Abingdon Health (LSE:ABDX) Q2 2026 Earnings Call

0:00 Good morning ladies and gentlemen and welcome to the Abingdon Health Plc half year results investor presentation. Questions are encouraged, they can be submitted at any time via the Q&A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself, however the company can review all questions submitted today and will publish those responses where it's appropriate to do so on the InvestorMeet company platform. Before we begin, we would just like to submit the following poll, and if you'd give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to Executive Chairman Chris Hand. Chris, good morning, sir.

0:37 Good morning, and good morning, everyone. Thank you for joining this half-year results presentation of Abingdon Health. These are the results to the 31st of December, 25. So I'm Chris Hand. I'm one of the founders of Abingdon Health and Executive Chairman, a role I took up previously. about a year ago to allow my co-founder Chris Yates to focus on our global commercial activities and our USA expansion. My background is in medical diagnostics 30 years plus in medical diagnostics and specifically rapid testing which I did both within Abingdon and previously at a company called Cozart where we specialised in drugs abuse testing using lateral flow. I'm joined today by my colleague Tom Hayes who's CFO

1:25 Thanks Chris. Good morning everyone. I'm Tom Hayes. I joined Abingdon Health just over 12 months ago now as Chief Financial Officer. Previously I was Group Finance Director for another enlisted business, Northern Bear Plc, for circa 10 years. My background originally is Chartered Accountancy and Corporate Finance Services.

1:50 So who we are, our mission is fast tracking diagnostics and devices to improve lives. We've over the past few years, we've expanded what we offer to our customer base. And you'll see as we go through the presentation that we're offering a full service offering to our customers from regulatory through to quality and analytical services across both diagnostics, which is our speciality. We're a specialist lateral flow testing company, but also increasingly in other areas of med tech. The company was founded in 2008. We're headquartered in York and we have additional laboratory facilities in Doncaster, also in Yorkshire. And we've recently opened, about a year ago, developments and commercial offices in Madison, Wisconsin, and we'll talk to you about our expansion at that site throughout the presentation. So you can see pictures of the three sites there. The full service offering is increasingly important and we're starting to differentiate ourselves from other lateral flow and diagnostic CDMOs by being able to offer this full service offering rather than just the development and manufacture of test kits and we're active in multiple sectors whether that be human health or veterinary infectious disease testing and also adjacent markets such as agritech and environmental

3:20 Okay, so just moving on to a financial summary. So obviously we published our half year results this morning. And as a quick overview, firstly with revenues, we've reported total revenues of 4.5 million for the six months, including an element of grant funded income, which is significant growth on H1 in the previous year. We reported an adjusted EBITDA loss in the period of 1.7 million, which is on the back of continuing investments in the overhead base to support future growth. And we said that we expect results to be weighted towards H2 in terms of higher revenues. And we're targeting a position that's EBITDA profitable and operating cash positive.

4:09 also just on the right hand side to note that we had cash and cash equivalents of 3.7 million at the end of December and that's partly on the back of the fundraiser that we completed last October which raised 3.2 million net for investments in the US operations and also for working capital purposes to allow us to execute the larger contracts that we've been winning

4:33 Commercially and operationally we've made good progress in half one and that's continuing into half two of the financial year. We've got continued strong revenue growth across our contract development and manufacturing offering and as I've touched on earlier that's been increasingly important to us as we're adding in now the regulatory service offering and the start to finish program management for our customer base this has been validated by us winning several larger contracts over the past year and the most recent one we announced on the 12th of March to as I say not only develop a lateral flow test but to do that either in parallel with the development of a pharmaceutical with our customer or to program management a larger program across multiple partners Regulatory services is an important addition to our offering.

