Abingdon Health (LSE:ABDX) Q4 2026 Earnings Call

0:00 Good morning, thank you Alex.

0:28 Good morning everyone thank you for joining the presentation of Abingdon Health's financial year 26 results for the year ended 30th of June. I'm Chris Hand Executive Chairman and I'm joined by Tom Hayes CFO.

0:42 Hi there.

0:45 So we have a disclaimer which we'll move through to the next slide. I'm Chris Hans, I'm one of the founders of Abingdon Health which we started in 2008. I'm executive chairman, a role I've held for the past 18 months or so and I've been previously non-exec chairman of the company. My co-founder Chris Yates is currently CCO and has moved to looking after our USA operations but in terms of my background it's 30 years in the medical diagnostics industry. Founded a company called Cozart Plc, which is also on AIM, which specialise in rapid diagnostic tests, similar to those we now manufacture at Indian Health. And that company was sold to Concateno Plc in 2007 and is now part of Abbott. So my background is the development and commercialisation of rapid diagnostic and other in vitro diagnostic tests.

1:49 Okay, thanks Chris. I'm Tom Hayes, I'm the CFO of Abingdon Health. My background is Chartered Accountancy. I've worked across a range of industry and corporate finance roles. Previously I was Finance Director at another enlisted group of companies and I joined Abingdon in January 2025.

2:14 So the agenda for the presentation today We'll give a brief overview of who we are as Abingdon Health Group and financial year 26 at a glance. Tom will run through the financial review and then hand back to me. We're happy to answer any questions that you may have please submit those as we go. So in terms of who we are, Abaddon Health is a end-to-end partner for the development through to manufacture, regulatory approval and delivery of rapid diagnostic tests. That's been our background.

3:03 Increasingly since acquisitions we made two years ago, that full service offering extends to other areas of MedTech via the MedTech regulatory and quality consultancy firms we bought two years ago, those being CS, Life Sciences and iVidiology. And those two companies are now increasingly incorporated into our full service offering for our customers. We operate from three sites. Headquarters are in York, the biotech campus, where we do all the activities from design for development through to manufacture. regulatory and delivery. We have two other sites. The site we have in Doncaster south of York is Aberdeen Analytical which operates an independent performance evaluation service and acts really as a bridge between product development and regulatory approval.

4:03 That facility we've invested in further over the past year and we'll explain as we go through what we're doing at Aberdeen Analytical. And then the third site is important for us, the Abingdon Health USA facilities, which are on the University Research Park in Madison, Wisconsin. And again, we'll tell you more about how we're expanding that site as we move through the presentation. In terms of financial year 26, this slide gives an overview at a glance. So our revenue is up 30% over the previous year. to £11 million, up from £8.4 million in financial year 25.

4:51 Both years had additional income from grant funding, and that relates to the project we're running with the Institute to pass through and others to develop tests for malaria. So there was an additional £0.3 million in the year just we're presenting today, versus £0.2 million in 2025. Our gross margin has increased to 47.1% from 44, driven largely by a mix of how the revenue is mixed. And it was a milestone second half of the year for us in that we achieved an adjusted EBITDA profit of 0.2 million pounds. So that was a big milestone for us, and it illustrates that our business model coming through and working that guarantees in place to create that type of movement. And then cash at the end of the financial year was at £2.9 million.

5:50 That was following a £3.2 million net placing we did in the autumn of 25. So yes, at a glance it's a good year for us moving towards that second half. Profit was an important point for us. And at this point I'll hand over to Tom who will run through the financial review.

6:14 Thank you, Chris. Okay, so this slide just gives a bit more detail on the numbers Chris has just run through. So really, after the summary, we've just covered the key numbers on here for us. There's the revenue, where we've had 30% reported revenue growth. up to 11 million or 11.3 million, including some grant funded project income, which we have to show on another income line. The second key number is the gross margin where we've got an improved margin year on year. And then the third one is the adjusted EBITDA line where we've seen some operating leverage come through in line with higher revenues. The 1.5 loss of year overall, but there was significant weighting towards H2 on the back of higher revenues.

