Ekf Diagnostics Share Discussion Threads

[mirandaj] 25/11/2020 10:35

Some of us are forgetful...

[wan] 25/11/2020 09:14

Surprised how no one has highlighted the RNS announcement from Source Bio today!

Wed, 25th Nov 2020 07:00

RNS Number : 4087G
SourceBio International PLC
25 November 2020

SourceBio International plc

("SourceBio", the "Company" or the "Group")


Update on key COVID-19 testing contracts, capacity

& Trading Update

SourceBio International plc (AIM: SBI), a leading international provider of integrated state-of-the-art laboratory services and products, provides the following update on its testing contracts, its capacity for COVID-19 antigen RT-PCR testing services and an update on trading for its current financial year, ending 31 December 2020.

Highlights

· Renewal of testing services contract with Spire Healthcare Limited ("Spire")

· Over 330,000 COVID-19 tests provided under existing Department of Health and Social Care ("DHSC") contract

· Public Health England's ("PHE") National Microbiology Framework now expected to be awarded to successful applicants from February 2021

· SourceBio continues to build capacity for COVID-19 testing services to support expected further demand into 2021

· Application for National Microbiology Framework has been submitted on the basis of building testing volume capacity above management's earlier expectation of 10,500 tests per day

· Award of NHS England framework for cancer testing services

· The Group now expects to report revenue of approximately £50.0m (2019: £21.2m) and EBITDA of approximately £14.0m (2019: £3.0m) for the year ending 31 December 2020

Since May 2020, SourceBio has provided COVID-19 testing services as part of its newly formed Infectious Disease Testing business unit. These services passed all of the auditing requirements of the NHS and the DHSC in April 2020.

Two key customers for the Company's COVID-19 testing services are the DHSC, under which SourceBio has been contracted to contribute to the critical national COVID-19 testing requirement, and the private healthcare group, Spire. The Spire contract was renewed in early November, as expected, and under the DHSC contract, which is set to expire on 12 December 2020, the Company has successfully processed over 330,000 COVID-19 PCR antigen tests. The DHSC contract is expected to be extended through Public Health England's ("PHE") National Microbiology Framework Lot 4 - Clinical Laboratory Diagnostic Testing Services ("Lot4"), however this framework is now not expected to be awarded until February 2021, although this may be subject to further change, having originally been expected to be awarded in November 2020. This delay is expected to impact testing volumes into Q1 2021 but the Board remains confident in its financial outlook for FY21 as a whole.

Following the Company's Admission to AIM in October 2020, funds have underpinned further scale-up plans for COVID-19 testing and as a result the Company has submitted an updated Lot 4 application based on Directors' assumption of increased testing capacity beyond their original target of 10,500 tests per day. The Directors believe that the Company is well placed to bid for this framework given its capability, track record and high level of accreditation.

In addition, the Company announces that it has been accepted into the Increasing Capacity Framework Agreement for cancer testing services to NHS England. This Framework is designed to reduce the significant backlog of elective surgeries impacting the NHS due to the COVID pandemic and is expected to support the continued growth of the Healthcare Diagnostics business unit in 2021.

Due to the considerable ramp-up in COVID-19 testing revenues delivered in the second half of the year SourceBio expects to report total revenue of approximately £50.0m (2019: £21.2m) and EBITDA of approximately £14.0m (2019: £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.

Jay LeCoque, Executive Chairman, said: "A key part of our investment case has always been our positioning to deliver against an unprecedented COVID-19 testing opportunity. The funds from our IPO are enabling us to further scale our COVID-19 testing services, to successfully deliver against expected increases in future testing. We believe we are in a very strong position for the Lot4 bid, and when awards are made in the New Year we have the potential to increase our testing volumes over the course of this framework."



Source Bio shares up (slightly).

[tongosti] 25/11/2020 09:04

Can one please one remind us how much unlocked value is assigned to Trellus? LOLIf we close below 58 then 46 is the next immediate target. Don't blame me fellas - blame Mr Market!

[wan] 25/11/2020 08:25

The new Longhorn website provides a better insight to other testing capabilities and opportunities beyond Covid-19.

But I also note that analysts in the US are starting to pencil in durable Covid-19 testing revenues in perpetuity post-pandemic, albeit at a reduced level to current revenues. It will then thus be interesting to see what effect this has in the availability of 'other' sample collection devices authorised under EUA that will no longer be authorised when the state of emergency is no longer in place.

I would also add that Covid-19 testing revenues in the US are forecast to increase significantly due to the current and unprecedented surge in Covid-19 cases, and sadly that the subsequent demand is being seen as extending well into the first half of 2021.

[wan] 25/11/2020 07:59

Btgman...You may be right. Royal Mails postal collection contract has be running for a number of months already, so this latest contract news is an extension/expansion.

I note that on EKF's postal kit web page it states "coming soon", so it would appear to imply that the kit was not available for the contract previously (so not included in previous Trading Updates?), or even if it's available now! So, arguably any such orders might not have been included in the recent upgrade.

