Oxford Nanopore reports steady first half amid market challenges

Oxford Nanopore Technologies reported a steady first-half performance on Tuesday, despite challenging market conditions.

The London-listed company's revenue for the six months ended 30 June was £84.1m - largely flat at constant currency, and down 2.2% on a reported basis, aligning with expectations.

Excluding a significant £8.9m headwind from Covid-19 sequencing and the Emirati Genome Programme (EGP), underlying revenue grew 12.4% at constant currency.

The firm saw notable growth in its PromethION product range, where revenue surged by 39% to £31.9m.

However, that was offset by a 10.8% decline in the MinION product range, primarily due to currency fluctuations and specific market factors.

Overall, gross margins improved by 120 basis points to 58.8%, driven by better margins on PromethION products, despite facing headwinds from product mix and currency.

Oxford Nanopore reported an adjusted EBITDA loss of £61.6m, an increase from the prior year, largely due to higher operational expenses related to increased headcount.

The company’s net loss also widened to £74.7m, up from £70.1m in the same period last year.

Strategically, the company made significant progress, including securing new contracts and expanding existing ones for its PromethION devices.

Notable deals included a partnership with Precision Health Research Singapore for sequencing 10,000 human genomes and a multi-year contract expansion with Plasmidsaurus for plasmid sequencing.

The company also launched new products like the PromethION 2 Integrated (P2i) and the GridION Q-Line, and made advancements in existing collaborations, including a tuberculosis test with bioMérieux.

Looking ahead, Oxford Nanopore reaffirmed its full-year guidance, expecting underlying revenue growth of 20% to 30% at constant currency, and reiterated its medium-term goals of achieving over 30% compound annual growth in revenue through 2027.

The company also anticipated reaching adjusted EBITDA breakeven by the 2027 financial year, and becoming cash flow positive by 2028.

“Against a challenging backdrop, our financial and operational performance in the first half was solid and in-line with our expectations, underpinning confidence in full year guidance,” said chief executive officer Gordon Sanghera.

“We delivered robust underlying revenue growth of 12.4% constant currency and margin expansion of 120 basis points.

“We continued with our high pace of innovation in the first half, with new product launches and platform enhancements.”

Sanghera noted the delivery of two product launches aimed at the firm’s regulated customer base, GridION Q-Line and Early Access of ElysION, its fully-automated samples to answer product.

“These meet customer needs for routine, end-to-end analyses, for example in clinical and applied industrial markets, particularly with Biopharma customers.

“As we look forward, our highly differentiated platform and substantial market opportunity position us well to deliver long-term, sustainable growth.”

The company’s growth and margin guidance for the full year remained unchanged, Gordon Sanghera added.

“We enter the second half in a strong position; new and enlarged contract wins, such as PRECISE and Plasmidsaurus, coupled with the increased productivity of our sales teams in the second quarter reinforces our confidence in delivering between 20 and 30% underlying revenue growth on a constant currency basis in full year 2024.”

At 0841 BST, shares in Oxford Nanopore Technologies were up 2.65% at 124.72p.

Reporting by Josh White for Sharecast.com.