MyHealthChecked PLC Preliminary Results (9017N)

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RNS Number : 9017N

MyHealthChecked PLC

07 June 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMED. ON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

MyHealthChecked PLC

("MyHealthChecked" or the "Company")

Preliminary Results

Year Ended 31 December 2021

MyHealthChecked PLC (AIM: MHC), the consumer home-testing healthcare company, announces its preliminary results for the year ended 31 December 2021.

2021 Highlights

Commercial

 
 --   Significant revenue growth over the prior year, up from GBP50,000 
       to GBP16.4m 
 --   Secured agreements with the two top retail high street pharmacy 
       chains and successfully launched and delivered into a new and unknown 
       category 
 --   MyHealthChecked brand successfully launched and established 
 --   Over 30,000 new direct customers 
 --   Over 5,000 Trustpilot reviews to achieve a 4.3 rating at the year 
       end 
 

Portfolio and accreditation

 
 --   Fast track onboarding of The Genome Store in preparation for peak 
       COVID activity 
 --   Achieved listing on Government website/gov.uk for the COVID-19 
       private testing providers for general Testing and Test to Release 
 --   Acquisition of Nell Health in July 2021 
 --   UKAS stage 2 passed in January 2021 with full ISO 15189:2012 accreditation 
       announced in September 2021 
 

Operational

 
 --   Migration across to new digital platform following Nell Health 
       acquisition 
 --   Secure supply chain established successfully underpinning category 
       volatility 
 --   Management of lean overheads 
 

Financial

 
 --   Adjusted EBITDA of GBP2.7m compared to a GBP2.7m loss in the prior 
       year 
 --   Oversubscribed GBP3.4m (gross) share placing @ 1.75p in February 
       2021 which included further reinvestment by Mercia's investment 
       funds 
 --   Cash generative for the first time with year-end cash balances 
       of GBP6.4m 
 

The full Group Annual Report and Financial Statements will be available shortly at www.myhealthcheckedplc.com .

 
 MyHealthChecked PLC                                                    www.myhealthcheckedplc.com 
 P enny McCormick, Chief Executive                                                 via Walbrook PR 
  Officer 
 Nicholas Edwards, Chief Financial 
  Officer 
 
 SPARK Advisory Partners Limited                                          Tel: [phone] 
  (NOMAD) 
 Neil Baldwin 
 
 Oberon Capital Ltd (Broker)                                              Tel: [phone] 
 Mike Seabrook                                                  [e-mail] 
 
 Walbrook PR Ltd (Media &            Tel: [phone] or [e-mail] 
  IR) 
 Paul McManus / Alice Woodings                            Mob: [phone] 
                                                                                               654 
 

About MyHealthChecked PLC ( www.myhealthcheckedplc.com )

MyHealthChecked PLC, based in Cardiff, is an AIM-quoted pioneering UK healthcare company focused on a range of at-home healthcare and wellness tests.

MyHealthChecked is the umbrella brand of a range of at-home DNA and RNA tests, now in development following the acquisition of The Genome Store in November 2020. The tests will be made available online, and would be viable for over the counter purchase.

The MyHealthChecked portfolio has been identified as part of a change in mindset as customers become more familiar with the concept of accessible healthcare in the growing at home testing kit market with a focus on accessibility at the right price, led by UK-based experts.

CHAIRMAN'S STATEMENT

2021 was a year that delivered record revenue of GBP16.4m and an adjusted EBITDA of GBP2.7m, with net cash being GBP6.4m at the year end.

Our key focus for 2022 will be the introduction and launch of our DNA wellbeing products in the first half of 2022. This portfolio will grow as we enter Q3 and Q4 and will be channelled initially through our Direct-to-Consumer model.

I would like to take this opportunity to thank all our employees who worked tirelessly during 2021 to deliver an outstanding result, not only financially but also in the quality and care of service.

We look forward to delivering further growth and value to shareholders in 2022 and beyond.

