DUBLIN, Ireland, Nov. 03, 2022 (GLOBE NEWSWIRE) — Trinity Biotech plc (Nasdaq: TRIB), a leading developer and manufacturer of diagnostic products for the point-of-care and clinical laboratory markets, today announced the Company’s results for the quarter ended June 30, 2022 and preliminary guidance with respect to Q3 revenues.
Summary Highlights:
Details
Quarter 2 Unaudited Results
Total revenues for Q2, 2022 were $18.5m which compares to $25.8m in Q2, 2021, a decrease of 28.6% and which were broken down as follows:
2021 Quarter 2 |
2022 Quarter 2 |
(Decrease) |
|
US$’000 | US$’000 | % | |
Clinical Laboratory | 23,885 | 16,624 | (30.4%) |
Point-of-Care | 1,958 | 1,840 | (6.0%) |
Total | 25,843 | 18,464 | (28.6%) |
Clinical Laboratory revenues were $16.6m, compared to $23.9m in Q2, 2021, representing a decrease of $7.3m or 30.4%. This decrease is mainly due to a reduction of approximately $7.4m in revenues from our PCR VTM products compared to Q2 2021. Sales volumes for PCR VTM products have decreased since the first half of 2021 due to a significant scaling down of PCR testing programs for Covid-19. In addition, there was an approximately $800k reduction in revenues in our legacy infectious disease product range compared to Q2 2021 as continuing COVID-19 lockdowns in Asia hampered demand for these products.
Our diabetes A1c revenues continue to grow with a $1.2m or 27% increase in revenues compared to Q2 2021 and we expect earnings from our A1c testing business to increase in the near term given our increasing instrument installed base and operational & strategic supply chain changes we began executing in Q3 2022 to reduce the cost of goods of our tests.
PoC revenues for Q2, 2022 decreased from $2.0m to $1.8m when compared to Q2, 2021, a decrease of 6.0%. This was mainly attributable to lower sales of HIV tests in Africa. Such fluctuations are a feature of the African HIV market which exhibits irregular ordering patterns from customers.
Gross profit for Q2, 2022 decreased from $11.0m to $6.5m when compared to Q2, 2021. The gross margin of 35.3% for Q2, 2022 was 7.4% lower the margin achieved in Q2, 2021, with the reduction largely due to sales mix changes, the reduction in higher margin PCR VTM and inflationary increases in the price of raw materials.
Research and development expenses declined from $1.1m to $1.0m when compared to Q2, 2021 due to a continued focus on cost control measures. Selling, general and administrative (SG&A) expenses were $6.5m in Q2, 2022, a reduction of $0.1m compared to Q2, 2021. The strengthening of the US Dollar against the Euro in Q2, 2022 has contributed to a reduction in our Euro-denominated SG&A expenses and this was partly offset by transaction related management bonuses and higher travel costs.
An impairment charge of $0.5m was recorded in Q2, 2022, compared to an impairment charge of $6.1m in Q2, 2021. In accordance with the provisions of accounting standards under IFRS, a company is required to carry out periodic impairment reviews in order to determine the appropriate carrying value of its net assets. This period’s review has resulted in a non-cash impairment charge of $0.5m being recognised. A number of factors impacted this calculation including the Company’s share price on June 30, 2022, which was lower than the share price at the time of the prior impairment review (31 December 2021), cash flow projections and net asset values across each of the Company’s individual main business units.
Operating loss for the quarter was $1.4m, which represents a decrease in profitability of $1.6m compared to Q2, 2021 and was attributable to a lower gross profit, partly offset by lower indirect costs and a lower impairment charge.
Financial income for Q2, 2022 was zero compared to $1.0m for Q2, 2021, which was due to a fair value adjustment of the derivatives embedded in the exchangeable notes. There is no equivalent financial income in Q2 2022 because 99.7% of the exchangeable notes were retired in January 2022.