5:35 We've historically offered that but now we've got a much stronger base of regulatory support following the acquisitions of two companies back in for IVDology and compliance solutions life sciences so now we've got 40 plus regulatory experts and of the 125 total staff and you can see on this slide our regulatory services is performing well with a 49% uplift to 1.9 million for the half out of the 4.5 million total that Tom's just noted Operationally, we are continuing to expand in Madison. We opened our development laboratories and commercial office in Madison, Wisconsin on the University Research Park about a year ago, April last year.

6:29 and based on customer demand we're now adding manufacturing to that site so we're adding four manufacturing laboratories right next to our development sites it's a very good site for us it's very flexible and we can we can add those manufacturing labs which we're in the process of doing right now and that will allow us to during this half look at adding performance evaluation services but also getting ISO accreditation which is an important part of the whole manufacturing offering A couple of interesting initiatives that we've been continuing to progress during the first half. AppDx is a system we worked on for a while.

7:15 It's a smartphone app. It's another tool in the toolbox to offer our CDMO customers. It's pattern protected. Another pattern was added to the portfolio in the half, a European pattern to go alongside those we have already in the USA and UK. And that app DX is something that allows reading of a lateral flow test to avoid the need for a visual interpretation. So it's like a reader, a mobile reader effectively. And as I say, this is another tool that we can offer to our customer base as part of the whole CDMO offering. And then an interesting initiative we started with a Midlands based company called Symbiotex.

8:01 They've been supplying us with material derived from red seaweed and we've been using this to develop lateral flow casings which removes the use of plastic and I'll come in and tell you a bit more about how that works and what we're trying to address in the sustainable use of red seaweed rather than plastic. and then we've got a very strong management team at Abingdon which we've established over the past few years that's been further enhanced lately by the internal promotion of two of our managers Candice Vendett-Torale who's been appointed to the role of Chief Delivery Officer and Natalie Thrush who's been promoted to Chief of Staff both of which are important roles which I'll touch on further into the presentation I mentioned the recent contract award.

8:59 We're winning a number of these over the past half and past year and into this year, this half too. This one is a two and a half million contract for the project management and expert technical support of a large international programme. The majority of the revenues of that two and a half million will actually flow into the next financial year, so starting from July so into financial year 27 and it will commence basically now so we'll start the program now and it will go into 27 for an 18 month program which as with other of the similar programs we're doing of this type gives us good visibility of revenue beyond the short term So what we're doing with that program is we're doing end-to-end project management.

9:54 We've got a very strong project management function now which I've been talking about allowing us to offer this one-to-one stop. one-stop shop from feasibility through to design and development and verification and validation. It leverages not only our lateral flow test developments but our expertise in clinical diagnostics and the whole regulatory and quality pathways. So we said it's strategically important. It's important because it validates what we're doing in terms of this one-stop-shop offering and it brings us into a clinical self-test sector which is an important very large sector for natural flow and it demonstrates our expertise managing complex multi-stakeholder international diagnostic programs. So it's a validation of what we've been promoting to our CDMO customer base.

10:55 Okay, so just moving on to a financial summary. So this slide is a quick recap on the H1 numbers with a bit more detail. So we've got the revenue, EBITDA and cash at the top. The graph on the left hand side is just showing how the revenue breaks down by segment compared to H1 in the previous year. So the key thing from this is that the growth has really come through two revenue segments. One's the contract development work and the other's the regulatory side of the business. And really both of those are on the back of the significant contracts that we've won over the past 12 months. The graph on the right hand side is just showing how revenue breaks down by geography. And that's based on where the customer's located rather than where the work's been done.

11:44 but it shows that the three key markets for us as in previous periods are the UK, Europe and then the USA. We'd expect those markets to continue to be our three key markets, but given the focus on the US, we'd also expect to perhaps that segment to grow as a percentage of group revenues over time. Okay, so just moving on to the next slide. So this slide is just a, sorry just hold on one second. So this slide is just an overview of the revenue on a multi-year basis, just showing how it's grown over time.

