Profit warnings have become a regular feature of Immunodiagnostic Systems’ (IDH:AIM) business in the past few years.
The latest warning on Thursday morning that revenues will miss expectations for the year to 31 March wiped 11% off the medical testing kit-maker’s value to leave it trading at 132.5p a share.
The problem stems from a client described as a ‘global healthcare group’ deciding to use another company’s equipment instead.
This is the latest setback for a company that is paying the price for relying on the success of a single product, namely a vitamin A test.
The North East-based company has struggled to reclaim lost ground in the diagnostic market and the latest of several chief executives, Patricio Lacalle, has decided to turn to the academic research market instead of targeting companies.
He still champions developing new tests, but is now focused on being a partner for universities and specialist laboratories.
Although the healthcare group is not part of the target market, it still takes vital sales away from the struggling business.
The previous chief executive left the company months after his ambitious plan to double revenues within five years through installing 1,000 IDS-iSYS testing devices suffered a difficult start in June 2014. There appears to have been little improvement since.
The prelims due on 22 June look like making difficult reading for shareholders. A positive update on the new strategy will be a must to reassure investors.