Outlook for 2025 and 2026
· CRS is a German based full-service early-stage clinical development CRO
· First step in hVIVO’s M&A strategy and further diversifies hVIVO’s services to include in-patient Phase I and Phase II trials across a broader range of therapeutic areas
· Establishes a significant footprint in Europe with 120 beds across two sites in Germany
· Total consideration of €10.0 million in cash, funded from hVIVO’s existing cash resources
· The two units being acquired recorded revenue of €19.9 million in 2024 (unaudited) and €18.6 million in 2023
· Acquisition expected to be earnings accretive in 2026
· Enlarged Group weighted contracted orderbook of £67 million as at 31 December 2024* following record delivery of £62.7m revenue by hVIVO in 2024
· Full year revenue guidance of £73 million in 2025 with EBITDA margins anticipated to be mid-high teens (excluding one-off costs)
· Expect to deliver strong growth in revenue in 2026 and a significant improvement on EBITDA margin
*Does not include the recently announced pivotal Phase 3 HCT for ILiAD Biotechnologies, expected to be the Group’s largest HCT to date.
hVIVO plc (LON:HVO), a fast-growing early-stage Contract Research Organisation (“CRO”) and the world leader in human challenge clinical trials, has announced that it has acquired two Clinical Research Units (“CRUs”) from CRS Clinical Research Services Management GmbH (“CRS”), a German full-service early-phase CRO which provides early clinical development services, including first-in-human and proof-of-concept trials. The Acquisition has been completed for a cash consideration of €10.0 million, wholly funded from the Group’s existing cash resources (£44.2 million (unaudited) as at 31 December 2024).
Details of the Acquisition and strategic rationale
Founded in 1977 and headquartered in Mannheim, Germany, CRS has enrolled over 7,700 participants in the past six years across 260 trials, earning a strong reputation for quality, safety and excellence. hVIVO has acquired CRS’ Mannheim and Kiel units which accommodate 120 beds in total, with the Mannheim facility being one of the largest clinical trial facilities in Germany with 94 beds. CRS’ Berlin site will remain an independent operation, continuing as hVIVO’s preferred partner for specialised clinical trials.
CRS has an extensive and diversified European client base across pharmaceutical, biotechnology and CRO businesses, including four of the world’s largest 10 biopharma companies. CRS Mannheim specialises in conducting cardiometabolic, immunology/inflammation, and complex PK/PD studies in healthy volunteers, while Kiel is renowned for its expertise in trials involving renal and hepatic impaired patients.
The Acquisition expands hVIVO’s suite of services while also strengthening the Group’s existing service offering. hVIVO will now offer Phase I and in-patient Phase II clinical trial services including first-in-human, SAD/MAD, BE/BA, QTc, DDI* and specialist renal and hepatic impairment trials. The Acquisition brings considerable cross-selling opportunities for both hVIVO and Venn Life Sciences as well as a broader client base and more diverse revenue streams. CRS currently outsources a number of services which the Group will now be able to provide in-house, such as laboratory, biometry, and consulting services including CMC, Clinical, PK, as well as regulatory services. The addition of two new sites in continental Europe gives the Group international clinical site capabilities for large field trials and means that it can now offer patient recruitment services in two of Europe’s most highly populated countries with high levels of clinical trial activity.
In 2024, CRS introduced a new Business Development team and commercial leadership which has already had success in building a stronger sales pipeline. With the diversified full service offering of the new combined Group, the Company anticipates CRS’ sales to continue to drive growth going forward. The integration of the Business Development teams will support the multiple cross-selling opportunities that are expected to be realised from the Acquisition across hVIVO, Venn, and CRS service offering. As most of the trials conducted by CRS are in patients, it could provide opportunities to run multi-site trials across the Group’s UK & German sites. hVIVO will also deploy its core existing systems into CRS to drive efficiencies and long-term growth.
The current senior leadership team at CRS, consisting of Dr. Elisabeth Lackner, Chief Executive Officer; Catherine Canales, Chief Commercial Officer; Prof. Dr. Thomas Forst, Chief Medical Officer; and Till Mieskes, Chief Financial Officer, will continue in their roles. They will work closely with hVIVO’s team to implement new initiatives designed to drive growth and deliver a profitable business by 2026.
