leading pharmaceutical and research organisations, including disclosed programmes with Astra Zeneca, the PRIME-CKD Consortium, University of Michigan, University Medical Center Groningen and Steno Diabetes Center are building a substantial value proposition in the KidneyIntelX platform and follow-on products in development. At this pivotal time where Governments are struggling to address the unsustainable cost of exploding chronic disease, KidneyIntelX offers a pathway to a validated, regulated and paid-for preventative medicine tool that is standardized for use by anyone.

In FY25, we have or are beginning active programmes with pharmaceuticals companies looking to incorporate KidneyIntelX technology in their clinical development and commercial programmes and will update shareholders as these advance. We would also expect to provide updates on additional data for publication in coming months, which will provide additional support for generating and concluding these commercial opportunities.

3. Reimbursement

With Medicare coverage granted in August 2024, over 50% of our addressable patient population gained full insurance coverage for KidneyIntelX at $950 per test. Medicare coverage, coupled with learned improvements in customer service and billing operations have brought about a 65% reduction in H1 FY25 in the time from when we submit an insurance claim to when we collect cash payment. We are continuing to pursue new coverage with a large regional insurance payer who operates in our Northeast and Southwest existing markets. The United States insurance reimbursement market is severely complex and we are proud that a majority of the 14 million patients in our addressable market now have full insurance coverage for KidneyIntelX testing services.

4. Cost Control

Cost control remains a top priority while we expand our revenue base. Whilst launching a product of this nature into the US market is expensive, we have continued to make significant progress on reducing our expenses. Our new Global Financial Controller, Dominic O'Brien, has been working with the Board since December 2024 to ensure we reduce costs wherever possible without compromising revenue generation.

Conclusion

We have made significant progress in a short space of time and I am confident we will achieve our goals for this financial year in terms of revenue growth and cost reduction.

It is clear to me that KidneyIntelX is a unique prognostic test that supports significant improvements in patient outcomes, whilst dramatically reducing the high costs to healthcare systems globally associated with the management of this chronic disease. With quarterly sales and third-party strategic interest increasing, we believe the market is beginning to understand the enormous benefits of utilising kidneyIntelX in patient care.

Thank you for all of your support and I look forward to continuing to deliver on expectations.

Julian Baines MBE

Executive Chairman

Financial Review

The results presented cover the six months ended 31 December 2024 ("H1 FY25"). The presentational currency for Renalytix plc and its subsidiaries (together, the "Group") is the United States Dollar.

INCOME STATEMENT

Revenue

Commercial test revenues grew significantly during the period following Medicare insurance coverage, the successful electronic integration of KidneyIntelX testing in a large New York integrated healthcare provider, deployment of additional direct to doctor sales personnel, and an increase in activity with pharmaceutical collaborators. Broader commercial adoption with Medicare payment has helped to reduce our reliance on revenues generated through non-recurring activities such as non-insurance reimbursed clinical study testing. The Group's commercial test revenues are sensitive to insurance reimbursement coverage and particularly Medicare and Medicare Advantage timely payment. KidneyIntelX billed testing to Medicare and Medicare Advantage has now achieved 95%+ payment on submitted testing claims.

Commercial test volumes represented 82% of total volume compared to 60% in the prior period and is expected to increase through the remainder of the fiscal year. The Group recognised $1.3 million in total revenue in H1 FY25 (H1 FY24: $1.2 million), with $1.2 million in testing revenue in the period (H1 FY24: $1.2 million) and $0.1 million in pharmaceutical services revenue (H1 FY24: $nil).

Cost of sales

The cost of sales associated with the revenue was $0.8 million for H1 FY25, compared to $1.0 million for the cost of sales associated with the revenue for H1 FY24. The decrease in cost of sales mainly relates to the reclassification of depreciation of $26k (H1 FY24: $0.2 million) related to equipment used in the revenue process from cost of sales to administrative expenses due to a review of standard cost methodology.

Administrative costs

Significant cost reduction across the business led to lower administrative costs of $10.4 million in H1 FY25 compared with H$18.4 million in H1 FY24, a reduction of $8.0 million for the period.

