EKF Diagnostics revenues, gross profits fall as expected

EKF Diagnostics reported revenue of £52.6m in its final results on Wednesday, aligning with market projections, although lower than the prior year's figure of £66.6m.

The AIM-traded firm said excluding Covid-related and clinical chemistry sales, revenue remained stable at £48.7m in 2023, compared to £48.6m in 2022.

Despite a decrease in gross profit before exceptionals to £24.4m from £30.8m, the gross margin improved to 45% from 36%, with administrative expenses reduced by £3.5m.

Adjusted EBITDA stood at £10.4m, down from £14.9m, but the company managed to return to a profit before tax of £2.1m, rebounding from a loss of £8.9m in 2022.

Cash generated from operations amounted to £8.8m, lower than the £12.7m in the prior year.

Group cash, net of borrowings, was £4.7m at year-end, primarily reflecting operational cash flow offset by capital expenditure and dividend payments.

A cash dividend equivalent to 1.2p per share was declared, consistent with the previous year.

On the operational front, EKF reported a varied performance across its business divisions, with point-of-care division revenue increasing 1.9% to £34.1m, reaching £32.4m excluding clinical chemistry revenues, representing a 3.5% rise.

In contrast, the life sciences division experienced an overall revenue decline of 2.4% to £14.8m, despite a 1.6% increase in β-HB sales.

Other revenues amounted to £2.3m, notably lower than the prior year's £8.5m, which included cash received for US inventory.

The year saw the opening of an upgraded life sciences facility in South Bend in October, the completion of a fermentation run for a new customer, and the ongoing transfer of some biomanufacturing products from Elkhart to South Bend.

EKF also strategically removed non-core, low-margin products from its portfolio.

In terms of leadership, the board said executive chair Julian Baines would continue in his role on a longer-term basis, while Steve Young was appointed as chief financial officer in September.

“2024 will see the completion of the rationalisation process that has simplified the business, allowing us to focus on our higher margin products and services, as well as delivering further improvements to EBITDA margin and cash generation,” said executive chair Julian Baines.

“EKF is a well-established business, with a core product portfolio that is steadily growing, generating cash from its operations.

“With a structured management team in place, a newly streamlined business, and the opening of our state-of-the-art fermentation facility in South Bend, we have a company that is well placed to deliver growth and improved returns from many of the investments made over the last two years.”

At 1037 GMT, EKF Diagnostics shares were down 1.69% at 26.2p.

Reporting by Josh White for Sharecast.com.