12:29 So the reason we started this slide with FY22 is that was the year that the business really regrouped post-COVID and started generating revenues on non-COVID contracts. And it's really showing that we've grown from 1.8 million in FY22, excluding COVID-related revenues, up to 8.4 million in FY25 and then we've got a forecast of 12.2 million in FY26. And that's really showing that the focus of the growth has been a couple of things. Firstly, the contract development revenues have grown quite significantly over time and we're expecting that to continue in FY26 on the back of some significant contracts we've won over the past 12 months. And then also the other thing to note is that we did make two acquisitions during well during FY24 and FY25 which is CS Life Sciences in August 24 and IVDology in May 24 and both of those are focused on the regulatory segment.

13:40 Okay, so this slide is just a quick summary of announcement we made last week, which is that the shares are going to be listed on the OTC QB market in the USA. We've completed our application and we're expecting that to go live next month in April. and really three, probably three key points around that. The first one is that we're expecting that to improve access to Abingdon shares for US investors because it will allow them to trade during US working hours on the OTC market. We're hoping that will give a benefit to liquidity in Abingdon shares. And thirdly, just to emphasize that it's a relatively low cost of doing that and there's no significant additional regulatory or process burden to doing that.

14:38 So I mentioned we've got a strong management team at Abingdon. That's been further supplemented by the internal promotion of two of our leaders, Natalie Thrush who's now Chief of Staff as well as Head of HR. Natalie covers the linkage across all our activities from throughout the group. She's had 20 years experience driving operational excellence across manufacturing and pharmaceutical sectors, and she's an expert in change management and organisational development. So that's aiding us at this point in our growth, as is the appointment of Candice Bendett-Twoley to Chief Delivery Officer. I've been talking and will continue to talk about our larger programme program management offering that we're bringing through in various larger contracts.

15:33 Candice manages that program management function across the group. Both Natalie and Candice have been with the company for five plus years. and Candice's expertise is in quality and regulatory as well as running our analytical site in Doncaster. So I think it's great to have people like this in the management team that we can promote to these extended roles and we're well positioned for the next phase in our growth with our current management team. So back to our speciality, lateral flow technology. It's evolving and it has evolved both within and post Covid. People don't really talk about Covid that much with regard to lateral flow now and certainly from our point of view what Covid did was create better awareness of lateral flow and what it can do.

16:28 The technology evolved and it's been in use for a long time in my personal experience dates back 25 plus years in lateral flow testing as does the experience of our CTO Nina Gareth and COO Mark Jones they've got a breadth of expertise in lateral flow what we're offering now is a very Comprehensive testing system for points of contact whether that's a single biomarker or multiplex testing So measuring many markers at the same time it can be qualitative or you can quantify the results both with a either a reader or Increasingly with smartphone apps which such as our app DX and we can apply the sample to many sample types so whether that's blood or urine, saliva, pretty much anything that you can create a liquid from you can run on a lateral flow test And they come in a number of formats, different particles create flexibility. We note fluorescent labels on this slide, which gives a very high level of sensitivity to be able to detect very low levels of substances.

17:37 And as I said, they can be visually read, they can be interpreted via a reference card or with a reader or a smartphone. So it's basically to From an end user's point of view, the tests are very simple to use. Our job as a CDMO is to do the complex chemistry and put these into a device which is very user friendly. One of the initiatives we're doing alongside our CDMO offering is to create a more sustainable use of material so you can see on this slide the size of the market so the natural flow market in 24 2024 was 8.5 billion and that covers the majority of that is clinical testing which includes pregnancy testing and 1.5 billion of that in in 24 was pregnancy testing and that's expected to grow significantly over the next 10 years or so to the order of 26 billion US dollars. Now what that does from a from a plastics point of view is with the current 2 billion plus lateral flow tests manufactured annually with each of those being 10 to 12 grams of plastic you've got an awful lot of plastic waste which generally can't be recycled so that's 20 000 tons of plastic waste so by us in partnership with Symbiotics who I mentioned earlier who are providing us with material we can injection mold these cassettes and offer them as a additional