The major items of expenditure were general and administrative costs which included $4.6 million in employee- related costs (H1 FY24: $7.2 million), $1.6 million in subcontractors, legal, accounting, and other professional fees (H1 FY24: $3.8 million), $0.3 million in external R&D Services, lab supplies and lab services (H1 FY24: $3.7 million), $0.02 million in depreciation and amortisation (H1 FY24: $1.1 million), $0.4 million in insurance (H1 FY24: $0.7 million), $0.4 million in IT related costs (H1 FY24: $0.6 million), $0.2 million in marketing and public relations (H1 FY24: $0.5 million), $nil in impairment loss on property and equipment (H1 FY24: $0.3 million), $0.2 million in office related expenses including rent (H1 FY24: $0.2 million), $0.2 million in stock exchange listing and filing fees (H1 FY24: $0.1 million), and $0.1 million in other miscellaneous expenses (H1 FY24: $0.2 million). We anticipate further expense reductions to occur through the remainder of FY25.

Gain (loss) on financial assets at fair value through profit or loss

The Group accounts for the investment in VericiDx equity securities at fair value, with changes in fair value recognised in the income statement. During H1 FY25, we recorded a loss of $0.2 million to adjust the VericiDx investment to fair value. During H1 FY24, we recorded a loss of $0.2 million to adjust the VericiDx investment to fair value.

Fair value adjustment of convertible debt

During the period we settled the previous convertible bond and issued a new convertible bond in its place. The derecognition of the previous convertible bond led to a recognised loss of $0.4 million in the statement of comprehensive income.

The new convertible bonds have been accounted for as an embedded derivative with changes in fair value of the embedded derivatives recognised in the income statement. The change in fair value recognised in the income statement at H1 FY25 was $nil.

Finance income (expense)

During H1 FY25, we recognised a loss of $0.5 million (H1 FY24: $0.5 million gain), which was comprised of $0.01 million interest income earned on our cash deposits (H1 FY24: $0.2 million), $0.5 million of foreign exchange losses (H1 FY24: $0.2 million gain), $0.1m interest expense(H1 FY24: $0.0 million) and $0.04 million of grant income (H1 FY24: $0.1million).

BALANCE SHEET

Net current assets

In October 2025 the Group refinanced its debt financing into long term non-amortising bonds. The Group also raised £11.8 million ($14.8m) in capital from an equity raise. The increase in capital combined with the significant reduction in short term debt liability helped the Group to move from a net current liability position of ($5.0 million) at 30 June 2024 to a net current asset position of $6.6 million at 31 December 2024.

Inventory

Inventory consists of consumable materials used by the labs to carry out KidneyIntelX tests. Inventory on hand at 31 December 2024 totaled $0.4 million (30 June 2024: $0.3 million). Inventory increased in the period to ensure sufficient inventory to fulfill increased volume demand. 

Fixed assets

Property, plant, and equipment consists of laboratory equipment being used to support testing and product development activities. At 31 December 2024, the Group held $0.2 million in net property, plant, and equipment (30 June 2024: $0.2 million).

There was no impairment of fixed assets during the period. At 30 June 2024 the Group recognised an impairment of $10.2 million in relation its intangible assets which comprised of trademark trade names, licenses, trade secrets and capitalised development costs. Despite that the financial forecast model showed a steady growth in revenues, the Directors took a conservative approach in recognising the impairment of intangible assets.

Investment in Verici Dx plc ("Verici Dx")

Convertible note

In April 2022, the Company issued amortising senior convertible bonds with a principal amount of $21.2 million due in April 2027 (the "Bonds"). The Bonds were issued at 85% par value with total net proceeds of $18.0 million. The Group elected to account for the Bonds at fair value. This bond was settled during the period with a new convertible bond issued in its place with the previous convertible bond derecognised.

A new non-amortising bond was issued in November 2024 for $7.8 million with a maturity date of July 2029. Interest accrues on a quarterly basis and may be settled or rolled into the Bond on a payment in kind ("PIK") election. The bond contains a conversion feature allowing the bond to be converted to shares during the Bond period. This conversion feature meets the definition of an embedded derivative. The debt component is recognised on an effective interest basis and the equity component is accounted for at fair value at the reporting date with changes in fair value recognised in the income statement. Changes in fair value of the embedded derivatives recognised in the income statement at H1 FY25 were $nil. The value of the debt host contract at 31 December 2024 was $6.4 million and the value of the embedded derivative was $1.5 million.

