Oxford Nanopore delays breakeven target as Covid revenue falls away

The London-listed company recorded significant growth in life science research tools (LSRT) revenue for the year, up 39% when excluding legacy Covid-related contracts, to £149.7m.

That growth was driven by strong sales across its PromethION product line and increasing adoption by customers across various research areas.

Total revenue, however, fell 14.6% to £169.7m as the firm’s legacy Covid testing revenue fell away completely, while gross profit slid 26.9% to £90.5m.

Gross margins were 900 basis points narrower at 53.3%, while the adjusted EBITDA loss was 26.3% wider at £104.9m.

Oxford Nanopore reported a total loss for the year of £154.5m, 63.5% below that recorded for 2022.

On the operational front, Oxford Nanopore reported significant strides, securing strategic partnerships to explore new markets in clinical and industrial applications.

The company said it expanded its commercial infrastructure and leadership team, positioning itself for further growth in the Americas, EMEAI, and Asia-Pacific regions.

Additionally, over 2,800 research studies using Oxford Nanopore technology were published in 2023, reflecting its increasing importance in fields like cancer, human genetics, and infectious diseases.

Looking to 2024, Oxford Nanopore projected LSRT revenue growth of 6% to 15%.

The firm said it anticipated faster growth rates in its larger customer segments and across the Americas and EMEAI regions.

Despite a challenging market environment and continued investment in growth initiatives, Oxford Nanopore revised its adjusted EBITDA breakeven target to the 2027 financial year, from the earlier target of 2026.

“We delivered strong underlying revenue growth of 39% in 2023, driven by the strength of our differentiated technology, commercial model, and strategic investments in infrastructure,” said chief executive officer Gordon Sanghera.

“Last year we also delivered breakthroughs in our platform performance, achieving record accuracy, expanded end-to-end workflows and increased access to high output applications with the PromethION 2 (P2) product rollout, with 700 P2 Solos sold or leased through starter packs in 2023.

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

Sanghera said the company was focussed on key strategic initiatives to drive value, including disciplined investments in its technology and commercial operations where appropriate to unlock key opportunities in priority markets.

“We also remain mindful of end-market conditions, with sales cycles lengthening at the same time as we have expanded our commercial and operational infrastructure to support future growth.

“These factors have led us to revise our forecast for achieving adjusted EBITDA breakeven to the end of 2027 as we continue to focus on delivering against the huge commercial opportunity ahead of us.

“We are confident that we can deliver underlying revenue growth of 20 to 30% in 2024 and greater than 30% in the medium term.”

At 1008 GMT, shares in Oxford Nanopore Technologies were down 2.48% at 125.7p.

Reporting by Josh White for Sharecast.com.