7:03 where we did make a small adjusted EBITDA profit in the half, which was a great milestone for us. Okay, so just moving on to the next slide. So we've got breakdown of revenue just by segment. These are the different activities we do within the business. This is really showing that most of the growth is driven by contract development revenues, which is on the back of a number of significant programs we've announced over the past 12, 18 months. There's some modest growth on the regulatory services side as well. Contract manufacturing was relatively flat year on year, but we expect over time that should step up as some of these bigger development programs progress through regulatory approvals and into manufacturing.

7:49 And then finally, just products we have split out separately. That's a mixture of some white label products that we make and also the Abingdon Simply Test products where we have noted in these results that we will carry on doing those as a b2b product but we're stepping back from the b2c sales through our website which was quite quite a small number for us and it's not really part of the key strategy moving forward okay so this so this slide is quite quite key just to be explaining how the how last year played out we've got significant weighting of revenue towards h2 in fy26 The reason for that, H1, the challenge for us was really securing and starting some of the basic programs that we've been announcing. H2 was very much full steam ahead, with significantly higher revenues as a whole, particularly on the contract development side.

8:41 And that has led into the adjusted EBITDA profit in H2. The reason for that is that a lot of the cost base is fairly fixed in terms of the people we've got in the business. and the premises that we've got in the UK and in the USA. And so really having delivered the higher revenues in H2, that's how we've got to the overall profitability. Okay. And then this slide is just kind of zooming out a bit and giving more of a view on the four or five year view. It's showing that the reason we started with FY22 is that's the first year where we are taking out some COVID revenues where the business has been kind of rebuilt around you know kind of broader contract development and regulatory manufacturing piece and it's showing that on that four or five year view we've had significant revenue growth we've got a compound revenue growth of 41% from 23 through to 26 the contract development revenues is a significant part of that you know the revenue growth over those years and that's all organic growth we did also acquire the two regulatory consultancy businesses CS Life Sciences and IbDiology in FY24 or just early in FY25 which is why it's part of the regulatory growth.

10:02 But overall we've got significant compound growth over this period. This final slide is just a bit more detail on the cash movement between June 25 and June 26. It's just showing that we obviously we did the last fundraise we did in October 25 which was for both the expansion of our US facilities and also for Wood Capital. We have that cash coming in. We've got an operating cash outflow of 1.6, which is not dissimilar to the adjusted EBITDA loss for the period. But again, the split of that is quite similar to the adjusted EBITDA line and most of that outflow was in page one. There was a modest outflow in page two.

10:51 And so, really sort of showing that Cash and Debit have moved fairly similarly and at the end of June we had 2.9 million of cash in the bank.

11:03 Thank you Tom. In the next section I'll cover on our operations and give some insight into some of the contracts we're actively working on, the increased capability we've created and some of the expansions we're doing in the US but also in the UK. at our York site and Xamarin Analytical. So as far as contracts are concerned, we've spoken previously about our full service offering now allowing us to gain larger contracts which give us greater visibility of revenue over longer periods of time. Inevitably some of these will move and be replaced by others but for us as managing the company it gives us a lot of insights as to what we need to continue to operate as I say over a longer time period and have a greater visibility of that revenue. So some examples we've put on here, 14.4 is a German biotech pharmaceutical company that we work with.

12:03 They're happy for us to name them as a partner and we've been doing a lot of work with them developing a quantitative lateral flow test which is acting as a companion diagnostic for their therapy. The therapy being to help cardiac shock and other types of shocks and then the diagnostic test is being developed alongside the pharmaceutical to ensure that companion diagnostics is ready at the same time as the pharmaceutical. Other programs of a similar size you can see illustrated on this slide. two and a half million dollar clinical self-test program is well underway and that's been project managed with technical support from Abingdon including some technical work being done at our York site and then the top right the USA Multi-Plex test system we unfortunately have to talk quite vaguely about some of these contracts and that the customer has confidentiality agreements with us but this is just an example of a similar size Contracts being signed end of last year at this time to be run out of our USA Madison laboratories and that's similarly to From a technology point of view new things from the simple yes-no to a semi quantitative Multi-flex system in other words measuring many many analytes at the same time and