Financial expenses in Q2, 2022 were $8.3m compared to $1.4m in Q2, 2021, an increase of $6.9m. A breakdown of the financial expenses is shown in the table below:
US$m | Q2 2022 | Q2 2021 | |||||
Penalty for early partial settlement of term loan | 3.5 | – | |||||
Term loan accretion interest | 2.1 | – | |||||
Term loan cash interest | 1.9 | – | |||||
Fair value movement for derivative balances related to term loan | 0.4 | – | |||||
Accretion interest on IFRS 16 leases | 0.2 | 0.2 | |||||
Convertible Note interest | 0.2 | – | |||||
Exchangeable Notes interest | 0.0 | 1.2 | |||||
Total financial expense | 8.3 | 1.4 |
In May 2022 the Company made an early partial settlement of the senior secured term loan of $34.5m and in accordance with the term loan’s credit agreement, there was a penalty for early repayment of $3.5m. To date, the Company has benefitted from a cash saving of approximately $2.3m by repaying a portion of the term loan early. The minimum liquidity covenant for the term loan was amended after the early repayment, so that the unrestricted cash balance that the Company is required to maintain was reduced from $5.0m to $2.0m until May 2023.
In Q2, 2022, accretion interest of $2.1m was recorded for the senior secured term loan. The accretion interest is higher in Q2 2022 than the expected run rate because of the early partial settlement of the term loan which resulted in an acceleration of the accretion interest expense under the applicable IFRS accounting provisions.
The loss after tax for continuing operations for the quarter was $9.7m in comparison to a loss of $0.8m for the equivalent period last year. This decrease in profitability of $8.9m was primarily due to lower gross profit, lower other operating income and higher financial expenses this quarter, with the partial early term loan repayment the main driver for the increase in financial expenses.
Loss before interest, tax, depreciation, amortisation and share option expense for the year and excluding impairment charges for Q2 2022 (Adjusted EBITDASO) was $0.5m. This is made up as follows:
$m | |
Operating loss | (1.4) |
Impairment charge | 0.5 |
Depreciation | 0.1 |
Amortisation | 0.2 |
Adjusted EBITDA | (0.6) |
Share option expense | 0.1 |
Adjusted EBITDASO | (0.5) |
The basic loss per ADS for Q2, 2022 was 28.6 cents versus 3.7 cents in Q2, 2021. For both Q2, 2022 and Q2, 2021, the diluted loss per ADS was the same as the basic loss per ADS as potential issuances of ordinary shares were anti-dilutive as their conversion to ADSs would not increase the loss per ADS.
Use of Non-IFRS Financial Measures
The Company reports financial results in accordance with IFRS. To supplement the consolidated financial statements presented in accordance with IFRS, the Company presents the non-IFRS presentation of Adjusted EBITDA and Adjusted EBITDASO. The Company uses these non-IFRS measures to evaluate and manage the Company’s operations internally. The Company is also providing this information to assist investors in performing additional financial analysis. Reconciliation between the Company’s results on a IFRS and non-IFRS basis is provided in a table above.
Investment by MiCo Group
In May 2022, the Company announced the successful closure of a $45.2m investment from MiCo Ltd (“MiCo”). MiCo, a KOSDAQ-listed and Korea-based company, is engaged in the biomedical business through its affiliate MiCo BioMed. The investment consists of an equity investment of $25.2m and a seven-year, unsecured junior convertible note of $20.0m. The convertible note has an interest rate of 1.5%. The convertible note mandatorily converts into ADSs if the volume weighted average price of the Company’s ADSs is at or above $3.24 for any five consecutive NASDAQ trading days.
The convertible loan is accounted for as a compound financial instrument containing both an equity and liability element. The debt component is accounted for at amortised cost in accordance with IFRS 9. At June 30, 2022, the carrying value of the convertible note’s debt component was $13.4m and accretion interest of $120,000 was recognised as a financial expense in the six-months ended June 30, 2022. The equity component of the convertible note is $6.7m and is recorded in the equity section of the Balance Sheet. There is no remeasurement of the equity element following initial recognition.
Liquidity
The Group’s cash balance increased from $10.1m to $10.5m in Q2, 2022, an increase of $0.4m. An investment of $45.2m from the Mico Group was received during the quarter and this was primarily used to fund the $34.5m early repayment of the term loan and a related penalty for the early repayment of $3.5m.
Cash used by operations during Q2, 2022 was $1.9m. During Q2, 2022 the Company had capital expenditure cash outflows of $1.8m and payments for property leases of $0.7m. Interest payments in the quarter were $2.0m.
Q3 2022 Revenue Guidance
Preliminary estimates of revenues for Q3 2022 indicate that revenues are expected to be within the range of approximately $19m to $20m with the expected increase in revenue primarily driven by an expected increase of over 30% in HIV PoC revenue and an approximate 25% increase in revenue in our Life Sciences supply business, Fitzgerald Industries.
