TIDMDXRX
RNS Number : 8945N
Diaceutics PLC
26 January 2023
26 January 2023
Diaceutics PLC
("Diaceutics" or "the Company" or "the Group")
Trading Statement and Strategy Update
Strong trading performance in 2022, with revenue materially
ahead of market expectations
Accelerating strategy with enhanced investment in data and
subscription offerings to capitalise on growing customer demand
Diaceutics PLC (AIM: DXRX), a leading technology and solutions
provider to the pharmaceutical industry, provides the following
unaudited trading statement for the year ended 31 December 2022 and
a strategic update.
Trading Statement (1)
-- Revenues increased 44% to approximately GBP20.0 million
(2021: GBP13.9 million), 29% at constant currency, materially
ahead of market expectations(2)
-- Significant shift to platform-based subscription contracts
in year with approximately 36% of revenue now subscription
based (2021: 3%)
-- Improved visibility of future revenue with growth in order
book value at 31 December 2022 to approximately GBP15.6
million (31 December 2021: GBP1.75 million), with approximately
GBP9.9 million of the order book expected to be realised
in 2023
-- EBITDA(3) is expected to be in line with market expectations(2)
with EBITDA margin similar to 2021 (2021: 17%)
-- Closing cash balance of GBP19.8 million as at 31 December
2022 (2021: GBP19.7 million) with no debt
Diaceutics has delivered strong trading for the year, with
revenues materially ahead of market expectations, driven by growing
demand from the Company's pharmaceutical and life science customers
for its recently launched platform driven Insight and Engagement
subscription solutions. The forward visibility of revenues has
significantly improved, with the acceleration of platform-based
subscription contracts versus prior year and 9x growth in the
Company's total order book, of which over 60% is expected to be
recognised in 2023. This growth has been driven through a
considered campaign to secure multi-year subscription contracts
with key customers, increasingly at an enterprise level. The
success of this operational change is evidenced through today's
separate announcement regarding two enterprise level engagements,
with top 10 global pharma companies, representing a combined value
of US$ 7 million to be realised over two years.
2022 EBITDA(3) is anticipated to be in line with expectations
and at a consistent margin to the prior year. The EBITDA margin has
been maintained whilst transitioning a significant proportion of
customers to multi-year subscription contracts, in spite of
macro-economic inflationary cost pressures, and whilst maintaining
the additional investment in the cost base of the business to
service the subscription model and future growth.
In addition to the above, and in recognition of the important
role our people have played in the Group's success and the
unprecedented increase in living costs, all employees were provided
a one-off GBP1,000 cost of living payment in December 2022.
As at 31 December 2022, the Company remains debt free and had
strong cash reserves of GBP19.8 million , representing an increase
of GBP0.1 million versus the end of the prior year (2021: GBP19.7
million ).
Strategy Update
Through its expanded suite of platform solutions and enhanced
data insights, Diaceutics has established a competitive advantage
within the sector and consolidated its reputation as a trusted
partner to pharma in the field of precision medicine
commercialisation. This places the Company in a position to achieve
a greater market share as the pharmaceutical industry continues its
post-COVID shift to digital enablement. The Company continues to
estimate that, on average, pharma allocates a commercialisation
budget of US$ 10-15 million per brand, and recognises a sizable
opportunity to secure an ever-increasing share of these
budgets.
In order to fully capitalise on this opportunity, bring
additional data offerings to market more quickly, and maintain its
first-mover advantage, the Board has decided to accelerate and
enhance the Company's investment in its data and products, platform
capability and operating model over a two year period. The
investments will enable Diaceutics to increase the mid-term rate of
revenue growth, accelerate the continued shift towards subscription
based revenues and to improve the future scalability of the
Group.
The acceleration of the Company's strategy has been validated
through its positive trading performance in FY22 and increase in
its pipeline, most notably around customer engagement for
multi-year enterprise level contracts via the DXRX platform. This
progression has been evidenced through today's separate
announcement regarding two enterprise level engagements
representing a combined value of US$ 7 million to be realised over
two years.
