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Trinity Biotech Announces Q3 2023 Financial Results & Business Update

DUBLIN, Ireland, Jan. 31, 2024 (GLOBE NEWSWIRE) — Trinity Biotech plc (Nasdaq: TRIB) today announced the Company’s results for the quarter ended September 30, 2023.

Business Updates and Strategic Priorities

In December 2023, the Company announced the promotion of John Gillard from CFO to CEO and the promotion of Des Fitzgerald to the role of Interim CFO. The new management team has now put in place a clear set of strategies and priorities as set out below.

Biosensor technology acquisition

Revenue growth and cash generation from our rapid HIV business

Optimization of our Diabetes business to help meet growth and profitability goals

Optimise the value of our other businesses

Overall focus on improved profitability and revenue growth

Amended Credit Agreement

Q4 2023 Preliminary Unaudited Trading Update

Third Quarter Results (Unaudited)
                                                                                          
The results of the Fitzgerald Industries life sciences supply business, which was disposed of on April 27, 2023, have been reported separately as discontinued operations in the Consolidated Income Statements for all periods presented. In the Consolidated Balance Sheet at March 31, 2023, the assets and liabilities attributable to Fitzgerald Industries were separately presented within “Assets included in disposal group held for sale” and “Liabilities included in disposal group held for sale”. At June 30, 2023 and September 30, 2023, the assets and liabilities attributable to Fitzgerald Industries have been de-recognised from the Consolidated Balance Sheet.

Total revenues for Q3, 2023 were $14.7 million which compares to $15.7 million in Q3, 2022, a decrease of 6.5% and which were broken down as follows:

Table 1. Trinity Revenue Segments

  2023
Quarter 3
2022
Quarter 3
Increase/
(decrease)
  US$’000 US$’000 %
Clinical laboratory 11,981 13,168 (9.0 %)
Point-of-care 2,696 2,536 6.3 %
Total 14,677 15,704 (6.5 %)

Clinical laboratory revenues were $12.0 million, compared to $13.2 million in Q3, 2022, representing a decrease of $1.2 million or 9%.

This decrease in clinical laboratory revenues was primarily driven by lower lab services and autoimmune manufacturing revenue, which was down $1.1 million versus Q3, of 2022. As previously reported, in early 2023 we ceased transplant testing activity at our Buffalo, New York laboratory, which drove the majority of this decline. In addition, there was a reduction of just over $0.2 million in revenues from our COVID-19 VTM products and a reduction of $0.2 million in revenues from our Clinical Chemistry products when compared to Q3, 2022. These reductions were offset by an increase of $0.3 million within our Haemoglobins division as a result of increased sales of our consumables for our Premier 9210 product.

Point-of-care revenues for Q3, 2023 were $2.7 million, which was 6.3% higher than in Q3, 2022, due to higher sales of our HIV confirmatory test Uni-Gold during the quarter.

In Q3, 2023, gross profit was $4.3 million, equating to a gross margin of 29.2%, compared to a Q3, 2022 gross profit of $0.3 million equating to a gross margin of 2.1%. The lower gross margin in Q3, 2022 reflected excess inventory obsolescence charges of $4.7 million and excluding this charge, Gross Margin for Q3, 2022 would have been 32.0%.

In Q3, 2023 an excess inventory obsolescence charge of $0.9m was recognised, driven by a write down of COVID-19 VTM inventory of $0.6 million, as expected demand for that product did not materialise in Q4 2023 or the early part of 2024 and a further write down of inventory relating to our Tri-Stat instrument of $0.3 million as part of the sunsetting of that product line. Excluding these excess inventory obsolescence charges in Q3, 2023, Gross Margin would have been 35.5%, an increase of 350 basis points above Q3, 2022 Gross Margin analyzed on the same basis.

Other operating income of $70,000 for Q3, 2023, compared to $1,000 for the same period in 2022. This income relates to a transition services agreement with the acquirers of Fitzgerald Industries.

Research and development expenses of $1.2 million in Q3, 2023 increased from $1.0 million in Q3, 2022 mainly due to lower capitalization of payroll costs into product development intangible assets.