Trading history of two units being acquired
The Mannheim and Kiel units recorded unaudited revenues of €19.9 million in the financial year ended 31 December 2024 (€18.6 million in 2023), with an adjusted EBITDA loss of €1.8 million (€1.6 million in 2023). Under hVIVO’s ownership the two units will undergo an investment and restructuring programme to assist with their integration which is expected to cost c.€2.5 million in 2025 including net liabilities being acquired of less than €0.5 million.
Current year and 2026 outlook
The Company expects to achieve Group revenues of £73 million in 2025, anticipated to be weighted towards the second half, representing a robust year-on-year performance of the core business (excluding the impact of the one-off client funded facility fee of £4.3 million recognised in 2024) but including revenues expected to be generated by CRS. The Company expects to achieve EBITDA margins in the mid-high teens in 2025 (excluding any one-off costs) and remain cash generative. While the integration of the Acquisition into the wider Group is expected to impact EBITDA margins in the short term, CRS is expected to be earnings accretive in 2026. The Group expects to deliver strong revenue growth in 2026 and a significant improvement on EBITDA margins following the integration of CRS.
The combined Group entered 2025 with a pro forma weighted contracted orderbook of £67 million as at 31 December 2024 which stretches into 2026. The weighted contracted orderbook does not include the recently announced pivotal Phase 3 HCT for ILiAD Biotechnologies, expected to be the Group’s largest HCT to date.
As reported on 10 September 2024, the Group had a pipeline of short to medium term potential opportunities of c.£40 million, of which c.£15 million has already been converted into signed contracts, with c.£25 million representing active opportunities. In 2024 the Group updated its challenge agent portfolio and as a result, has seen a significant rise in interest in its HCT models, with more opportunities in an advanced stage than at any time in 2024. As an example, the increased global hMPV infections have increased client interest in the Company’s new hMPV human challenge model. Further to recently awarded contracts for hLAB and field studies, the Company expects the growth to continue in these service lines. Following the Acquisition, average contract sizes across the Group are anticipated to increase, as well as growth in the CRS sales pipeline.
The Board is pleased to have commenced its M&A strategy to further grow and diversify its revenue streams and to deliver its £100 million Group revenue target by 2028. The Group will continue to explore further small bolt-on acquisitions that meet the Company’s strategic and financial criteria.
Yamin ‘Mo’ Khan, Chief Executive Officer of hVIVO plc, said: “I am delighted to have completed this acquisition of CRS’ clinical research units at Mannheim and Kiel, aligning with our M&A strategy to find complementary businesses that can further broaden our service offering. The acquisition will establish a significant European footprint for hVIVO, which combined with CRS’ expertise in early clinical development, will create significant synergies and growth opportunities for the entire Group.
“CRS is a well-respected brand in the industry providing high quality services for early-stage clinical development. They are one of the leading European clinical trial units with a loyal customer base, a strong team, and a history of delivering consistent revenues. I look forward to working with the CRS team and leveraging our combined expertise to deliver growth for the Group.
“Overall, the mid- and long-term outlook for the Group is excellent. We have laid foundations for future growth, expanded our service offerings organically and diversified to a wider range of revenue streams through the CRS acquisition. As such, I believe we have significantly strengthened and diversified the business and have enhanced our ability to deliver our target of growing Group revenue to £100 million by 2028.”
Dr Elisabeth Lackner, Chief Executive Officer of CRS, said: “I am delighted that the CRS Mannheim and Kiel units are joining the hVIVO Group. Together, we can leverage each other’s specialist CRO expertise and complementary infrastructures. CRS’ clinical trial sites seamlessly enhance hVIVO’s site services offering, and the combined Group will be able to develop new ways to benefit our global client base.”
Analyst briefing
A briefing for sell-side equity analysts will take place on Wednesday 29 January 2025 at 11.00am GMT. To register and for more details please contact Walbrook PR on [email protected].
The company also provided an unaudited trading update for the year ended 31 December 2024.
Highlights
· Revenue up 11.9% to £62.7 million (2023: £56.0 million)
· EBITDA margin of c.26% (2023: 23.3%)
· Cash of £44.2 million as at 31 December 2024 (31 December 2023: £37.0 million)
· World’s largest commercial human challenge trial unit opened to meet client demand
· Record number of volunteers inoculated across seven challenge agents
· Expansion of human challenge model portfolio
· Diversification of revenue streams with strong delivery in new services
*Commentary on 2025 and 2026 outlook and orderbook is included in today’s other announcement regarding the Company’s acquisition of two Clinical Research Units from CRS.