Adam Reynolds

Non-Executive Chairman

CHIEF EXECUTIVE'S REPORT AND REVIEW

Last year, in my first CEO review in my new role, I talked about how we had reshaped the business to deliver against an ambitious growth plan with a clear runway ahead to revenue achievement. I am proud to say that during 2021 we have delivered against this aim at every stage. MyHealthChecked has again evolved significantly over the last year, and we are well-positioned to deliver further shareholder value in 2022 as we continue to grow the business.

I must give due credit to our fantastic team at MyHealthChecked whose commitment and professionalism has been outstanding during an incredibly challenging time for everyone. The team adapted our business model to create a new retail product line in response to the COVID pandemic and delivered a phenomenal ramp-up of testing volume through challenging supply chain conditions. We also successfully integrated The Genome Store business during the year and acquired Nell Health Limited ("Nell Health") in July 2021. The team has delivered to an incredibly high standard, and this has been reflected in the thousands of positive customer reviews we have received, and the continuing relationships that we have established with the UK's top pharmacy retailers.

We have moved into 2022 in a position of strength financially, operationally and with a quickly established reputation for responsive, commercial delivery. We have exciting longer-term prospects based on a pipeline of new product introductions, whilst we continue to provide COVID testing services to our key partners, and I am delighted to update shareholders on our strong performance over the last year.

Successful commercial delivery - executing on our strategy for growth

The financial performance of the business is the strongest indicator of the significant step-change that we have delivered over the last year. In 2021 we recorded revenues of GBP16.4m (2020: GBP50k) and delivered an adjusted EBITDA profit of GBP2.7m, reversing the GBP2.7m adjusted EBITDA loss seen in 2020. The business has been cash generative for the first time in its history and cash balances at the year-end were GBP6.39m (2020: GBP0.47m), which reflected both good working capital management and stronger than expected cash conversion in the final quarter.

The main driver of commercial success was the roll-out of our new COVID-19 PCR nasal swab test kit for at-home use which was adopted by the UK's top two high street pharmacy retailers. The strong Q4 performance was also supported by the launch of our COVID-19 rapid antigen test and verification service which saw us become a distributor of FlowFlex lateral flow assays, adapting neatly with changing market needs and demonstrating our ability to successfully integrate third party products alongside our own brand.

Our team also supported a number of smaller travel and institutional Business-to-Business ("B2B") customers, however it is the opening up of our own Direct-to-Consumer sales channel which, supported by our investment in digital marketing and excellent customer service provision, grew to contribute approximately GBP2.4m to overall revenues. As the Company has grown, we have focused on the establishment of our reputable brand with a customer-first approach to both retail partners and directly with consumers. Our Care Team has worked tirelessly to ensure that our service excellence is captured, securing over 5,000 reviews on Trustpilot in 2021 and currently standing at over 7,000 at the time of writing. Our marketing strategy has been focussed on effective referral channels and pricing strategies, ensuring that we always deliver customer value.

Careful cost control and operational excellence

Whilst transforming the operational and commercial capacity of the business to meet market demands we have kept a tight control of our cost base and have maximised efficiencies by working closely with key suppliers and maintaining a flexible and lean team that has delivered extraordinary growth over the last 12 months.

We have continued to ensure that our operational footprint matches our clients' demands as well as providing the flexibility to expand for future growth as required. The flexible arrangements at our Cardiff Head office have allowed us to scale up and scale down through the year without any detriment to the provision of customer care and dispatch. Our Manchester laboratory operation, combined with third-party supply from Yourgene Health PLC ("Yourgene"), allowed us to maintain a reputation for quality of service with reliable turnaround times that consistently met the requirements of our customers. It is a mark of the quality of the team that we were able to achieve ISO 15189 standards within six months of opening the laboratory, and we consistently achieved 100% for the reliability of patient results and accuracy of reporting in the SARS CoV-2 External Quality Assurance Programme. Our facilities were subject to ongoing review by our retail partners, and I am proud that the team have consistently met their exacting requirements. As part of an internal review however, in response to a significant downturn in COVID PCR testing and our drive to remain cost efficient, our laboratory operations will close in the current quarter whilst we continue to utilise Yourgene's laboratories, in conjunction with our in-house expertise, to continue building our scientific and digital portfolio.

