Horizon Discovery Group plc – Full Year Results

Horizon Discovery Group plc (LSE: HZD), a global leader in the application of gene editing and gene modulation technologies, today announces its full year results for the year ended 31 December 2018.

Financial highlights

• Reported revenue increased 68% to £58.7m (FY17 restated¹: £35.0m) or up 73% to £60.5m on a constant currency basis3
• Like-for-like3 revenue (i.e. excluding Dharmacon business) of £30.1m, growth of 16%[1]
• 148% increase in Research Products revenue and 72% increase in Applied Products revenue partially offset by a 21% decline in Services revenue
• Gross margin increased to 67.3% (FY17 restated¹: 61.1%) driven by a combination of the full-year effect of Dharmacon, increase in licence revenue, product optimisation and change in mix towards higher-margin products
• The Group reports a loss after taxation of £35.8m for the full year (FY17 restated¹: loss of £11.0m)
• Positive adjusted EBITDA3 of £0.7m (FY17 restated¹: loss of £3.0m) due to improved revenue, margin performance and a focus on cost management (refer to Financial Review for further detail)
• The Group experienced a positive operating  cash flow versus the prior year due to the improved adjusted EBITDA performance coupled with a focus on  working capital management
• Robust cash position with cash of £26.7m[2] at 31 December 2018 (FY17: £28.1m)
• Exceptional3 non-cash impairment relating to the Group’s In Vivo business of £32.1m
  –  In Vivo business contributed ca. 8% of revenue in FY18
• Review led to a change in revenue recognition of licence contracts leading to a restatement of FY17 revenue from £36.5m to £35.0m1

Business highlights (including post-period end)

• Development and implementation of new investment strategy, focusing on core markets with highest growth potential
• Integration of Dharmacon business completed, with Dharmacon returning to high single digit growth driven by market share gains in RNAi in all territories and growth in CRISPR reagents
• CRISPR screening agreements signed with major pharmaceutical companies
• BioProduction: two commercial licences, each worth approximately £1 million, signed with major pharmaceutical companies
• Exclusive strategic partnership signed with Rutgers, The State University of New Jersey (US), to develop and commercialise base editing, a novel gene editing technology
• Partnership signed with Celyad for use of Horizon IP in next generation CAR-T therapeutic developments
• Terry Pizzie appointed as Chief Executive Officer of the Group and, post-period end, Jayesh Pankhania appointed as Chief Financial Officer of the Group

 Outlook

• New eCommerce platform to be launched in H219 will support enhanced customer experience and drive future revenue growth
• Process improvements and automation expected to increase capacity in cell line engineering
• Positive sales momentum in the first quarter of 2019 and the Board expects FY19 revenues to be in-line with current market expectations and to maintain a positive EBITDA performance  

Terry Pizzie, Chief Executive Officer of Horizon Discovery, commented: “Given that 2018 was a year of change for the business, it is even more pleasing that the Group was able to report a strong set of results for the year, with a substantial increase in reported revenues, gross margin improvements and, for the first time, a positive adjusted EBITDA. 

“Our customers include many of the world’s leading academic institutes and global pharmaceutical companies. Our expertise and insights into the challenges that they face is driving us to create products and services that not only differentiate our business, but also help our customers to achieve a deeper understanding of biological systems, thereby fuelling the development of the next wave of precision medicine.  

“I believe that our commercial excellence, scientific innovation and industry know-how remain key differentiators. Our ‘Investing for Growth’ strategy will see the business shift from a scientifically-led life sciences company to a fully commercial tools company, which will mean that Horizon is increasingly well placed to capitalise on its market-leading position to drive sustained top-line growth.

“With a robust balance sheet and an already strong order book for 2019, we are confident in our growth prospects. The Board expects FY19 revenues to be in-line with current market expectations and to maintain  positive EBITDA development.”