- Revenue up 40% driven by rapid adoption of subs
- Average revenue per brand £0.3m- potential for £3m
- Two-year investment plan to drive enhanced growth
Diagnostics commercialisation platform provider Diaceutics (DXRX:AIM) delivered a 40% increase in full year 2022 revenues to £19.5 million driven by a significant shift to platform-based subscription contracts which jumped nine-fold, representing 35% of the group total.
The rapid adoption by pharma companies to the subscription model greatly increases revenue visibility with the order book climbing to £16.9 million from £1.74 million in 2021.
Despite investing heavily in the business, the company generated pre-tax profit of £0.6 million and ended the year to 31 December 2022 with cash of £19.8 million and no debts.
Diaceutics issued a positive outlook saying accelerated investment is expected to enhance growth and enable the company to ‘seize the opportunity to become the primary commercialisation partner for pharma or biotech launching a precision medicine’.
The shares reacted positively, rising 6.5% to 107p to take year-to-date gains to 40%.
WHAT DID THE COMPANY SAY?
CEO Peter Keeling said: ‘We have delivered another year of significant financial and operational progress, increasing revenues materially ahead of initial expectations, driven by the demand from our pharma customers for our expanded offering of platform solutions.
‘Our ongoing transition to a subscription model has significantly enhanced our order book visibility, while the strong balance sheet gives the board great confidence that the group is well positioned to pursue its accelerated investment strategy.’
Growth was by driven by expanding the customer base with the company adding 15 new pharma brands during the year to 43 and driving average revenue per brand up 40% to £0.35 million.
Diaceutics has identified a current opportunity to generate £1 million per brand which has the potential to grow to £3 million over time.
In January 2023 the firm announced enterprise level engagements with two pharma companies worth a combined value of $7 million over two years.
WHAT ARE THE EXPERTS SAYING?
Canaccord Genuity said the strong platform adoption in 2022 underpins its forecasts for strong growth: ‘Following the two-year investment programme, we expect sales growth to accelerate to 30% (from 20% in FY23E) and adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) margins to return to ~20%.
‘As the cost base neutralises and it starts to realise operational leverage as the platform model scales, we believe margins could trend towards ~30%.’