13:36 that's that program will move through financial year 27 there's a series of contracts bottom left which we announced earlier in the year some of those are going through and completed others are being reviewed by the customer and some may continue some may not but I think importantly because of this visibility we have with contracts the way we forecast things would take care of we basically only forecast contracts if we're sure they're progressing but as I said earlier as we move through working with different customers. Some programs will continue, some will fade away, but importantly, we've got a good visibility of the whole due to this larger service offering.

14:23 An interesting one in the bottom middle there is a product we've developed with a company called Upfront Diagnostics. The product's called LV1, and it's a test for triaging stroke. It's currently being piloted across the London Ambulance Service and the idea of the test is to triage whether the patient has suffered a large vessel occlusion which is the worst sort of stroke which requires different treatment and potentially to be directed to a different health centre than a different sort of stroke so that's a really interesting product that's coming through as I say being trialled by the London Ambulance Service and the UKCA mark The idea of this slide is to illustrate hopefully to you how the integrated full service offering that we now give to our customers is allowing us to gain these larger contracts and take things from feasibility right through to manufacture and sale.

15:30 In terms of the capability, two key areas of growth for us which were helped by the fundraiser last autumn Paraben and Analytical which is our Doncaster performance evaluation laboratory that opened December 2024 so less than two years ago it generates performance data that bridges between product development and regulatory approval we'll also bring a CRO service from that site now as some of these products come through and require clinical testing we're managing that from the Doncaster site and importantly we gained our first UCAS accreditation to a standard known as 17025, which is the laboratory testing standard, which illustrates that the highest level of laboratory work is being performed from the analytical side, which obviously gives our customer confidence that the results come from that lather of a high quality. That's an area we've put effort into expanding, and we've got a lot of activity going on in the Doncaster lab.

16:34 and then similarly with Madison, Wisconsin where we have Abingdon Health USA which we established a year and a half ago and we've now added manufacturing to that site from now basically so the opening happened very recently end of September and we'll be adding the appropriate quality standards staff site. So basically our customers can have products developed and manufactured in both the UK or the USA both in the same quality system and the same standard of work.

17:23 So Madison has just been expanded to add a manufacturing hub. We did that from the pool from our customer base. We continue to expand and have most of our activity from York but Madison is an important site for us now as we're gaining an increasing number of US based customers who want both the development work and now increasingly the manufacturing work to be done from the USA. This began before President Trump but we're finding increasingly if a customer is operating by US grant funding then that funding needs to be used in the USA and similarly they want USA manufacturing made in the USA which we can now offer from our Madison site which is on the University Research Park in Madison and Wisconsin is a very strong health tech state they've been very supportive of us and to the extent that we've we've been certified for state support for up to $370,000 based around recruitment of people in that site. So as I said previously, we're adding the appropriate accreditations to the site and because of the interest we've gained, certainly in Madison and the wider Wisconsin community and beyond that, we've allowed our A-listed shares to be traded on the OTCs QV

18:55 in New York and that's something we started earlier this year it's a very low cost way of letting our shares be more widely traded in the USA so our strategy going forward this year and beyond we're consolidating our activities into three pillars to give a more coherent offering to our customer base and indeed to investors and we've divided things into three pillars which you can see illustrated on this slide with Abingdon Diagnostics being the original core lateral flow development and manufacturing element of our offering. It also includes new technologies which we can add our development skills to which are very similar to the lateral flow skills such as biosensors and other new IVD methods.

