Omega wins DHSC Covid test kits deal and hires chairman
Kits will be made in Scotland
Omega, the Scottish medical diagnostics company, has confirmed a contract with the Department of Health and Social Care to produce Covid test kits.
The company has already indicated that it will expand production capability at its Alva-based facility, to ensure the tests are made available as soon as possible. Shares in the company rose 25p to 118p at the open, a year high, before settling back to about 98p. They closed down 4p at 89p.
It expects to produce approximately two million tests per week by the end of April, when combining Government-loaned equipment with its own manufacturing equipment.
In a trading update Omega said revenue is expected to be approximately £9.3 million with an EBITDA loss in the region of £2.1m to £2.3m. Despite the considerable investment in the scaling-up production capacity, the year-end cash position is expected to be in the region of £5.5m to £6m (2020: £0.6 million overdraft).
The timing of the antigen supply contract with the DHSC coming so close to the deadline of the financial year-end means that it will have very little impact, if any, on the results for the year ended 31 March 2021 but the group expects that this supply contract will lead to significant volumes of tests being delivered over the coming weeks and months.
The DHSC contract is expected to have a significant impact on the future performance of the business and whilst volumes are unquantified at this stage it is likely to result in substantial revenue growth in the financial year beginning 1 April 2021.
Colin King, chief executive, said: “We are delighted to formalise our relationship with the UK Government and to utilise our lateral flow test production capacity to support the COVID-19 mass testing programme being rolled out across this country.
“I appreciate that trading in our core business has been softer than expected for the current financial year, however the on-going opportunity for growth in CD4 testing and Food Intolerance revenues is unchanged.
“The new financial year will see this growth opportunity realised, and will also see the full impact of COVID-19 antigen testing, and so we are likely to deliver substantial revenue growth compared to this financial year which ends next month.
“These are very exciting times for the business and I am delighted that we can play a part in supporting the UK Government’s national effort to control the spread of the Coronavirus.”
Omega has also announced the appointment of Dr Simon Douglas as non-executive chairman with immediate effect.
He replaces Bill Rhodes who has stepped down after three years as interim non-executive chairman but remains as a non-executive director.
Dr Douglas has also become a member of the audit and remuneration committees.
He has 25 years of board level experience at both early stage and public businesses within the diagnostics, life science and bioPharma industries.
He is currently non-executive chairman at AIM-quoted Fusion Antibodies having served as its chief executive until 2011. He is also non-executive chairman of C-Major Medical, a private limited company.
Mr Rhodes said: “We have seen Omega gain significant momentum recently as the need for accurate lateral flow diagnostic tests has increased, and I believe Simon is the right individual to support the company in gaining even greater levels of success.”
Dr Douglas said it was an exciting time in the firm’s development and growth.