TrinScreen HIV Update
Premier Resolution FDA 510k Submission
Comments
Commenting, Aris Kekedjian, Chief Executive Officer and Chairman stated “I’m delighted to lead Trinity Biotech at such an exciting time of change and transformation with the shift to decentralised diagnostics. The company has many of the capabilities, and the experience, to become a key platform in this evolving ecosystem. In addition, our prospects in the autoimmune segment are particularly enticing and likely an area of further investment. We continue to enhance our team and streamline our operations to drive agility and efficiency to maximise shareholder value. I look forward to engaging with shareholders in the coming weeks to lay out our strategy for growth and profitability.”
Commenting, John Gillard, Chief Financial Officer stated “The Company made further substantial progress in strengthening its balance sheet and reducing the cash cost of its debt during Q2 2022. Given the hardening of debt markets over the course of 2022 this action has been shown to be timely and beneficial. The Company continues to invest in future growth, especially with the submission for FDA approval for our Premier Resolution and progress in the adoption of our WHO approved TrinScreen HIV product in Africa.”
Forward-Looking Statements
Certain statements made in this release that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “estimate”, “project”, “intend”, “expect”, “believe” and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause the actual results, performance or achievements of Trinity Biotech to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, but not limited to, the results of research and development efforts, risks associated with the outbreak and global spread of the coronavirus (COVID-19), the effect of regulation by the U.S. Food and Drug Administration and other agencies, the impact of competitive products, product development commercialization and technological difficulties. For additional information regarding these and other risks and uncertainties associated with Trinity Biotech’s business, reference is made to our reports filed from time to time with the U.S. Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements for any reason.
About Trinity Biotech
Trinity Biotech develops, acquires, manufactures and markets diagnostic systems, including both reagents and instrumentation, for the point-of-care and clinical laboratory segments of the diagnostic market. The products are used to detect infectious diseases and to quantify the level of Haemoglobin A1c and other chemistry parameters in serum, plasma and whole blood. Trinity Biotech sells direct in the United States, Germany, France and the U.K. and through a network of international distributors and strategic partners in over 75 countries worldwide. For further information, please see the Company’s website: www.trinitybiotech.com.
Trinity Biotech plc
Consolidated Income Statements
(US$000’s except share data) | Three Months Ended June 30, 2022 (unaudited) |
Three Months Ended June 30, 2021 (unaudited) |
Six Months Ended June 30, 2022 (unaudited) |
Six Months Ended June 30, 2021 (unaudited) |
|||||||||||
Revenues | 18,464 | 25,843 | 37,240 | 51,437 | |||||||||||
Cost of sales | (11,937 | ) | (14,816 | ) | (23,443 | ) | (29,497 | ) | |||||||
Gross profit | 6,527 | 11,027 | 13,797 | 21,940 | |||||||||||
Gross margin % | 35.3 | % | 42.7 | % | 37.0 | % | 42.7 | % | |||||||
Other operating income | 1 | 2,906 | 1 | 2,907 | |||||||||||
Research & development expenses | (984 | ) | (1,056 | ) | (1,949 | ) | (2,493 | ) | |||||||
Selling, general and administrative expenses | (6,459 | ) | (6,591 | ) | (13,190 | ) | (12,990 | ) | |||||||