Recall that last month EKF highlighted that it materially increased its manufacturing capability/capacity, which at the very least implies durable demand -

The Company has now started production at its facilities in Barleben, Germany, and will soon be moving its current Penarth-based manufacturing lines in Wales to a new larger facility in Llandough, Cardiff, which is over 600 sq. metres in size. This represents a 100% increase in manufacturing area.

[btgman] 25/11/2020 07:21

Thanks wan absolutely fascinating. One thing I would say given the Royal Mail numbers I doubt there was very much in the last upgrade if anything at all. It would be good to get some clarity from EKF
AIMHO
GLA
BTG

[wan] 25/11/2020 07:07

Mirandaj...Yes, as I said the similarity is no guarantee, and the display of the logo can be used in different ways to comply -

[mirandaj] 25/11/2020 06:53

Wan
I'm glad you posted that as I saw the Royal Mail kit box last night and did wonder.
It looks the same to me although it says this so looks to be a standard:

UN3373 postal box with security seal for sample return

Sample transport box for mailing of category B biological samples to UN3373 P650 packaging standards.

[wan] 25/11/2020 06:47

Re postal testing kits:

The following shows a photograph and a video, presumably of the actual postal kit-


I also note the following question -
How safe is it for postmen and women? Is there a risk they will get infected?
The health of our colleagues is our first priority. Royal Mail has worked in partnership with the Chief Medical Officer to ensure that the process is safe for our colleagues.

The following also shows photographs of EKF's postal kit -


The similarity is obviously no guarantee it's EKF's, but as I already suggested and indeed the Royal mail video tends to confirm, the Royal Mail does not operate cold chain logistics.

It may be that any postal supply contract was already contained within the Trading Update for the full year, but one assumes it could still increase.

[wan] 25/11/2020 06:11

Longhorn Vaccines & Diagnostics new website (so much better!) -



I note that for the ATM product Longhorn is accepting orders for research use only, which perhaps fits with CEO's comment that some has been sold in the US, but with Thermo Fisher's marketing stating the availability of the product due to recent demand, also suggesting that there is already strong underlying interest in the attributes of ATM. Clearly, the FDA EUA (filed early September) will be an important factor in terms of large volume sales.

[btgman] 24/11/2020 22:22

So the Royal Mail has won the moon shot postal testing contract. Does anyone have any thoughts as to which type of kits they will be collecting.
AIMHO
GLA
BTG

[speedsgh] 24/11/2020 15:37

#EKF in third place...

New Update: Fund managers' favourite UK smaller companies -

Our fund managers’ best ideas tables constitute the top five holdings of a selection of top performing funds, or the three most overweight positions. The data is based on the funds’ most recent portfolio disclosures to Morningstar.

Download table -

[mirandaj] 24/11/2020 14:15

EKF on report lists going forward

[wan] 24/11/2020 08:14

And I am not taking my eye off of testing, which is expanding everywhere I look! Including Grant Shapps announcing/confirming rapid testing to enable travel and the PM announcing the launch of a major community testing programme, offering all local authorities in tier 3 areas in England a six week surge of testing.

[wan] 24/11/2020 07:56

Nov 16, 2020,10:57am EST
Where Telehealth Is Headed In 2021

But while the spotlight on telehealth has been mainly related to its usefulness for infectious diseases, there are many other developments occurring in the industry that are on track to revolutionize the way many of us seek care.

Here’s a look at where telehealth is going in 2021.

Care management for chronic disease

In the earliest days of the pandemic, many patients with chronic or ongoing health issues delayed care due to concerns over catching Covid-19 or the reduced availability of health services due to an overflow of coronavirus patients in their area.

Now that hospitals and medical offices know better how to treat those coronavirus patients, non-emergent and ongoing care for chronic diseases like lupus, autoimmune disease, and age-related diseases is picking up once again.

Full story -

[wan] 24/11/2020 07:54

Nov 2, 2020,09:20am EST
It’s Time To Go All In On Telehealth

The COVID-19 pandemic catapulted telemedicine from an underused, value-added offering in employee benefits plans into the safest, most secure and sometimes only means of accessing health care. Now, as businesses move to reopen, employers need to resist reverting to the traditional brick-and-mortar health care model — and its escalating costs.

Instead, companies large and small should lean into telehealth as a way to support employee wellness and productivity, reduce absenteeism and protect the bottom line.

“While employers have been implementing more virtual solutions in recent years, the pandemic caused the pace to accelerate at an astronomical rate,” said Ellen Kelsay, president and CEO of the organization, which advocates for large employers in health care policy. “Virtual care is now garnering growing interest and receptivity from both employees and providers who increasingly see its benefit.”


5. Embrace the future of e-health. Some large employers are exploring primary care models that replace fee-for-service, encounter-based care with a more comprehensive, patient-centered health management approach. Look for a provider that goes beyond the discrete virtual visit to deliver e-wellness and disease management programs. These programs should include efforts to regularly connect with employees via email and text messages to promote positive behavior changes and treatment adherence.