Selling, general and administrative (“SG&A”) expenses of $7.7 million increased by $2.5 million in Q3, 2023, compared to $5.2 million in Q3, 2022. The $2.5 million increase was primarily related to:

In Q3, 2023 our non-product development professional advisory, audit and consulting fees were approximately $1.0 million, which is higher than our expected future spend. This spend was mainly driven by a) higher legal and financial advisory transaction fees incurred as part of our acquisition of the biosensor assets of Waveform and b) external consulting fees incurred as we continue the examination of the optimal path to value accretion for some of our smaller business lines. Although we also expect an elevated level of advisory and professional fees in Q4 2023 driven by the same activities, these projects are time limited, and we expect our annualized non-product development professional advisory, audit and consulting fees expenses to be broadly half of that level per quarter through 2024, unless we engage in additional transactions.

Operating loss for the quarter was $4.5 million, compared to an operating loss of $8.1 million in Q3, 2022. The lower loss was due to an impairment charge recognised in Q3, 2022 of $2.3 million and higher excess inventory obsolescence charges in Q3, 2022 of $3.8 million when compared to Q3, 2023, partly offset by higher SG&A costs in Q3, 2023.

Financial income for Q3, 2023 was $0.4 million compared to $0.3 million for Q3, 2022 and related to fair value adjustments to warrants granted to the Group’s principal lender. Financial expenses in Q3, 2023 were $2.4 million compared to $2.2 million in Q3, 2022, an increase of $0.2 million, which was attributed to higher prevailing interest rates on the senior secured loan.

The loss after tax for continuing operations for the quarter was $6.7 million compared to a loss of $10.0 million for the comparable period last year. The variance is due to the impairment charge and excess inventory obsolescence charges in Q3, 2022, partly offset by higher SG&A costs in Q3, 2023.

Loss before interest, tax, depreciation, amortization and share option expense (EBITDASO) for continuing operations for Q3, 2023 was $3.5 million. This is broken out in more detail in Table 2 below.

Table 2. EBITDA and EBITDASO Calculation:

  $m
Operating loss  (4.5 )
Depreciation 0.2  
Amortisation 0.1  
EBITDA for continuing operations (4.2 )
Share option expense 0.7  
EBITDASO for continuing operations (3.5 )

            Note: table contains rounded numbers.

The basic loss per ADS for Q3, 2023 was $0.18 compared to a basic loss per ADS of $0.24 in Q3, 2022. Diluted loss per ADS is the same as basic loss per ADS for both current and comparative quarters.

Use of Non-IFRS Financial Measures
The attached summary unaudited financial statements were prepared in accordance with International Financial Reporting Standards (IFRS). To supplement the consolidated financial statements presented in accordance with IFRS, the Company presents non-IFRS presentations of, adjusted EBITDA and adjusted EBITDASO. The adjustments to the Company’s IFRS results are made with the intent of providing both management and investors a more complete understanding of the Company’s underlying operational results, trends, and performance. Non-IFRS financial measures mainly exclude, if and when applicable, the effect of share-based payments, excess inventory obsolescence charges, depreciation, amortization and impairment charges.

EBITDA for continuing operations and EBITDASO for continuing operations are presented to evaluate the Company’s financial and operating results on a consistent basis from period to period. The Company also believes that these measures, when viewed in combination with the Company’s financial results prepared in accordance with IFRS, provides useful information to investors to evaluate ongoing operating results and trends. EBITDA for continuing operations and EBITDASO for continuing operations, however, should not be considered as an alternative to operating income or net income for the period and may not be indicative of the historic operating results of the Company; nor is it meant to be predictive of potential future results. EBITDA for continuing operations and EBITDASO for continuing operations are not measures of financial performance under IFRS and may not be comparable to other similarly titled measures for other companies. Reconciliation between the Company’s operating profit/(loss) and EBITDA for continuing operations and EBITDASO for continuing operations are presented.

Liquidity
The Group’s cash balance decreased from $14.2 million at the end of Q2, 2023 to $6.3 million at the end of Q3, 2023, a decrease of $7.9 million. Cash used by operating activities for Q3, 2023 was $4.7 million compared to $0.7 million generated in Q3, 2022, which was inclusive of a negative net working capital movement of $2.3 million. During Q3, 2023 the Company had investing cash outflows related to acquisitions of property, plant and equipment, product development and transaction costs of $0.9 million (Q3, 2022: $1.3 million) and payments for property leases of $0.6 million (Q3, 2022: $0.7 million). Interest payments in the quarter were $1.9 million (Q3, 2022: $1.7 million).

