hVIVO plc (LON:HVO), the world leader in testing infectious and respiratory disease products using human challenge clinical trials, has announced a trading update for the six-month period ended 30 June 2023.
Highlights
· First half revenue growth of 52% to £27.3 million* (H1 2022: £18.0 million)
· EBITDA margin c.19% (H1 2022: 12.7%)
· Net cash of £31.3 million as at 30 June 2023 (H1 2022: £15.9 million)
· Weighted contracted orderbook of £78 million as at 30 June 2023 (30 June 2022: c.£70 million) underpins venue visibility
· Full year revenue and EBITDA remains in line with expectations
* The Group will now report revenue excluding other income, such as R&D tax credits. Other income in H1 2023 was £1.4 million (H1 2022: £0.9 million).
Strong revenue and robust cash generation
The Group expects to report half year revenues of £27.3 million excluding other income (H1 2022: £18.0 million), a 52% increase year-on-year. This growth has been driven through the delivery of a higher number of human challenge trials with continued increases in total contract value. In addition to the revenue generated, the Group also recognised other income relating to R&D tax credits of £1.4 million (H1 2022: £0.9 million). The improved EBITDA margin of c.19% is a result of enhanced operational efficiencies and concurrent execution of multiple larger trials. The Group continues to be strongly cash generative with a cash position of £31.3 million as at 30 June 2023 (H1 2022: £15.9 million) following the payment of a £3.0 million special dividend on 9 June 2023.
Growing orderbook
As at 30 June 2023, the Group’s weighted contracted orderbook increased to £78 million (H1 2022: £70 million), an increase of 11%, underlining the continued growth in demand for human challenge trials from the global biopharma industry. Importantly, the orderbook is diversified across multiple clients, challenge agents and geographies, which provides a strong foundation for long term revenue growth.
Full year outlook
hVIVO plc is fully contracted to achieve its revenue guidance for 2023 and the Group has a record orderbook giving visibility of revenue into the second half of 2024, which will allow the management team to effectively optimise its resources, improve strategic decision making and enhance its adaptability and flexibility in managing its revenue pipeline. This coupled with its track record of excellent operational delivery provides a strong foundation for future trading.
While there have been industry wide delays in UK clinical trial approvals by the Medicines and Healthcare products Regulatory Authority (MHRA), the Board does not currently expect the MHRA delays to have a material impact on revenue. This delay in approvals has had some impact on new trials but the Company is successfully working closely with both its clients and the MHRA to ensure the timely delivery of studies and has implemented a contingency plan to mitigate any potential impact.
Based on the current guided timeline for approvals and hVIVO’s contingency plans, the Company reaffirms its guidance of £53 million in revenue for 2023 and EBITDA margins in the mid to high teens. Revenue excludes £2 million of other income, such as R&D tax credits.
Yamin ‘Mo’ Khan, Chief Executive Officer of hVIVO plc, said: “I am pleased to announce another period of excellent growth for hVIVO, delivering strong revenues, healthy EBITDA and continued cash generation. Since the end of June our weighted contracted orderbook has increased even further following the recent announcement of our new Influenza B human challenge model. This record visibility of revenue well into the second half of 2024 provides a strong basis for future trading, as well as additional flexibility and adaptability to efficiently manage our pipeline.
“I take pride in what the team has achieved and admire their determination to continue our growth path. It has also been pleasing to see a number of our clients receive positive outcomes as a result of conducting challenge trials with us. Coupled with our current track record of operational delivery, the Board is confident that the Group will achieve its full year revenue and EBITDA expectations.”
