By Kristy Dorsey
Omega Diagnostics has confirmed its selection as a supplier on a lucrative UK Government contract that analysts estimate could boost revenues by a factor of 16 or more in the coming financial year.
News of the deal to supply rapid Covid-19 tests, which first appeared in press reports earlier this week, initially sent the Scottish firm’s share nearly 8 per cent higher before they later eased back to finish lower at the close of yesterday’s trading.
READ MORE: Omega shares soar 32 per cent on Covid test news
The announcement about the Covid test deal with the Department of Health and Social Care (DHSC) was accompanied by a trading update in which Omega said that revenues for the current year will fall significantly short of previous expectations. Because of pandemic-related disruptions in its food intolerance and HIV testing businesses, revenues for the year to the end of March will be in the region of £9.3m versus the previous forecast of £12.6m. Underlying losses for the current year will be between £2.1m and £2.3m.
But looking further ahead, chief executive Colin King predicted substantial revenue growth as the company increases capacity to begin producing up to two million tests per week for the DHSC by the end of April. House analysts at FinnCap said this could theoretically generate between £150m and £200m of additional annual revenues.
“I appreciate that trading in our core business has been softer than expected for the current financial year, however the on-going opportunity for growth in CD4 testing and food intolerance revenues is unchanged,” Mr King said.
“The new financial year will see this growth opportunity realised, and will also see the full impact of Covid-19antigen testing, and so we are likely to deliver substantial revenue growth compared to the financial year which ends next month.”
Separately, Omega has also announced the appointment of life sciences veteran Simon Douglas as its new chairman. Shares in the AIM-listed company closed yesterday’s trading 4p lower at 89p.
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