hVIVO (HVO) , a specialist contract research organisation, announced a trading update for the 6 months ended 30 June 2023 (H1 2023).
hVIVO saw revenues climb 52% to £27.3m, compared to £18m in the same period last year. EBITDA margins also improved significantly to 19% from 12.7% last year, implying an EBITDA increase of 126% to £5.2m, while net cash doubled to £31.3m as of 30 June 2023 compared to £15.9m a year ago. The company said it was on track to hit full-year revenue and EBITDA expectations.
The company's revenue growth was driven by the delivery of a higher number of human challenge trials, combined with continued increases in contract value. Simultaneously, the much improved EBITDA margin of 19% resulted from improved operational efficiencies, most notably concurrent execution of multiple large trials.
hVIVO's contracted orderbook grew 11% year-on-year to £78m, underpinning revenue visibility to H2 2024. Only yesterday, the company added a large £13.1m contract with an existing client for the development of an Influenza B virus challenge model. The combination of high revenue visibility and much improved cash position gives hVIVO a strong basis for future trading, with high flexibility in managing its pipeline and investment decisions.
The company continues to be highly cash generative, as evidenced by the doubling of its cash position to £31.3m, even after the payment of a £3m special dividend in June 2023. Underlying free cashflow (before the payment of the special dividend) was £6m, reflecting the strong EBITDA growth and upfront customer payments. hVIVO is already fully contracted to achieve its full-year revenue guidance of £53m with EBITDA margins "in the mid to high teens". hVIVO joint broker finnCap maintained its 35p target price, more than double HVO's current price.
In summary, H1 2023 was another period of stellar growth for hVIVO in terms of revenues, EBITDA, orderbook and cash generation, building on equally impressive performance in FY22. hVIVO's strong numbers in recent quarters testify to the ongoing high demand for human challenge studies. Such studies provide great value for biopharma as they offer access to fast and cost-effective data that enables easy decisions ahead of larger Phase 2 trials, giving companies the best chance of quickly advancing their candidates through the development pathway.
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