Novacyt to Revise Down 1st Half Revenue Due to UK Covid-19 Contract Dispute -- Update

By Sabela Ojea

Novacyt SA said Thursday that its revenue for the first half of the year will be lower than originally announced as a result of its dispute with the U.K. Department of Health and Social Care over a supply contract, and that it will also book higher costs.

The clinical-diagnostics specialist, which is listed in France and the U.K., said in April that the parties hadn't reached an agreement to extend a contract for the supply of Covid-19 diagnostic kits and other products.

On Aug. 18, the company reported first-half revenue of 94.7 million pounds ($131.1 million).

But Novacyt said Thursday that it won't recognize revenue of almost GBP40.8 million pounds booked in the first half in relation to the contract.

The remaining first-half revenue of GBP54.0 million from non-DHSC sales remains unchanged, Novacyt said.

The company is also booking an exceptional one-off cost of GBP28.9 million, to write down inventory that it had built in anticipation of further DHSC demand and to terminate agreements with third parties regarding supply that is no longer required.

The company is also recognizing manufacturing costs of GBP6.9 million related to these disputed sales, it added.

The accounting treatment of the DHSC revenue and costs in the first half doesn't change the company's legal position or rights in relation to the dispute, Novacyt noted.

Write to Sabela Ojea at [e-mail]; @sabelaojeaguix

(END) Dow Jones Newswires

September 16, 2021 05:35 ET (09:35 GMT)

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