Preparation for the launch of a portfolio of personalised wellness tests in H1 2022

Whilst we are still benefitting from our pivot into the provision of COVID-19 rapid antigen tests, a key focus of our business as we have moved into the new financial year has been on re-investing 2021 earnings into our new product pipeline of at-home wellness tests and building digital healthcare-centric technology that is scalable.

The effective integration of Nell Health, acquired in July 2021, has enabled the migration of our Laboratory Information Management System ('LIMS') onto the digital platform that will underpin the future business as it expands. Nell Health provided access to innovative technology in-house, that is secure, adaptable, and robust for future product and service developments.

This new scalable customer facing e-commerce platform enables connection from customer through to the lab and facilitates Government required reporting for COVID testing and has been further enhanced in readiness for the launch of future tests. We continue to focus on cyber security, and work closely with our Data Protection Officer to ensure that our systems are robust as we launch our new app technology that will provide actionable health and nutritional guidance, tailored to the customer. Our realignment of the goals and strategy of the business has included the mapping-out of a range of accessible family healthcare tests, with the aim of helping our customers to take control of their own healthcare, whilst providing a positive customer experience.

We remain on track to launch five new at-home wellness tests this month, focussing on the areas of weight management, vitamin deficiency, food intolerances, heart health and blood glucose. We will be announcing further portfolio developments through the course of the year to support our clear business development strategy across Direct-to-Consumer, retail, and B2B channels and I look forward to updating shareholders on this in due course.

We will continue to explore additional third-party technology options that can enhance the customer journey and the value of our products, and which can be integrated by our in-house talent. We also maintain our efforts to identify and assess complementary earnings-enhancing partnerships with organisations that demonstrate potential value-add and are a complementary and strategic fit to our core business.

Whilst COVID-19 was the number one priority for 2021, and portfolio growth is key to our long-term growth strategy, we will continue to reinforce our strong reputation in the COVID-19 testing space, providing a high-quality product and service to our key partners. We will do so whilst consistently evaluating the cost effectiveness of our operations.

Summary and outlook

Last year I commented that we had ended 2020 and commenced 2021 as a very different organisation to that of the previous January, and that we were poised to meet the needs of the market in 2021. I am delighted that we absolutely met the needs of the market this past year, and I am confident echoing those comments this year: that we have grown to be a very different organisation to that of January 2021, commencing 2022 in a stronger position.

Having pivoted the original Concepta business plan, our first year of commercial delivery has demonstrated that this was the right decision, and we have delivered a successful start in our journey to an exciting future. Whilst we did deliberately delay the launch of the wider portfolio of wellness products until the COVID market stabilised, we have in the meantime demonstrated our ability to effectively identify the right tests for the market, secure supplier and customer relationships, and manage challenging supply chains effectively, whilst remaining competitive on price, and excelling in customer service and delivery.

We have in place a secure digital platform, a customer base opening up to the new idea of home-testing, and an existing customer base to whom we can share our new product information.

2022 will be another exciting year for the business as we launch our initial portfolio of new tests and build upon our sophisticated digital platform, which presents a fantastic opportunity for us to grow and create value for our shareholders. This will be supported by positive trading in the COVID space, as over the counter consumer demand continues into 2022.

Penny McCormick

Chief Executive Officer

FINANCIAL REVIEW

In come statement

Following the acquisition of The Genome Store in November 2020, the Group was able to launch the COVID-19 PCR nasal swab test kit for at-home use in December 2020 which enabled revenues to increase from GBP50,000 in 2020 to GBP16,376,000 with a gross profit margin of 31.3% in the year under review. Further details are set out in the Chief Executive's Report and Strategic Review.