Impairment charges | (519 | ) | (6,068 | ) | (519 | ) | (6,068 | ) | |||||||
Operating (Loss)/Profit | (1,434 | ) | 218 | (1,860 | ) | 3,296 | |||||||||
Financial income | 0 | 1,018 | 0 | 1,019 | |||||||||||
Financial expenses | (8,300 | ) | (1,364 | ) | (20,303 | ) | (2,736 | ) | |||||||
Net financing expense | (8,300 | ) | (346 | ) | (20,303 | ) | (1,717 | ) | |||||||
(Loss)/Profit before tax | (9,734 | ) | (128 | ) | (22,163 | ) | 1,579 | ||||||||
Income tax credit/(expense) | 29 | (655 | ) | 180 | (760 | ) | |||||||||
Profit/(Loss) for the period on continuing operations |
(9,705 |
) |
(783 |
) |
(21,983 |
) |
819 |
||||||||
Profit/(Loss) for the period on discontinued operations |
(1 |
) |
– |
(2 |
) |
– |
|||||||||
Profit/(Loss) for the period (all attributable to owners of the parent) |
(9,706 |
) |
(783 |
) |
(21,985 |
) |
819 |
||||||||
(Loss)/ Earnings per ADS (US cents) | (28.6 | ) | (3.7 | ) | (75.1 | ) | 3.9 | ||||||||
Diluted (loss)/ earnings per ADS (US cents) | (28.6 | ) | (3.7 | ) | (75.1 | ) | 3.9 | ||||||||
Weighted average no. of ADSs used in computing basic and diluted earnings per ADS |
33,952,095 |
20,901,703 |
29,289,617 |
20,901,703 |
Trinity Biotech plc
Consolidated Balance Sheets
June 30, 2022 US$ ‘000 (unaudited) |
March 31, 2022 US$ ‘000 (unaudited) |
December 31, 2021 US$ ‘000 |
|||||||||
ASSETS | |||||||||||
Non-current assets | |||||||||||
Property, plant and equipment | 6,261 | 5,634 | 5,918 | ||||||||
Goodwill and intangible assets | 38,743 | 37,320 | 35,981 | ||||||||
Deferred tax assets | 4,553 | 4,478 | 4,101 | ||||||||
Derivative financial asset | 140 | 219 | – | ||||||||
Other assets | 207 | 175 | 207 | ||||||||
Total non-current assets | 49,904 | 47,826 | 46,207 | ||||||||
Current assets | |||||||||||
Inventories | 29,109 | 29,627 | 29,123 | ||||||||
Trade and other receivables | 15,913 | 16,898 | 16,116 | ||||||||
Income tax receivable | 1,762 | 1,734 | 1,539 | ||||||||
Cash, cash equivalents and deposits | 10,453 | 10,012 | 25,910 | ||||||||
Total current assets | 57,237 | 58,271 | 72,688 | ||||||||
TOTAL ASSETS | 107,141 | 106,097 | 118,895 | ||||||||
EQUITY AND LIABILITIES | |||||||||||
Equity attributable to the equity holders of the parent | |||||||||||
Share capital | 1,963 | 1,445 | 1,213 | ||||||||
Share premium | 53,297 | 21,874 | 16,187 | ||||||||
Treasury shares | (24,922 | ) | (24,922 | ) | (24,922 | ) | |||||
Accumulated surplus/(deficit) | (9,103 | ) | 481 | 12,559 | |||||||
Translation reserve | (5,439 | ) | (5,186 | ) | (5,379 | ) | |||||
Other reserves | 23 | 23 | 23 | ||||||||
Total equity/(deficit) | 15,819 | (6,285 | ) | (319 | ) | ||||||
Current liabilities | |||||||||||
Income tax payable | 21 | 40 | 22 | ||||||||
Trade and other payables | 13,600 | 15,637 | 17,107 | ||||||||
Exchangeable senior note payable | 210 | 210 | 83,312 | ||||||||
Provisions | 50 | 50 | 50 | ||||||||
Total current liabilities | 13,881 | 15,937 | 100,491 | ||||||||
Non-current liabilities | |||||||||||
Senior secured term loan | 43,990 | 76,246 | – | ||||||||
Derivative financial liability | 2,002 | 1,671 | – | ||||||||
Convertible Note | 13,372 | – | – | ||||||||
Other payables | 12,723 | 13,279 | 13,865 | ||||||||
Deferred tax liabilities | 5,354 | 5,249 | 4,858 | ||||||||
Total non-current liabilities | 77,441 | 96,445 | 18,723 | ||||||||
TOTAL LIABILITIES | 91,322 | 112,382 | 119,214 | ||||||||
TOTAL EQUITY AND LIABILITIES | 107,141 | 106,097 | 118,895 |
Trinity Biotech plc
Consolidated Statement of Cash Flows
Three Months Ended June 30, 2022 (unaudited) |
Three Months Ended June 30, 2021 (unaudited) |
Six Months Ended June 30, 2022 (unaudited) |
Six Months Ended June 30, 2021 (unaudited) |
||||||||||||
Cash flows from operating activities | |||||||||||||||
