EKF Diagnostics Holdings PLC on Thursday said it has sold subsidiary Advanced Diagnostic Laboratory LLC in a management buyout.

In February, the Cardiff-based diagnostics and central laboratory assay maker had said it expected 2022 earnings to be below market expectations as it shifts its business away from Covid-19 tests.

Noting the anticipated results for 2022, which it plans to release in late March, EKF said ‘the transition to non-Covid revenues in both contract manufacturing and laboratory testing is progressing, but is taking longer than originally anticipated.’

EKF Diagnostics at the time said it expected adjusted earnings before interest, tax, depreciation and amortisation to be slightly below market expectations due to underperformance in contract manufacturing and laboratory testing. Net cash as at December 31 was 42% lower at £11.4 million from £19.6 million a year prior.

On Thursday, EKF said it now has disposed of its subsidiary Advanced Diagnostic Laboratory, as part of its transition towards generating non-Covid revenue. It said that the transition has presented ‘certain challenges following the rapid drop in demand for Covid testing worldwide since Q1 2022’.

The subsidiary has been sold to Medical Management Partners LLC, an entity that is 100% controlled by Stan Crawford, a member of the management team of Advanced Diagnostic Laboratory. No sale price was disclosed.

EKF Diagnostics explained that Advanced Diagnostic Laboratory will contribute a loss in 2022, and this had forced EKF management to review the business and its rationale in the context of the company’s wider strategy.

‘The disposal will provide cost savings to EKF, allow management time to focus on growth initiatives in other areas, and also simplify the reporting structure of the wider group,’ it added.

Shares EKF Diagnostics were down 2.7% to 25.79 pence each in London on Thursday morning.

Copyright 2023 Alliance News Ltd. All Rights Reserved.