19:11 tool to our customer base whether that's for pregnancy test type, midstream urine devices that you can see in the middle of the slide here, or a more standard lateral flow. We can use our standard injection molding techniques to produce these. So I think that's a very important initiative and we're getting a lot of interest from our customer base on the use of this type of substance. So we've spoken of larger contracts we're winning over the past year or so and we've spoken of the one-stop shop offering. One particular area where this is resonating is in the field of companion diagnostics where a pharmaceutical or biotech company is required to develop a diagnostic test alongside the development of their therapeutic products and to allow data to be collected at the point of care or point of contact.

20:12 Lateral flow companion diagnostics require a lot of validation. They've got to demonstrate clinical relevance and linkage to the drug and we are synchronizing our development and approval processes alongside our pharma or biotech customers to basically synchronize the companion diagnostic development and regulatory approval with their drug process. And our multidisciplinary teams that we now have in place cover all of these areas. So I think what we're doing with this offering is differentiating ourselves now from other lateral flow or diagnostic CDMO competitors by bringing this full, highly skilled service offering to our customer base and that's allowing us to win these larger, longer term programs.

21:18 and companion diagnostics can be applied to many different therapy areas. The ones we have listed on this slide are ones that we're actively involved in. So that's anything from oncology or cancer testing through to infectious disease, cardiology, Neurology or also inflammation and autoimmunity so each of these areas where we're into different degrees are active in but there are others beyond this I think it just shows the breadth of the market opportunity for us to offer these this full service offering The next slide shows how that works. So I've spoken of the regulatory synchronisation. So as well as developing the lateral flow assay, which we're doing in our York labs and also increasingly in Madison, you can see from this slide we're doing it, as I say, in parallel with the drug development.

22:15 So the first phase from a CDX program is to identify the appropriate biomarkers which is done alongside phase one of the drug development and then we develop the lateral flow assay again in parallel analytical and clinical validation is done again from Abingdon we use our Doncaster performance evaluation laboratories to do that and then that goes all the way through to the FDA or IVDR submissions to get regulatory approval. So again, it's all managed and programme managed from Abingdon and in very close association with our customer.

23:02 A bit more detail on how that works, which I think is useful to understand the different elements of what we offer. So again, drug timeline is at the top of this chart and you can see that the programmes can take multiple years, so they're generally of the order of 18 months to two years. Some can be longer, it depends on the complexity of the programme. This one is showing a longer term development and manufacturing period. On the CDX development, the darker green on the slide, what we're doing in-house, again at York or Madison, is the proof of concept the optimization and the scale-up for manufacture at that point we move to a stage known as design free so the product's ready to move through to a to technical transfer or TT that's the scale-up process to allow manufacture where we make multiple batches and then the design verification performance evaluation are all done to generate data alongside the clinical data and operationally The same clinical studies can be used to evaluate both the drug and the diagnostic in parallel.

24:22 So that's the sort of program that we're actively engaged in with a number of the programs we're working on at the moment. So USA, we opened the facility just less than a year ago now in Madison, Wisconsin. We've touched on the fact that we're expanding there as we speak. A number of our clients are US based and increasingly so now that we have the development capability in Madison. We have eight people in in our development and commercial offices there in Madison now. That's eight from a total of 125 across the group.

25:08 We've added six highly skilled scientists to that group over the past few months. And we won't need to add many more people for now for manufacturing we're recruiting several manufacturing experts as we as we expand our manufacturing at madison and we're adding four manufacturing labs right next to our development lab so it's very convenient and efficient for us and we raised 3.2 million in q4 calendar q4 last year to aid that expansion but also to aid cash flow to manage some of these larger projects that we've been talking about. So to summarise, the revenues were 45% up in half one versus the same time last year.