Profit/(loss) for the period | (9,706 | ) | (783 | ) | (21,985 | ) | 819 | ||||||||
Adjustments to reconcile net profit/(loss) to cash provided by operating activities: | |||||||||||||||
Depreciation | 47 | 577 | 479 | 1,136 | |||||||||||
Amortisation | 214 | 240 | 442 | 458 | |||||||||||
Income tax (credit)/expense | (29 | ) | 655 | (180 | ) | 760 | |||||||||
Financial income | – | (1,018 | ) | – | (1,019 | ) | |||||||||
Financial expense | 8,300 | 1,364 | 20,303 | 2,736 | |||||||||||
Share-based payments | 122 | 312 | 319 | 693 | |||||||||||
Foreign exchange gains on operating cash flows | (191 | ) | (276 | ) | (149 | ) | (67 | ) | |||||||
Impairment charge | 519 | 6,068 | 519 | 6,068 | |||||||||||
Other non-cash items | 995 | (2,774 | ) | 305 | (3,144 | ) | |||||||||
Net movement on working capital | (2,217 | ) | (3,155 | ) | (3,481 | ) | (1,326 | ) | |||||||
Cash (used)/generated from operations | (1,946 | ) | 1,210 | (3,428 | ) | 7,114 | |||||||||
Interest paid | (1 | ) | (21 | ) | (3 | ) | (25 | ) | |||||||
Interest received | 2 | 1 | 2 | 2 | |||||||||||
Income taxes received/(paid) | 13 | (72 | ) | 1 | 120 | ||||||||||
Net cash (used)/generated by operating activities | (1,932 | ) | 1,118 | (3,428 | ) | 7,211 | |||||||||
Cash flows from investing activities | |||||||||||||||
Payments to acquire intangible assets | (1,658 | ) | (1,742 | ) | (3,211 | ) | (3,288 | ) | |||||||
Acquisition of property, plant and equipment | (143 | ) | (389 | ) | (305 | ) | (969 | ) | |||||||
Net cash used in investing activities | (1,801 | ) | (2,131 | ) | (3,516 | ) | (4,257 | ) | |||||||
Cash flows from financing activities | |||||||||||||||
Issue of ordinary share capital including share premium (net of issuance costs) | 25,019 | – | 25,019 | – | |||||||||||
Net proceeds from new senior secured term loan | – | – | 80,014 | – | |||||||||||
Proceeds for convertible note issued | 20,000 | – | 20,000 | ||||||||||||
Expenses paid in connection with debt financing | (40 | ) | – | (2,356 | ) | – | |||||||||
Repayment of senior secured term loan | (34,500 | ) | – | (34,500 | ) | – | |||||||||
Penalty for early settlement of term loan | (3,450 | ) | – | (3,450 | ) | – | |||||||||
Purchase of exchangeable notes | – | – | (86,730 | ) | – | ||||||||||
Interest paid on senior secured term loan | (1,920 | ) | – | (3,706 | ) | – | |||||||||
Interest paid on convertible note | (49 | ) | – | (49 | ) | – | |||||||||
Proceeds from Paycheck Protection loans | – | – | – | 1,764 | |||||||||||
Interest payment on exchangeable notes | (4 | ) | (1,998 | ) | (1,289 | ) | (1,998 | ) | |||||||
Payment of lease liabilities | (729 | ) | (743 | ) | (1,500 | ) | (1,472 | ) | |||||||
Net cash generated/(used) in financing activities | 4,327 | (2,741 | ) | (8,547 | ) | (1,706 | ) | ||||||||
Increase/(decrease) in cash and cash equivalents and short-term investments | 594 | (3,754 | ) | (15,491 | ) | 1,248 | |||||||||
Effects of exchange rate movements on cash held | (153 | ) | 95 | 34 | 43 | ||||||||||
Cash and cash equivalents and short-term investments at beginning of period | 10,012 | 32,277 | 25,910 | 27,327 | |||||||||||
Cash and cash equivalents and short-term investments at end of period | 10,453 | 28,618 | 10,453 | 28,618 | |||||||||||
The above financial statements have been prepared in accordance with the principles of International Financial Reporting Standards and the Company’s accounting policies but do not constitute an interim financial report as defined in IAS 34 (Interim Financial Reporting).
Contact: | Trinity Biotech plc | Lytham Partners, LLC |
John Gillard | Joe Diaz | |
(353)-1-2769800 | (1)-602-889-9700 | |
E-mail: investorrelations@trinitybiotech.com |
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