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Novacyt H1 Revenues Down 15 Percent Amid SARS-CoV-2 Contract Dispute

NEW YORK — Novacyt on Monday reported a nearly 15 percent year-over-year decrease in revenues for the first half of 2021 as the French diagnostics firm held off on including revenues generated under a disputed SARS-CoV-2 test supply contract with the UK Department of Health and Social Care.

For the six-month period ended June 30, Novacyt's revenues fell to £54.0 million ($74.0 million) from £63.3 million the year before. The revenues for H1 2021 exclude £40.8 million in revenues from the firm's contract with the DHSC. Non-DHSC revenues were up 20 percent from £44.8 million in the first half of 2020.

In 2020, Novacyt signed a deal to supply SARS-CoV-2 assays to the DHSC for an initial term of six months. About a year later, the company said it was not able to secure an extension for the deal but had still supplied its Promate SARS-CoV-2 tests to the DHSC at the agency's request. Novacyt later revealed that the DHSC was seeking a refund for a specific product supplied under the arrangement.

Novacyt said on Monday that although the test supply deal with DHSC has been extended until the end of next March, it has decided not to include revenues from the arrangement until the dispute is settled.

Novacyt's net loss for the first half of 2021 rose to £12.7 million, or £.18 per share, from a year-ago profit of £35.1 million, or £.53 per share.

Contributing to the losses was a one-time exceptional cost of sales charge of £35.8 million tied to the DHSC dispute. The company's R&D spending in H1 2021 more than tripled year over year to £1.9 million from £518,000, while its general, sales, marketing, administrative, and distribution expenses rose 47 percent to £14.1 million from £9.6 million.

At the end of June, Novacyt had cash and cash equivalents totaling £77.2 million.

"We have launched 18 new COVID-19 products since the beginning of 2021, and we expect Novacyt to continue to play a major role in COVID-19 testing well into 2022," Novacyt CEO Graham Mullis said in a statement. "We also remain focused on strengthening our long-term position and executing against our strategy by building our product and instrument platforms and expanding our commercial infrastructure for growth beyond COVID-19."