26:02 The EBITDA loss was reduced slightly to 1.7. We've said that we anticipate EBITDA positive and an operating cash flow positive in half two, with the loss in half one being due to increased investment in our infrastructure and scale up. The contracts we're winning, I think, validate our strategy. The two and a half million contract we announced from the 12th of March is one of those. And to satisfy a customer pull in the USA, we're adding the expansion of manufacturing, which is underway at our site in Madison. Tom's mentioned the OTC QB listing, important to know that's a route to AIM so it's not an alternative to AIM.

26:53 The OTC QB trading is a route for US investors to buy AIM listed shares and that's planned to happen in April. and then regarding cash at the end of the period where 3.7 million cash following the 3.2 million net fundraise in October and as I've said we are anticipating a cash flow positive an operating cash flow positive position in H2 so that concludes the presentation we're happy to answer questions I know we have some in already so Perfect. Chris, Tom, if I may just jump back in there.

27:39 Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your investor dashboard. Guys, you can see that we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions. But, Paul, at this stage, sir, if I may hand over to you to chair the Q&A with the team, and if I pick up from you at the end, that would be great. Thank you. Thank you. Thank you very much, everyone, for your questions, for the pre-submitted ones and those that have come in during the presentation. We've received a few questions regarding what your customers find out from home FOFH.

28:27 There's quite a few questions on that, so I wondered whether you could just give us an overview that maybe addresses those.

28:33 Yes, sure. Find Out From Home is a company specialising in self-testing for infectious diseases. It's an independent company. Abbott & Health has a shareholding in it, and what we've said I think at the time of our trading update earlier in the year is that Find Out From Home are currently involved in a funding process that's independent of Abingdon and therefore currently we don't have revenue for Find Out From Home in our forecasts but obviously we maintain our guidance on forecasts but Find Out From Home aren't in there but yeah they're they're raising money to continue the development and regulatory approval process and that's being done independently although obviously we offer help if we're asked to so yeah we're their manufacturing development manufacturing and regulatory approval partners and we'll continue to be that globally but yeah I mean the specific details of their funding is really a question for them, but what I can say is they are in a funding process at the moment.

29:45 And could you say anything about whether their tests have received FDA approval?

29:49 They haven't. No, that would be part of the next phase is to continue what we call performance evaluation and regulatory approval, and clinical testing actually, which requires them to conclude their fundraising process. Thank you very much. We had a question regarding other customers. Are Loop Diagnostics 52 North and Upfront still customers?

30:20 Yeah, that's an easy question, Paul. The answer is yes for all of those. Oh, great. Just some questions on the US. Do you anticipate any further acquisitions or US expansion that would require further funding?

30:35 It's not something we're actively looking at, no. We've invested in our organic expansion in Madison. We're obviously active in the industry, and if an opportunity were to present which was beneficial for our continued growth, we'd look at it, but it's not currently something we're actively pursuing. And while you're talking about fundraising, there was a question regarding the OTC. Listening on the OTC, does that suggest that there's a fundraiser coming?

31:07 No, and actually we should really call it OTC trading rather than listing, because what OTCQB, which is the specific market we'll be trading on, is a route through to AIM. So it allows American investors to trade in American time using US dollars, but the shares are actually, it's allowing them to buy shares through into London on AIM. So it's a trading platform we could raise money on it should we want to but again that isn't the plan. Staying in the US, you've expanded your manufacturing capacity in the US. Is this to support contract development through pilot batch manufacturing or is it in anticipation of larger manufacturing orders?

31:58 It's both of those. So all of the developments we do, or the bulk of the development we do, the objective is to bring things through into manufacturing. Now some of those things take longer than others because of the complexity of the development and regulatory process, but the same equipment and the same people can do both those things. I'm not sure if you can answer this whether it might be sensitive, but how does US pricing and margin profile compare to say the UK or European business?

