Horizon Discovery deliver on path to profit strategy
- On track to meet revenue guidance for the enlarged Group of £37-£41 million for FY2017, with strong H2 order book
- Delivery on scalability and path-to-profit strategy now accelerated through the transformational acquisition of GE Healthcare Dharmacon, Inc.
- Consolidation of cell line manufacturing capability from Vienna, Austria to Centre of Excellence in Cambridge, UK
Cambridge, UK, 8 September 2017: Horizon Discovery Group plc (LSE: HZD) (“Horizon” or “the Group”), a global leader in gene editing and gene modulation technologies, today announces a trading update ahead of its interim results for the six months ended 30 June 2017. The Group will announce its interim results on Tuesday 26 September 2017.
Strong financial performance
The Group expects to report six month revenues of £12.1 million, in line with previous guidance, representing growth of at least 20%. Reported Group gross margins are expected to expand substantially to at least 60% (HY16: 48%), enhanced by significant improvement in service margins as the impact of actions to drive operational efficiencies are realised. As anticipated, the Group expects to report negative EBITDA in H1 2017 in line with its historical H1:H2 phasing of revenue of c. 40%:60% and the fixed cost base of the business.
Based on the historical revenue profile, combined with a strong H2 order book, the Group is on track to achieve FY2017 revenue in the £30 million – £33 million range on an organic basis, £37 million – £41 million inclusive of the impact of GE Healthcare Dharmacon, Inc. (“Dharmacon”), whose P&L will be consolidated with effect from 1 September 2017. Full year EBITDA for the enlarged group is expected to be approximately break-even prior to exceptional items relating to the acquisition, integration and restructuring costs and discontinued operations.
Dharmacon acquisition complete
On 31 August 2017 Horizon announced completion of the $85 million acquisition of Dharmacon, a global leader in gene modulation products with a fast-growing gene-editing product portfolio that is highly complementary to Horizon’s Products business. The deal has approximately doubled the annual revenue of the Group, is significantly accretive to earnings, and provides further opportunities to accelerate revenue growth and margin expansion via commercial synergies and cost efficiencies across the enlarged business. The initial transition to the enlarged organisation has been delivered successfully and ongoing integration planning continues to progress well.
Over-subscribed £80 million Placing
On 23 August 2017, Horizon completed an over-subscribed placing of shares, raising gross proceeds of £80 million. Following the investment in the Dharmacon acquisition and settlement of the debt facility, the Group will be in a robust cash position. The cash proceeds of the placing will be used to support accelerated growth, drive sustainable revenue growth and margin expansion, exploit synergies to drive profitability and strengthen the balance sheet.
Continued delivery of Path to Profit
The Group is now benefiting from the investments and actions taken in prior years to optimise organisational design and operating efficiency. In line with the strategy to transition to sustainable profitability, this process is continuing and today Horizon announces the intention to close the Group’s site in Vienna, Austria, by the end of 2017, consolidating its cell line manufacturing capabilities into Horizon’s UK-based in vitro Centre of Excellence. This closure, combined with further reductions in personnel across the Group, would result in an overall reduction of staffing costs of c. 5% (prior to the acquisition of Dharmacon) by year end.
Dr. Darrin M. Disley, Chief Executive Officer of Horizon Discovery Group, commented: “Horizon is a leader in the rapidly growing gene editing and gene modulation markets that are having a major impact on the crucial drivers of healthcare, including personalised medicine, immuno-oncology, and gene and cell therapy. With our continued growth and delivery of the business strategy, we look forward to a strong performance in the second half of the year.
“The acquisition of Dharmacon has created immediate value for our customers and for the Group, and we look forward to benefiting from the substantial commercial potential of the enlarged business. The transaction has also allowed Horizon to significantly grow its shareholder base, and we are grateful for the continued support of our existing investors, and to welcome GE Healthcare and many specialist life science investors from the US to our shareholder register.
“With the acquisition of Dharmacon now complete, and a strong balance sheet following the £80 million placing, we are well positioned to unlock the potential of this highly complementary acquisition, building an innovation-driven and customer-focused business that delivers sustained growth and profitability.”