SourceBio International (SBI ) has achieved record results in the year ended 31 December 2021 with group revenue increasing by 82% and gross profit increasing by 77%, respectively.
SourceBio, which provides laboratory services and products, said its record results have been achieved in a year dominated by the provision of COVID-19 PCR testing services which has allowed it to re-invest in its core Healthcare Diagnostics business unit, through acquisition.
Over the period, revenue increased by 82% to £92.4 million, up from £50.7 million in FY20 while gross profit increased by 77% to £36.2 million (FY20: £20.5 million). Adjusted EBITDA also increased by 70% to £24.1 million, up from £14.2 million reported in the prior year.
Cash balances at the year-end stood at £33.3m with no bank or shareholder borrowings, compared to cash of £8.4 m in the prior year-end to reflect ‘a very strong cash conversion.’
Over the course of FY21, SourceBio significantly scaled-up its Nottingham laboratory facilities to initially increase COVID-19 PCR testing volumes. The facilities are now being repurposed towards Cellular Pathology as actual and anticipated volumes increase, the Group explained.
This expansion enabled the company’s Infectious Disease Testing business unit to provide a significant component of revenue, gross margin and cash generation throughout the year.
The level of business for the Healthcare Diagnostics division increased through 2021, as efforts were made to tackle the mounting backlog of elective surgeries. As a result, 2Q saw revenues nearly 80% higher than in 1Q, and 3Q saw revenues nearer 60% higher than in 2Q.
Genomics revenue streams were impacted by COVID-19 in 2020 but bounced back quickly; the business line of the Stability Storage unit remained relatively robust during COVID-19.
As SourceBio closed a record year of business in 2021, with material growth in revenues, gross margin and cash generation, the Company said trading in the early months of 2022 for the core business units has been both ‘solid’ and in line with the Board’s current expectations.
Volumes of Cellular Pathology work began returning in more meaningful volumes in the second half of 2021 and this has continued to accelerate in the early months of 2022. This is expected to be further enhanced by cash and initiatives of support from the HM Government.
In March 2022, the Group strengthened its position with the strategic acquisition of LDPath Limited, a pioneer in digital scanning technology for histopathology, a move which enabled it to offer its testing services to NHS Trusts as well as private healthcare providers in the UK.
The enlarged Group will target the conversion of both NHS and private clients to the Digital Pathology offering, including the use of Artificial intelligence (“AI”) to further streamline the reporting of more routine pathology cases and to ensure the highest quality of reporting.
As a result, the Board said it is very optimistic of securing significant future volumes of work and believes that the current market conditions are supportive and provide an excellent backdrop for the Group’s acquisition of LDPath, which was completed back in March 2022.
Its Cellular Pathology capabilities have significantly increased following this acquisition, as the Group has an enlarged customer mix of both NHS and private healthcare clients and SourceBio expects to lead the market migration towards its Digital Pathology platform.
Jay LeCoque, Executive Chairman of SourceBio International, commented, “It is particularly encouraging to see our core business units meeting or beating pre-COVID-19 levels of trading. In particular, our Cellular Pathology business is seeing material month-on-month growth in volumes and revenues, fuelled by the return of elective surgeries and the Government initiatives to reduce the enormous backlog of patient waiting lists.”
Looking ahead, LeCoque said he believes the acquisition of LDPath provides SourceBio with the wet laboratory and Digital capacity “to accelerate growth in market share and profitability.”
In addition, the Group said it has identified further attractive growth opportunities in the Precision Medicine marketplace; SourceBio said this will be a focus of attention throughout 2022 as a discrete offering neatly building on existing offerings, including personalised tests.
Given the current market environment, the Board believes that it is well positioned to deliver further attractive growth in revenue and margin from these core business units in 2022 and that SourceBio will continue to seek further strategically attractive acquisition opportunities.
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