32:29 I'll pick that one up. I think it's is probably similar is the short answer. Obviously we don't publish information on margins by segment but the way we're approaching the US businesses is similar to how we deal with UK and European customers. Just another question on FOFH. Are any of their fees owing to having them contingent on the successful investment rates? Are there any of these? No. there's no money Tom a question for you and perhaps this is regarding what annual revenue levels would produce a positive EBITDA on a full year basis obviously in the statements you've talked about the second half of the year being EBITDA positive and maybe you could refer to some of the numbers in the cabin initiation note that came out this morning but that's the question what was

33:30 annual revenue levels delivers a profit and maybe you could for those investors that don't have access to the Cavendish notes maybe describe what the forecast will look like for next year yeah yeah that's fine so yeah as Paul just mentioned Cavendish initiated their research coverage this morning and they have revenue guidance is 12.2 million in FY26 plus a small amount of grant funded revenue that sits elsewhere in the profit and loss account and they have an adjusted EBITDA loss of 1 million in FY26 and then in FY27 the revenue guidance is 15.2 million with an adjusted EBITDA profit of 0.7 million and it's probably worth mentioning that Cavendish do have a research portal that people can sign up for and then download the research notes so if anybody would like to look at the detail behind those numbers then that should be accessible You mentioned in your presentation, Chris, on slide 12, is it too early to say?

35:00 Yeah it's take up as in being a manufacturer it's early days for that you know we've developed prototypes which you could see on the slide that I showed earlier and we've developed prototypes for both midstream urine as I said and the standard cassette. We've put a couple of our own tests into it. The one I showed on the slide is a test for a plant disease called Phytophthora and that's really there as a proof point to show customers that they work because importantly it's not just a case of putting another casing around the lateral flow test. We have to show that that casing doesn't impact the results or the stability of the device which we've shown doesn't so the stage we're at in terms of commercializing that is several customers have asked to evaluate the use both as an alternative or addition to their current product but also in new development programs so it's not going to be an overnight switch because as with all the things that we work on and develop we'd have to demonstrate compliance with the regulatory aspects of what we're doing but what I can say is we're actively promoting that across our customer base yeah thank you and this is the last question but in two parts it's in in relation to one of your contract awards first of all congratulations

36:30 on of that award, you described it as strategically important. The first question maybe you could address is why is it going to be paid in US dollars when the customer is UK based? But then the question, the second follow up question is why is it strategically important?

36:46 Okay. The US dollar one is basically at the request of the customer. They are UK based, but it's an international programme. We're quite happy to take payment in US dollars we've got a natural hedging now that we have the two sites you know and two sites of operation in the USA and UK so it's really yeah the customers request and we're happy to we're happy to satisfy that request in terms of strategically importance I think and there are a number of things one is it validates our it's a strategic proof point for what we're offering you know for the platform we've been building and it validates that both strategically but also financially it's showing we can win these larger programs by having this full service offering it's it's important that it moves us into the clinical self-test market I think the key thing is it's validated what we set out to do and this differentiation from a classic lateral flow developer and manufacturer by this contract it's validating that people do require the full service offering that we've been promoting and it's one of a number of contracts we've won like this but this one's particularly interesting because it's clinical self-test

38:18 Thank you, Chris. Chris, Tom, Paul, yeah, absolutely. If I may just jump back in there. Thank you very much indeed for being so generous for your time there and addressing all of those questions that came in from investors this morning. And, of course, if there are any further questions that do come through, we'll make these available to you after the presentation has ended. But, Chris, perhaps before really now just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, I could please just ask you for a few closing comments just to wrap up with. That would be great.

38:48 yes thanks uh well first of all uh thanks uh to to you all for joining the presentation we've been pleased to present our progress in half one and and thanks for your support as shareholders um we're pleased with where we've got to we expect half two to be very busy as it tends to be for us um we're well positioned for the continued growth that tom has spoken of and um we've got a strong management team across the company, including now through into the US. And we're looking forward to after and beyond for our continued success. That's great, Chris. Tom, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you automatically redirected to provide your feedback on behalf of management team of Abingdon Health Plc.

39:37 We would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.