Cash

The Group raised gross proceeds of £11.8 million ($14.8m) through an equity placing in October 2024. At 31 December 2024 the Group had cash and cash equivalents of $9.2 million (30 June 2024: $4.7 million). The cash is held in multiple short term deposit accounts.

Unaudited Consolidated Income Statement

FOR THE PERIOD ENDED 31 DECEMBER 2024

Consolidated Statement of Comprehensive Income

FOR THE PERIOD ENDED 31 DECEMBER 2024

Unaudited Consolidated Statements of Financial Position

AS AT 31 DECEMBER 2024

Unaudited Consolidated Statements of Cash Flows

FOR THE PERIOD ENDED 31 DECEMBER 2024

Unaudited Consolidated Statement of Changes in Equity

FOR THE PERIOD ENDED 31 DECEMBER 2024

Notes to the Financial Statements

1. GENERAL INFORMATION AND BASIS OF PRESENTATION

Renalytix Plc (the "Company") is a company incorporated in the United Kingdom. The Company is a public limited company, which is listed on the AIM market of the London Stock Exchange and OTCQB market. The address of the registered office is 2 Leman Street, London, United Kingdom, E1W 9US. The Company was incorporated on 15 March 2018 and its registered number is 11257655.

The principal activity of the Company and its subsidiaries (together "the Group") is as a developer of artificial intelligence- enabled diagnostics for kidney disease.

The financial statements are presented in United States Dollars ("USD") because that is the currency of the primary economic environment in which the Group operates.

2. BASIS OF PRESENTATION

New standards, amendments, and interpretations not adopted by the group

The group did not adopt any new standards, amendments or interpretations in year as they did not have a material impact on the financial statements.

New standards, amendments, and interpretations issued but not effective for the period ended 31 December 2024, and not early adopted

3. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below.

Going concern

Accounting policies

The same accounting policies, presentation and methods of computation have been followed in these condensed interim financial statements as were applied in the preparation of the company's annual financial statements for the year ended 30 June 2024.

5. SEGMENTAL REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Directors who make strategic decisions. At present the Directors consider the business to operate in a single segment.

6. REVENUE

Testing services revenue

Testing services revenue is generated from the KidneyIntelX platform, which provides analytical services to customers. Each individual test is a performance obligation that is satisfied at a point in time upon completion of the testing process (when results are reported) which is when control passes to the customer and revenue is recognised. During H1 FY25, the Company recognised $1.2 million of testing services revenue. Sales tax and other similar taxes are excluded from revenues. There was $1.2 million of testing services revenue recognised in H1 FY24.

Pharmaceutical services revenue

Pharmaceutical services revenue is generated from the provision of analytical services to customers. Contracts with customers generally include an initial upfront payment and additional payments upon achieving performance milestones. The Group uses present right to payment and customer acceptance as indicators to determine the transfer of control to the customer which may occur at a point in time or over time depending on the individual contract terms. Sales tax and other similar taxes are excluded from revenues. During the period ended 31 December 2024, $0.1 million of pharmaceutical services revenue was recognised. The amount of pharmaceutical services revenue recognised in the period ended 31 December 2023 was $nil.

7. COST OF SALES - ANALYSIS BY NATURE

The total cost of sales reduced in H1 FY25. This is due to depreciation and amortisation of $26k (H1 FY24: $0.2m) being reclassified to administrative expenses due to a review of standard cost methodology.

8. EXPENSES - ANALYSIS BY NATURE

The Group significantly reduced its administrative expenses during H1 FY25 through cost cutting measures, including a reduction in headcount. We anticipate further expense reductions to occur through the remainder of FY25.

9. EARNINGS PER SHARE

Basic net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during each period. Diluted net loss per ordinary share includes the effect, if any, from the potential exercise or conversion of securities, such as options which would result in the issuance of incremental ordinary shares. Potentially dilutive securities outstanding as of 31 December 2024 have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive. Therefore, the weighted average number of shares used to calculate both basic and diluted net loss per share is the same.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of ordinary shares outstanding as they would be anti-dilutive:

The Company was incorporated on 15 March 2018 with 50,000 ordinary shares of £1.00 each, and as a result of subdivisions (100:1 on 4 May 2018 and then 4:1 on 24 October 2018), the resulting founding shares became 20,000,000 at £0.0025 each.

9. SHARE CAPITAL