Administration costs amounted to GBP3,079,000 compared to GBP3,118,000 in the prior year after expensed research and development expenditure of GBP175,000 (2020: GBP487,000). An impairment provision of GBP414,000 has also been taken in 2021 against the know-how and goodwill arising on the acquisition of The Genome Store as all testing is now sub -contracted to third parties and the testing laboratory is being closed. In 2020 the charge was GBP622,000.

Adjusted EBITDA is calculated as follows:

 
                                               2021      2020 
                                            GBP'000   GBP'000 
-----------------------------------------  --------  -------- 
 Operating profit/(loss                       2,046   (3,758) 
 Depreciation and amortisation                  157       157 
 Impairment provision (net of DT credit)        414       622 
 Share based payments                           112       103 
 Loss on disposal of intangible assets            -       180 
-----------------------------------------  --------  -------- 
 Adjusted EBITDA                              2,729   (2,696) 
-----------------------------------------  --------  -------- 
 

The Group's profit before after taxation was GBP2,004,000 (2020: GBP3,763,000 loss) giving a basic earnings per share of 0.28p (2020: loss 0.89p) and fully diluted earnings per share of 0.27p.

Financial position

The Group's net assets at 31 December 2021 amounted to GBP7,113,000 (2020: GBP530,000). This comprised total assets of GBP11,668,000 (2020: GBP1,336,000) and total liabilities of GBP4,555,000 (2020: GBP806,000). The total assets included property, plant and equipment of GBP163,000 (2020: GBP56,000) and intangible assets, being development costs, know-how, goodwill and patent costs, of GBP2,289,000 (2020: GBP616,000). The significant additions during the year relate to the goodwill and digital platform acquired on the acquisition of Nell Health. As noted above an impairment provision was made against the know-how and goodwill arising on the acquisition of The Genome Store which was acquired last year.

Cashflow

The Group's cash balance at the year-end was GBP6,387,000 (2020: GBP466,000). The net inflow from operating activities amounted to GBP3,014,000 (2020: GBP2,072,000 outflow) with a further GBP3,206,000 (2020: GBP1,960,000) net of expenses raised through financing activities, whilst the cash outflows from investing activities amounted to GBP299,000 (2020: GBP38,000).

Capital management

The Board's objective is to maintain a balance sheet that is both efficient and delivers long term shareholder value. The Board continues to monitor the balance sheet to ensure it has an adequate capital structure.

Events after the reporting year

On 25 March 2022 24,000,000 new ordinary shares of 0.1p each were issued to settle the deferred contingent consideration payable on the acquisition of The Genome Store Limited of GBP240,000 after all performance milestones were met.

Nicholas Edwards

Chief Financial Officer

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For The Year Ended 31 December 2021

 
                                           2021      2020 
                                        GBP'000   GBP'000 
 -----------------------------------  ---------  -------- 
 
 Revenue from contracts with 
  customers                              16,376        50 
 Cost of sales                         (11,251)     (690) 
------------------------------------ 
 Gross profit/(loss)                      5,125     (640) 
 
 Other administrative expenses          (2,553)   (2,213) 
 Impairment of intangible assets          (414)     (622) 
 Share based payments                     (112)     (103) 
 Loss on disposal of tangible 
  assets                                      -     (180) 
 
 Administrative expenses                (3,079)   (3,118) 
------------------------------------  ---------  -------- 
 Operating profit/(loss)                  2,046   (3,758) 
 Finance expenses                           (2)       (5) 
 Additional consideration payable 
  on the 
  acquisition of The Genome Store 
  Limited                                  (40)         - 
------------------------------------  ---------  -------- 
 Profit/(loss) before income 
  tax                                     2,004   (3,763) 
 Tax charge                                   -         - 
------------------------------------  ---------  -------- 
 Profit/(loss) for the year               2,004   (3,763) 
 Other comprehensive income                   -         - 
------------------------------------  ---------  -------- 
 Total comprehensive Profit/(loss) 
  for the year                            2,004   (3,763) 
------------------------------------  ---------  -------- 
 