The coronavirus pandemic has pushed the once-niche telemedicine industry into the mainstream, creating a potentially lasting shift in health care. Companies have responded but will need to be even more creative, nimble and open in managing employee benefits. And CTOs will be at the center of this mix as health care offerings move rapidly to the next level.

Full story -

[wan] 24/11/2020 07:44

As I said further above, telehealth/digital health is a hot sector, not least spurred on by the pandemic. However, many experts have concluded that telehealth/digital health is here to stay and is likely to experience continued growth. Hence, I am very much looking forward to my exposure to this sector!

Dividend yield potentially looking very healthy at these levels ;-)

[rivaldo] 24/11/2020 07:09

Great to see Trellus advancing nicely, with the IPO set for next year and the in-specie dividend to shareholders about to happen.

Anyone who wants in on the IPO had better buy in here soon :o))

[tongosti] 23/11/2020 19:57

If you know about it, Mr Market knows about it as well. In other words, it has been fully discounted and that piece of info is already in the price. Markets move on rumours and stall (or worse) on news - sure as day have read it somewhere.

[wan] 23/11/2020 16:22

Maybe Jack, but don't discount news on orders for antibody testing and antigen testing (new PrimeStore ATM), neither have specifically featured yet in terms of orders.

[jacks13] 23/11/2020 15:28

Markets have changed wan in the past twenty years or so. With the advent of internet dealing and the emergence of spread betting there is a stronger bias towards trading. Even those who style themselves as investors now trade in and out of positions with ease. This didn't happen when dealing for PIs was exclusively by telephone or a visit to the local bank, market information was via teletext or newspaper and dealing costs were eye-wateringly expensive.

We can't rule out further news announcements, but for the time being the next big announcement seems likely to be the preliminary year-end results around late March or early April. So little wonder that the share price has gone a little cold. For now at least.

[wan] 23/11/2020 15:03

Thanks Jack, that's quite similar to my workings/findings.

It perhaps indicates why the CEO(having inside knowledge of growth prospects/orders, any likely effect from vaccine authorisation, as well as the strength in rebound/growth in the core business) thought the pullback was well overdone.

Not to mention that Chris Mills thinks there is nothing in the current rating for Trellus (or the Mount Sinai partnership), nor indeed PrimeStore, which has quite a lot of potential beyond its Covid-19 limelight.

Anyway, it gives us a hint that the next push onwards might not meet much resistance if growth can be maintained. However, it appears the market wants more supporting information before advancing back towards the all-time high, or through it if growth is again revised up (cue antigen testing?).

[jacks13] 23/11/2020 14:12

Assuming a Dec 2020 ebitda of £24.4m and at today’s enterprise value of approximately £275m we get a current multiple of 11.3 ev/ebitda. That is based on today’s share price and assumes the cash and debt positions to be the same as they were at end-Dec 2019.

Today’s share price is approximately 62.5p, so assuming the market awards an uplift to a new ev/ebitda multiple of say 14.7 this would imply a revised share price in the order of 80p

I think that a 14.7 ev/ebitda multiple is a modest target and could be exceeded on the back of the projected 3.5p eps forecasts. An 80p share price would imply a p/e ratio of 23, again not an exacting target in the circumstances.

But to answer your question wan and from the quick research I’ve done today the medical equipment sub-sector appears to trade on an ev/ebitda multiple typically in the range 11 to 15 times. I don’t believe your above projections to be overly optimistic and probably understate the share's potential.

[wan] 23/11/2020 13:51

Adding to my post above, obviously Chris Mills thinks EV/EBITDA multiples are particularly relevant/useful (he quoted the multiples achieved in a recent exit).
obviously I subtracted £30m of cash, which one assumes could be used for capital investment (not to mention there's not much by way of long term debt). I assume by the following that private Equity also use EV/EBITDA -

Coronavirus boosts M&A activity in the healthtech sector, says Hampleton Partners

08/10/2020

The first Healthtech M&A market report to be published by Hampleton Partners since the outbreak of Covid-19 stresses the serious impact of coronavirus on healthcare systems around the world.

Healthtech valuations have been high for the best part of the past five years. In the first half of 2020, the trailing 30-month median EV/S multiple dipped slightly to 3x following a 4x peak in 2H2019. Despite previous volatility, EBITDA multiples are still very high, coming in at 17.7x in the first half of 2020.

This growth has been driven particularly by high valuations in the Healthcare Vertical Software segment which saw 88 deals closed in the first half of the year – a 20 per cent increase on the last reporting period.


Food for thought...I am not suggesting we should use a multiple of 17.7 (at this stage), but that would equate to a share price of circa 95p. Tone it down for example to what Chris Mills suggested was a moderate multiple of 15 and that would give a share price of circa 80P, which is close to where we were before the pullback.

Ultimately though, no doubt reliant upon what EKF says next!