Abingdon (ABDX) Shares Crashed 24.4% After Revenues Fell by £6M

Key points:
The Abingdon Health share price crashed 24.4% after revenues fell by £6m.
The company’s is yet to be paid by the DHSC for its 2021 deliveries.
Therefore, the firm has changed its strategy to focus on selling to consumers.

The Abingdon Health PLC (LON: ABDX) share price crashed 24.4% after reporting that revenues for the six months to 31 December 2021 fell £6 million to £1.7 million.

The company that develops rapid tests revealed that the lower revenues were triggered by the lack of sales of its AbC-19™ Rapid Test from the UK Department of Health and Social Science (DHSC) and declining sales of its COVID-19 lateral-flow test.

Also read: Best Healthcare Stocks to Buy Right Now.

Abingdon Health’s share price has fallen 74.2% in 2022 after its COVID-19 test could not identify the Omicron variant, which currently makes up most new cases.

The company is also suffering from a projected decline in demand for coronavirus tests as the UK government relaxes its testing requirements for travellers and British citizens.

Abingdon had £5.9 million in cash at the end of 2021 after raising £6.1 million via a share placement that significantly diluted existing shareholders. However, the company ran into a cash crunch after the DHSC declined to pay for the AbC-19™ Rapid Tests it had delivered.

The company reminded investors that the DHSC had reduced to pay an outstanding amount of £8.45 million for the rapid tests delivered in January 2021 before the government authority terminated its supply contract.

Abingdon Health signed a non-binding Head of Terms agreement with the DHSC on 9 November 2021 following mediation efforts but is yet to receive any payments from the government entity.

The company is looking forward to the judicial review scheduled for May 2022, when the complete details about its contract with the DHSC will become public as it fights for the payments from the DHSC.

The firm believes that antibody testing is the future of COVID-19 testing but is currently shifting its focus to three strategic growth areas identified by its management board.

One of the growth areas identified includes its contract manufacturing services, which it offers to other companies that need to produce lateral flow tests. The firm can produce both COVID-19 and non-COVID-19 lateral flow tests.

Abingdon is currently working with Vatic Health Limited (Vatic) to start producing its Know-Now™ COVID-19 rapid antigen test after completing a large-scale transfer of its technical specifications and technology.

Vatic’s test is close to being approved after reporting positive clinical trial results and is about to submit the results to the US FDA for Emergency Use Authorisation.

Abingdon faced another challenge after Avacta declined the transfer of its AffiDX® SARS-CoV-2 antigen lateral flow tests after successfully preparing three batches of the product.

The firm is currently working on its self-test e-commerce store, which it will launch soon as it focuses on its direct to consumer business instead of its B2B business, where it used to target large medical organisations.

The company’s focus on the B2C market is informed by research that indicates that the B2C market for COVID-19 lateral flow test will grow to $11 billion by 2030.

Abingdon is also focused on developing its brand of lateral flow self-tests that consumers can use from the comfort of their homes.

Chris Yates, Abingdon Health’s CEO, commented: “The COVID-19 market for lateral flow tests has been unpredictable against the constantly evolving pandemic situation. In the UK, the COVID-19 antigen test market has been dominated by overseas manufacturers, and there has been no Government support to date for COVID-19 antibody testing. Although it remains an opportunity for the business, it is clear that we can no longer rely on the COVID-19 market to meet our growth plans. It is also important we respond to fundamental changes in our market, which support greater adoption and broader utility for lateral flow testing as a core diagnostic away from centralised labs. Therefore, I am pleased to set out our strategic and commercial update today.”

Abingdon Health shares have fallen 74.2% in 2022, and we cannot rule out a further decline. Hopefully, the firm’s new strategy will start paying dividends quickly, pushing its share price higher. Until then, I will be staying away from the firm.

*This is not investment advice. Always do your due diligence before making investment decisions.

Abingdon Health share price.