 Attributable to owners of 
  the parent:                             2,004   (3,763) 
 
 Earnings/(loss) per ordinary 
  share - basic                           0.28p   (0.89p) 
 Fully diluted earnings per 
  ordinary share                          0.27p         - 
 

All activities relate to continuing operations.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As At 31 December 2021

 
                                       2021       2020 
                                    GBP'000    GBP'000 
 -------------------------------  ---------  --------- 
 Non-current assets 
 Property, plant and equipment          163         56 
 Intangible assets                    2,289        616 
 Total non-current assets             2,452        672 
--------------------------------  ---------  --------- 
 
 Current assets 
 Inventories                            497          3 
 Trade and other receivables          2,332        195 
 Cash and cash equivalents            6,387        466 
--------------------------------  ---------  --------- 
 Total current assets                 9,216        664 
--------------------------------  ---------  --------- 
 
 Total assets                        11,668      1,336 
--------------------------------  ---------  --------- 
 
 Current liabilities 
 Trade and other payables             3,315        384 
 Deferred tax liability                   -         87 
 Lease liabilities                        -          5 
 Deferred consideration               1,240        200 
 Other provisions                         -         26 
--------------------------------  ---------  --------- 
 Total current liabilities            4,555        702 
--------------------------------  ---------  --------- 
 Non-current liabilities 
 Loans and borrowings                     -        104 
--------------------------------  ---------  --------- 
 Total non-current liabilities            -        104 
--------------------------------  ---------  --------- 
 
 Total liabilities                    4,555        806 
--------------------------------  ---------  --------- 
 Net assets                           7,113        530 
--------------------------------  ---------  --------- 
 
 Share capital                          756        518 
 Deferred shares                      6,359      6,359 
 Share premium account               16,671     12,442 
 Share-based payment reserve              -        916 
 Capital redemption reserve           1,815      1,815 
 Reverse acquisition reserve        (6,044)    (6,044) 
 Retained earnings                 (12,444)   (15,476) 
--------------------------------  ---------  --------- 
 Total equity                         7,113        530 
--------------------------------  ---------  --------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
 
 
                                                      Share-based        Capital        Reverse 
                     Share     Deferred       Share       payment     redemption    acquisition     Retained 
                   capital       shares     Premium       reserve        reserve        reserve     earnings     Total 
 
                   GBP'000      GBP'000     GBP'000       GBP'000        GBP'000        GBP'000      GBP'000   GBP'000 
---------------  ---------  -----------  ----------  ------------  -------------  -------------  -----------  -------- 
 Equity as at 
  1 January 
  2020               6,624            -      10,740           813          1,815        (6,044)     (11,713)     2,235 
 Loss for the 
  year                   -            -           -             -              -              -      (3,763)   (3,763) 
---------------  ---------  -----------  ----------  ------------  -------------  -------------  -----------  -------- 
 Total 
  comprehensive 
  loss                   -            -           -             -              -              -      (3,763)   (3,763) 
 Issue of 
  shares 
  net of 
  expenses             253            -       1,702             -              -              -            -     1,955 
 Share-based 
  payments               -            -           -           103              -              -            -       103 
 Sub-division 
  of ordinary 
  shares 
  to deferred 
  shares           (6,359)        6,359           -             -              -              -            -         - 
 Equity as at 
  31 December 
  2020                 518        6,359      12,442           916          1,815        (6,044)     (15,476)       530 
 Profit for the 
  year                   -            -           -             -              -              -        2,004     2,004 
---------------  ---------  -----------  ----------  ------------  -------------  -------------  -----------  -------- 
 Total 
  comprehensive 
  profit                 -            -           -             -              -              -        2,004     2,004 
 Transfer from 
  share based 
  payment 
  reserve                -            -           -         (916)              -              -          916         - 
 Issue of 
  shares 
  net of 
  expenses             194            -       2,979             -              -              -            -     3,173 
 Conversion of 
  loan note and 
  interest              13                       92             -              -              -            -       105 
 Exercise of 
  options                2            -          18             -              -              -            -        20 
 Other share 
  issue                  1                       16             -              -              -            -        17 
 Share-based 
  payments               -            -           -             -              -              -          112       112 
 Acquisition of 
  Nell Health 
  Limited               28                    1,124             -              -              -            -     1,152 
 Equity as at 
  31 December 
  2021                 756        6,359      16,671             -          1,815        (6,044)     (12,444)     7,113 
---------------  ---------  -----------  ----------  ------------  -------------  -------------  -----------  -------- 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