Double-digit revenue growth with efficiency gains benefitting margins and cash generation
The Group expects to report record revenues of £62.7 million for FY24, an 11.9% increase on the prior year, and full year EBITDA margins of c.26% (2023: 23.3%). The significant uplift in revenue and margins was driven by strong operational delivery including recruitment of record number of human challenge trial (HCT) participants and improved utilisation rates (particularly in H124), delivery of the Group’s largest Phase II field study to date, and recognition of £4.3 million client funding towards the new Canary Wharf facility to accelerate delivery of client studies.
In 2024, the Group successfully delivered on its growth strategy to optimise, scale and diversify its revenue streams. The Group successfully opened the world’s largest commercial HCT unit, a state-of-the-art 50-bedroom CL-3 facility. This milestone enabled the Group to inoculate the highest number of participants to date in its HCT studies, across seven challenge agents. The Group benefitted from the availability of three quarantine facilities in H124 which led to the delivery of several projects ahead of schedule, enhancing revenues and margins.
The new site also facilitated the diversification of the Company’s revenue streams to include standalone laboratory, field study, and participant recruitment services. The Group saw strong and immediate success in these newly launched services in 2024, with five standalone laboratory services signed and a 99% growth in hLAB proposals within a 12-month period. The Group delivered its largest Phase II field study contract to date, supported by the expansion of its outpatient facility at Canary Wharf and at Plumbers Row in which FluCamp, the Company’s volunteer recruitment platform, enrolled 817 participants in just over six weeks providing significant validation to the Group’s ability to provide excellent results for clients in these types of large and complex studies with very strong client feedback received.
In addition, hVIVO expanded and updated its human challenge model portfolio in 2024. This includes completing the world’s first influenza B HCT and the successful manufacture and completion of a pilot characterisation trial for its new hMPV human challenge model. hVIVO also contracted an Omicron characterisation study, as well as developing a number of new challenge models including influenza H1N1 and H3N2, and RSV A and RSV B. The Group implemented a programme of new software systems, driving efficiency gains. This includes FluCamp’s new Volunteer Management System, which succeeded in delivering a record number of participants for the Group’s studies with a significant decrease in advertising spend versus 2023.
The Group’s cash position as at 31 December 2024 was £44.2 million (31 December 2023: £37.0 million), underlining the strength of hVIVO as a cash generative business.
The Company expects to release its results to 31 December 2024 in mid-April 2025 and will confirm the date in due course.
Dr Yamin ‘Mo’ Khan, Chief Executive Officer of hVIVO plc, said: “2024 was a tremendous year for the Group, with the delivery of record revenue and EBITDA margins as well as laying broader foundations for future growth. These record financials were achieved in a year when the Company completed the move to the world’s largest commercial human challenge trial unit, developed a number of new challenge models, launched three new service lines, and implemented a number of new software systems. This is all a testament to the hard work and expertise of our world-leading team.
“Our newly launched services executed in our existing infrastructure, benefited our margins and cash generation. I am impressed with how well these new services are performing since their recent launch and this, combined with the expansion of our human challenge offering and strategic M&A (with our first acquisition announced today), has enhanced our ability to deliver revenues of £100 million by 2028.”
hVIVO plc (Ticker: HVO) is a rapidly growing early-stage Contract Research Organisation (CRO) and the global leader in human challenge trials. The company delivers end-to-end clinical development services to a diverse and expanding client base, including seven of the world’s ten largest biopharma companies.
hVIVO specialises in conducting human challenge trials across multiple infectious and respiratory indications, leveraging its state-of-the-art quarantine facility in London-the largest of its kind worldwide. The company also offers comprehensive virology and immunology laboratory services under the hLAB brand.
Through its German subsidiary, CRS, hVIVO operates a 120-bed capacity across Mannheim and Kiel, providing early-phase clinical trial services, including first-in-human and proof-of-concept studies. Its second subsidiary, Venn Life Sciences, offers Early Drug Development Consulting and Biometry services to the biopharma sector.
The Group provides fully integrated drug development solutions from preclinical stages through Phase II trials, alongside patient recruitment via FluCamp. Additionally, its five clinical sites support outpatient Phase II and III trials, ensuring a seamless and efficient pathway from discovery to late-stage development.