19:53 AI and software as a medical device is something we've been offering as a consultancy via the companies we acquired a couple of years ago. We're finding a lot more incoming interest to add this consultancy service alongside our product development and other medtech consultancies. So you can see AI and SAMD featured in both Avalyn Diagnostics and Avalyn AI and Medtech, which is the third pillar here. And that's basically the same people offering it. operating across those three pillars. So the Abingdon AI and Medtech is the core of our Medtech consultancy which goes beyond in vitro diagnostics and then Abingdon Analytical in the centre there bridges between the two actually and it also allows performance evaluation and things like bioburden testing which apply to other medical devices in addition to in vitro diagnostics and then the CRO clinical research offering is complementary to the test house and evaluation offering as we're bringing products through from development to testing and regulatory approval we're now also offering that clinical activity too and importantly we're promoting this as one one-stop shop if you like so one having done an integrated consultancy across all these

21:24 three pillars so those three pillars are backed by these six um priorities in terms of our strategy our people are very important to us we're developed happy people um and the culture and their capability is important as we continue to grow that people grow with the company. We need to grow efficiently, so we need to be constantly managing our costs and as we scale up, which is a key feature of our activities. And as I just mentioned, outside world faces as one group and then actually our identity as a in vitro diagnostic and med tech consultancy.

22:14 AI and software as a medical device is very important and increasingly so. crosses all that we do we're getting an increasing number of interest and incoming inquiries about our ability to help incorporate AI and software as a medical device into our current offering and as I said we've already got skilled people in that field within the company the new tech services again leverages what we have in place if we can develop and manufacture lateral flow tests there's an easy pivot towards other and similar rapid diagnostic tests such as bio sensors and micro fluidics which we have experience in the company doing and then the key across all of this is to grow our revenue and profits in the UK and the US and obviously more applying that globally but from our two bases in the UK and the USA For the outlook as we said earlier the contracts we've announced during the calendar year provide visibility to us to allow us to manage the company efficiently giving us a solid base on which to build and we've got a very good pipeline of work coming through Q1 revenue

23:44 was lower than we anticipated due to some delays in programs nothing that's gone away but things such as speciality reagents not being available from a customer for example or another example which could create a delay in revenue maybe the customer altering the specification when we get to a certain milestone which would mean for example adding additional work but it slows down the full program so again Nothing that's gone away but can potentially slow revenue and therefore make our half two more heavily weighted than half one. Financial Year 27 revenue and adjusted EBITDA will be therefore moved towards the second half. And I mentioned the integration of our regulatory and quality MedTech consultancy offerings.

24:45 as part of that restructuring will be moving towards that integrated offering to a higher value IVD and MedTech and AI work which will by the reintegration will cause some short term revenue impact but a smaller impact on EBITDA and we would expect that to pick back up pretty quickly but for now we've to lower the revenue from that element of our activities. The Board expects an improved EBICDA position for 27 versus 26 and importantly our infrastructure is largely in place. Our priority is delivery of existing programmes and converting our strong pipeline on that existing infrastructure base.

25:37 So to summarise, We have good growth in the year, up 32% if we include the grant income from both years, 25 and 26, or 30% if we don't. The first half, it was our first half, sorry, of adjusted EBITDA profit, so that was an important milestone for us, and our multi-year contracts that we're obtaining now, based upon the full service offering that we provide, are allowing larger multi-year programs to allow us to have this greater visibility of activities. Our capability is where we want it to be, both in the UK and the US, from a development, manufacturing and regulatory performance evaluation, the whole process.

26:26 Adding the UCAS accredited laboratory is important and in terms of numbers, we expect to continue the revenue, the revenue to continue to increase and we expect EBITDA performance to improve over last year into this. And at that point I'll just have one more slide to those who haven't seen this already. We're offering an open day on the 21st of October at our York Biotech campus facilities. There's still places if those listening would like to attend, we'll be introducing members of the team, doing a tour of our facilities and looking at some of the products we make. So if anyone's interested in attending that, please do register because we need names of people. So you can see the place to register your interest there at barabington at walbrookpr.com.