For The Year Ended 31 December 2021

 
 
                                                2021      2020 
                                             GBP'000   GBP'000 
------------------------------------------  --------  -------- 
 Cash flows from operating activities 
 Profit/(loss) before taxation                 2,004   (3,763) 
 Adjustments for: 
 Deferred consideration                           40         - 
 (Decrease)/increase in provisions              (26)        26 
 Depreciation and amortization                   157       157 
 Impairment of intangible assets                 414       622 
 Finance expenses                                  2         5 
 Share-based payments                            112       103 
 Loss on sale of asset                             -       180 
------------------------------------------  --------  -------- 
 Adjusted operating profit/(loss) 
  before changes in working capital            2,703   (2,670) 
 Changes in working capital 
 (Increase)/decrease in inventory              (494)       381 
 Increase in trade and other receivables     (2,124)      (72) 
 Increase in trade and other payables          2,931       116 
 Cash generated/(used) in operations           3,016   (2,245) 
 Tax received                                      -       178 
 Other interest                                  (2)       (5) 
------------------------------------------  --------  -------- 
 Net cash inflow/(outflow) from 
  operating activities                         3,014   (2,072) 
------------------------------------------  --------  -------- 
 Investing activities 
 Acquisition of Nell Health Limited             (50)         - 
 Purchase of property, plant and 
  equipment                                    (147)      (35) 
 Purchase of intangible assets                 (102)       (3) 
 Net cash flows used in investing 
  activities                                   (299)      (38) 
------------------------------------------  --------  -------- 
 Financing activities 
 Issue of ordinary shares (net of 
  issue expenses)                              3,211     1,675 
 Convertible loan note                             -       101 
 Sale of assets                                    -       285 
 Repayment of lease liability                    (5)     (101) 
 Net cash flows from financing activities      3,206     1,960 
------------------------------------------  --------  -------- 
 Net change in cash and cash equivalents       5,921     (150) 
 Cash and cash equivalents at the 
  beginning of the year                          466       616 
------------------------------------------  --------  -------- 
 Cash and cash equivalents at the 
  end of the year                              6,387       466 
------------------------------------------  --------  -------- 
 

NOTES TO THE FINANCIAL STATEMENTS

The notes to the Financial Statement are available in full in the Group Annual Report and Financial Statements which will be available shortly on the Company website: www.myhealthcheckedplc.com

Basis of preparation

The financial statements have been prepared in accordance with UK adopted international accounting standards (IFRS), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS

Earnings/(loss) per share

 
                                                                                2021             2020 
 Basic and diluted 
 Profit/(loss) for the year and earnings used in basic & diluted EPS    GBP2,004,000   (GBP3,763,000) 
 Weighted average number of shares - basic                               710,852,000      420,757,000 
 Weighted average number of shares - fully diluted                       744,056,000                - 
 Earnings/(loss) per share                                                     0.28p          (0.89p) 
 Fully diluted earnings per share                                              0.27p                - 
---------------------------------------------------------------------  -------------  --------------- 
 

Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year. Due to the loss in the prior year the effect of the share options was considered anti-dilutive and hence no diluted loss per share information has been provided.

Events after the reporting date

On 25 March 2022 24,00,000 new ordinary shares of 0.1p were issued to settle the deferred consideration payable on the acquisition of The Genome Store Limited of GBP240,000 after all performance milestones were met.

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