In its results for the year ended 31 December 2020, SourceBio International (SBI ) said it has achieved “significant revenue growth and dramatically increased underlying profitability.” 

The Group, which provides integrated state-of-the-art laboratory services internationally, said revenue increased 139% to £50.7m from £21.2m in 2019 over the period, while underlying profit soared by 369% to £14m from £3m in the comparative 2019 period. 

Gross profit rose by 135% to £20.5m from £8.7m in 2019 while group cash balances at the year-end date totalled £8.4m with no bank and shareholder borrowings, compared to cash of £1.2m and bank and shareholder borrowings of £95.9m at the prior year-end date.  

Despite the arrival and sustained impact of the COVID-19 pandemic, SourceBio said it has been able to more than make up for any adverse impacts to its long-standing business units by introducing large scale laboratory COVID-19 testing services from its Nottingham facility. 

In May 2020, SourceBio created the Infectious Disease Testing business unit with the launch of COVID- 19 Antigen RT-PCR testing services, through high volume lab-based testing. 

By the year-end date, the Company had progressively expanded its laboratory capacity at its facility in Nottingham to 10,500 tests per day. In December 2020, the Group signed a further strategic partnership agreement with Oxford Nanopore to offer a new generation of rapid COVID-19 test, LamPORE, for use in both traditional laboratory and more localised settings. 

The Group highlighted that these services generated revenues totalling £34.5m (2019: £nil) and a gross profit of £13.7 m (2019: £nil), equating to a gross margin percentage of 39.6%.  

The customer base throughout the year comprised the DHSC, certain NHS trusts and other NHS constituents, as well as private healthcare groups and commercial clients, it noted. 

In addition, in November 2020, the Company also announced to investors that it had been accepted into the Increasing Capacity Framework Agreement for cancer test services to NHS England, an initiative to reduce the significant backlog of procedures built up during 2020. 

"I am very pleased to report to shareholders significant revenue growth and dramatically increased underlying profitability in an extremely busy year for SourceBio, that included a successful AIM listing in October,” said Jay LeCoque, Executive Chairman of SourceBio. 

Outlook 

The Group said trading in 2021 has been solid and it is expected that its COVID-19 testing focus in 2021 will transition from exclusively RT-PCR testing to a wide portfolio of offerings. 

The Board said it anticipates that whilst PCR based testing will remain the gold standard test, the Group will also offer additional testing capabilities during 2021 with it already having reviewed several complementary applications, technologies and routes to market. 

In particular, the Group said it has established a number of new COVID-19 testing initiatives, some of which are in anticipation of the expected lifting of travel restrictions, ‘where significant business is expected to be secured as travel related testing gains momentum.’ 

Meanwhile, the Group’s recently announced San Diego facility, which will provide COVID-19 testing services to the USA market, is expected to launch mid-year. As a result, the Group anticipates a significant proportion of 2021 revenues and earnings to be generated from the third quarter of the year onwards, giving a second half bias to the expected results for 2021. 

Looking ahead, the Company said it remains strongly capitalised with no borrowings, which it believes positions it well to deliver “further aggressive growth in 2021.” In particular, it sees Infectious Disease Testing revenues coming from a number of different platforms. 

‘Given the current macro environment, the Board believes that SourceBio is well positioned to deliver further substantial growth in revenue, earnings and cash generation in 2021. It will also continue to consider potential acquisition opportunities,’ the company noted. 

Reasons to  SBI

SourceBio International is an international provider of laboratory services to clients in the pharmaceutical industry, the NHS and to private healthcare providers. The Group is headquartered in Nottingham, with additional facilities in the UK, Ireland and the US. 

The company saw a positive start on its first day of trading on AIM, adding around £8m to its initial £120m market capitalisation while the £35m raised at 162p is intended to be used by it to scale up COVID-19 testing capacity as well as paying off shareholder and bank loans. 

“We are delighted by the strong support we’ve received from institutional investors. Our IPO on AIM allows us to significantly increase our COVID-19 testing capacity, accelerate earnings growth in our core business and execute on potential M&A opportunities,” said LeCoque. 

He said at the time of the IPO: “It’s an exciting time for our business and we  look forward to executing on our ambitious growth plans and delivering value to our shareholders.”  

In November 2020, SourceBio unveiled that its funds from its IPO were enabling it to further scale its COVID-19 testing services to deliver against expected increases in future testing. 

SourceBio previously forecasted total revenue of around £50m (FY19: £21.2m) and EBITDA of c.£14m (FY19: £3.0m) for the year ending 31 December 2020, with the vast majority of this increase in expected earnings driven by the contribution of COVID-19 testing revenues. 

The group said in November 2020 that it had been accepted into the Increasing Capacity Framework Agreement for cancer testing services to NHS England, designed to reduce the significant backlog of elective surgeries impacting the NHS due to the pandemic which is expected to support the growth of the Healthcare Diagnostics business unit in 2021. 

SourceBio entered into a strategic commercial partnership with Oxford Nanopore Technologies to offer a COVID-19 testing solution to corporate customers at scale via its own lab facilities. Last month, the group entered into a supply agreement to provide ‘state of the art’ products and lab services to an unnamed high street retail and pharmacy group. 

Since December 2020, SourceBio has been supplying COVID-19 antigen RT-PCR testing services to the DHSC. It is currently awaiting a potential formal award under Public Health England's National Microbiology Framework in relation to further COVID-19 testing services. 

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