27:30 So please do that and we look forward to seeing those that you can make it in York That's great. Thank you very much indeed for your presentation. I will now turn on your cameras for the Q&A session. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated in the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that recording of this presentation, along with a copy of the slides in the published Q&A, can be accessed via our invested dashboard. Alice, at this point, if I may, I will hand back to you to take us through the Q&A session and I'll pick up at the end. Thank you. Thank you Alex, we've had a couple of questions submitted online, so I'll start with the first few from Ben. With the development revenues increasing, what's the timeframe for this transition, for this transition of uniform manufacturing revenue?

28:26 Yeah, we've got a lot of programmes which are moving, the way that the development moves through to manufacturing, there are various stages to that, so for example, Once a product has finished being optimized, it moves through to what we call technical transfer, where we manufacture three batches of the product at increasing sizes. And then the customer alongside us, if that's how we're working, will do the performance evaluation and clinical testing of those products. And that can take several months to do. so we would expect an increasing number of those products to come through to manufacturing this year but obviously they'll start at a lower level and then that will pick up as they gain traction with their own commercial activities so it's a key thing for us to do we've got a couple of programs moving through the same way in the US as we're doing the UK So yeah, it's a question of getting things through the regulatory approval process as well as just completing the development.

29:39 Thank you Chris. And then the next question from Ben. What revenue contributions do you see from the expanded US facility in the coming months and what does the profile look like further out?

29:54 Yeah, sure. Yeah, well it's a big growth area for us in the USA. We don't publicly split out the revenue by that business unit, but essentially they were up and running in early 2025. We last month just officially opened the manufacturing side of things. I think without giving exact numbers, we want them in. Our expectation is they're into the millions rather than hundreds of thousands of revenue and we'd like to see that step up significantly in the future. Great, thank you Tom. And then we've had a couple of questions about the significant growth forecast for 2027.

30:42 And Martin H says, given the improvement in financial performance in page 226, I'm slightly disappointed by the 2027 outlook. What level of sales is required to become profitable?

30:59 Okay, I'll make a start on both of those if you want. I think in the conclusion of the results I suppose, I mean Carbon Dish have published updated forecasts this morning, obviously it's up to them what numbers they forecast, but you know we're comfortable saying we think we're on for significant growth this year, although as Chris has said that will be weighted more towards H2 in terms of revenues just given we've had a couple of delays in H1. And picking on Martin's question around the outlook, Cavendish again Cavendish has their numbers out there. I mean just page 226 the numbers, I've got reported revenue of £6.8 million not including the grant funded income and that was an adjusted EBITDA profit of £0.2 million.

31:51 So, I mean, that's probably not a bad starting point, although just a caveat being, obviously, you know, the cost base will evolve as the business grows. But, I mean, I can't really give a kind of, you know, revenue or profit forecast, but, you know, that's what we achieved in H2.

32:05 Yeah, and the Calendish forecast for 28 on a revenue of 13.7 is forecasting the adjusted EBITDA of 0.2. So, we're not far from that. position and what we've done as I mentioned earlier in the presentation is we have we have taken a view as we integrate our regulatory services that the revenue may take a dip in that particular area while we restructure things but we'd expect that to come back so yeah I think we're if we look at the Cavendish Note and the 13th 0.7 or thereabouts takes us, is that profitable?

32:55 Yeah. It sort of matches with what we said in half to 26.

32:58 I think so and also just to note that we obviously are managing costs as carefully as we can to align with revenue and so that's the profitability is still very much on our key part of our agenda. Thank you, and just a reminder for those who aren't aware, the Cavendish notes are available through the Cavendish website or research tree. Anybody can register to receive those. Chris, do you want to wrap up these few closing comments?

33:30 Yeah, thanks Alice, and thanks for the questions. We're very pleased with our progress. The financial year 26 was a good one for us, and we expect us to continue to to grow as we go forward. We've got the full service offering now. We're attracting some prestigious customers from pharmaceutical and live biotech through to the smaller startups. By integrating everything together, having the three pillars that we present to our customers, we think we're well positioned for increased growth both in the UK and the US. So, yeah, thanks again for taking time to listen to the presentation and, yeah, hopefully we'll see some of you in York.

34:16 Fantastic. Thank you very much indeed for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide a feedback which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation and good morning to you all.