News blog
Omega Diagnostics
- BY: Andrew Hore |
- POSTED: 26/11/2010 |
Omega Diagnostics has pushed up its interim profit even before it completes the takeover of the allergy testing business of Allergopharma Joachim Ganzer.
Revenues grew from £2.87m to £3.3m in the six months to September 2010, while underlying profit jumped from £263,000 to £403,000. That profit figure excludes the £262,000 of acquisition costs in the period plus non-cash items in the income statement.
Omega produces diagnostic tests for food intolerances and infectious diseases. The former currently accounts for around one-half of revenues and was responsible for the majority of the growth in revenues. There was growth all around the world.
Omega is paying £5m for the allergy testing business of Allergopharma, which has been a small part of pharma company Merck and has therefore been neglected. Revenues have been flat at around €4.3m a year. They are mainly in Germany but there is scope to sell the testing products in more countries around the world.
This is a high margin business – gross margins are more than 75% - with one major competitor in the form of Phadia. The acquired business has 600 allergens, which is more than Phadia. The allergy testing market has historically grown at around 8% a year.
Net debt was £852,000 at the end of September 2010. Most of the £7.75m gross (£6.7m net) raised in a placing at 12p a share will go on the acquisition. The rest of the cash is likely to go on investment in automating the company’s tests. This includes using the IDS-iSYS machine developed by Aim-quoted Immunodiagnostic Systems Holdings. Omega is also developing an automated version of its Genarrayt system.
At 17p a share, Omega is valued at £3.51m prior to the completion of the reverse takeover and placing. It should be valued at around £14m when the deal is completed after the shareholder meeting on 17 December.
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