Having achieved cash flow breakeven in 2022 and accompanied by a
strong balance sheet with GBP19.8 million of cash and no debt, the
Company has decided to accelerate investment from its own resources
and without the requirement for outside funding. Total net cash
investment is expected to be approximately GBP7.0 million over a
two year period, preserving a robust minimum cash balance of
approximately GBP12.0 million throughout.
The investment will be made primarily into data acquisition,
greater platform functionality and AI capabilities, our innovation,
laboratory network and sales and marketing teams. This will enable
the strategy acceleration in the following ways:
-- Enrich data and platform products - through investments
in key geographical data sources and enhanced patient healthcare
journey data, secure and elevate market leadership position
of our platform enabled insight and engagement solutions,
further embedding our offering in customers' commercialisation
activities and boost Diaceutics' share of customer budgets;
-- Accelerate growth and engagement of the laboratory network
and platform-based community - through investments in our
laboratory network team and community content engagement,
drive laboratory network growth and augment our platform-based
engagement solution and data insight offerings to pharma;
-- Invest in platform scale and capability - through investments
in the innovation team, accelerate development of the platform
capability and functionality at scale (automation and AI),
facilitating better customer functionality and service,
and growing levels of revenue visibility and best in class
profitability;
-- Transform our customer experience and service - through
investments in Diaceutics' customer success programme, aimed
at accelerating our Precision Medicine market leadership
in target geographies, support transformation of sales and
marketing and customer service and support teams across
all customer accounts, enriching the customer experience
and driving sustainable growth.
The Company expects to remain EBITDA profitable for each
financial year and over the period of investment. The anticipated
accelerated investment will result in reduced EBITDA margins over
this two year investment period, with the Board anticipating margin
expansion, revenue growth acceleration and a substantial increase
to scalability thereafter, driving increased long-term shareholder
value.
Peter Keeling, Diaceutics' Chief Executive, commented:
"We are delighted to report a strong year for Diaceutics, both
financially and strategically, with revenues increasing materially
ahead of expectations. Our investments in the business during the
past year have facilitated significant top line growth,
highlighting the extent of the opportunity available to us.
The growing demand from our pharmaceutical and life science
customers for our full suite of commercialisation solutions and
advisory services, along with a building order book and strong cash
position, provide us with the confidence to accelerate our
investment to fully capitalise on this momentum, supporting our
ambition to become the primary partner for pharma or biotech's
launching a precision medicine."
(1) All numbers stated are subject to audit
(2) The Company believes that current market expectations for
the year ending 31 December 2022 are revenues of between GBP16.3
and 16.8 million and EBITDA of between GBP3.4 and 3.6 million.
(3) EBITDA is earnings before interest, tax, depreciation,
amortisation and exceptional items, but after share-based payment
costs.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
("MAR"), and is disclosed in accordance with the Company's
obligations under Article 17 of MAR. The person responsible for
making this announcement on behalf of the Company is Nick Roberts,
Chief Financial Officer.
Enquiries:
Diaceutics PLC
Peter Keeling, Chief Executive Officer Via Alma PR
Nick Roberts, Chief Financial Officer
Stifel Nicolaus Europe Limited (Nomad & Broker) Tel: +44 (0)20 7710
7600
Ben Maddison
Stewart Wallace
Nick Adams
Alma PR Tel: +44(0)20 3405
0205
Caroline Forde diaceutics@almapr.co.uk
Kieran Breheny
Matthew Young
Kinvara Verdon
About Diaceutics
At Diaceutics we believe that every patient should get the
opportunity to receive the right test and the right therapy to
positively impact their disease outcome. We provide the world's
leading pharmaceutical and life science companies with solutions
and technology for the commercialisation of their precision
medicines, enabled by the proprietary DXRX platform.
DXRX is the world's first diagnostic commercialisation platform
for precision medicine, utilising a global network of affiliate
laboratories to deliver multiple pipelines of real-world healthcare
data insights, advisory services and innovative platform enabled
solutions.
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