Conference Call

The Company will host a conference call on Wednesday, January 31 at 8:30 a.m. EST to discuss its recent Waveform acquisition and third quarter results. To access the call, please dial 1-877-407-0784 (domestic) or 1-201-689-8560 (international) and use conference ID 13744109.

A live webcast and replay of the conference call is available at: https://viavid.webcasts.com/starthere.jsp?ei=1654009&tp_key=270fbd0272

Forward-Looking Statements

This release includes statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”), including but not limited to statements related to Trinity Biotech’s cash position, financial resources and potential for future growth, market acceptance and penetration of new or planned product offerings, and future recurring revenues and results of operations. Trinity Biotech claims the protection of the safe-harbor for forward-looking statements contained in the Reform Act. These forward-looking statements are often characterised by the terms “may,” “believes,” “projects,” “expects,” “anticipates,” or words of similar import, and do not reflect historical facts. Specific forward-looking statements contained in this presentation may be affected by risks and uncertainties, including, but not limited to, our ability to capitalize on our purchase of the assets of Waveform, our continued listing on the Nasdaq Stock Market, our ability to achieve profitable operations in the future,  the impact of the spread of COVID-19 and its variants, potential excess inventory levels and inventory imbalances at the company’s distributors, losses or system failures with respect to Trinity Biotech’s facilities or manufacturing operations, the effect of exchange rate fluctuations on international operations, fluctuations in quarterly operating results, dependence on suppliers, the market acceptance of Trinity Biotech’s products and services, the continuing development of its products, required government approvals, risks associated with manufacturing and distributing its products on a commercial scale free of defects, risks related to the introduction of new instruments manufactured by third parties, risks associated with competing in the human diagnostic market, risks related to the protection of Trinity Biotech’s intellectual property or claims of infringement of intellectual property asserted by third parties and risks related to condition of the United States economy and other risks detailed under “Risk Factors” in Trinity Biotech’s annual report on Form 20-F for the fiscal year ended December 31, 2022 and Trinity Biotech’s other periodic reports filed from time to time with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date the statements were made. Trinity Biotech does not undertake and specifically disclaims any obligation to update any forward-looking statements.

The foregoing description of the transaction does not purport to be complete and is qualified in its entirety by reference to the transaction documents which will be included in a Form 6-K to be filed with the U.S. Securities and Exchange Commission.

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

  Three Months
Ended

September 30, 2023 
US$’000

(unaudited)
Three Months
Ended

September 30, 2022
US$’000
(unaudited)
Nine Months
Ended

September 30, 2023  
US$’000

(unaudited)
Nine Months
Ended

September 30, 2022
US$’000
(unaudited)
         
Revenues 14,677   15,704   43,404   46,795  
Cost of sales (10,397 ) (15,375 ) (28,521 ) (34,902 )
Gross profit 4,280   329   14,883   11,893  
Gross margin % 29.2 % 2.1 % 34.3 % 25.4 %
         
Other operating income 70   1   141   2  
Research & development expenses (1,169 ) (1,023 ) (3,262 ) (2,972 )
Selling, general and administrative expenses (7,681 ) (5,150 ) (24,217 ) (17,311 )
Impairment charges   (2,288 ) (10,815 ) (2,808 )
         
Operating Loss (4,500 ) (8,131 ) (23,270 ) (11,196 )
         
Financial income 389   329   605   329  
Financial expenses (2,387 ) (2,184 ) (8,761 ) (22,488 )
Net financial expense (1,998 ) (1,855 ) (8,156 ) (22,159 )
         
Loss before tax (6,498 ) (9,986 ) (31,426 ) (33,355 )
         
Income tax (expense)/credit (222 ) (2 ) 56   181  
Loss for the period on continuing operations (6,720 ) (9,988 ) (31,370 ) (33,174 )
         
(Loss)/profit for the period on discontinued operations (1 )              1,043   12,853   2,244  
Loss for the period (all attributable to owners of the parent)  (6,721 ) (8,945 ) (18,517 )  (30,930 )
         
Loss per ADS (US cents) (17.5 ) (23.5 ) (48.4 ) (95.9 )
         
Diluted loss per ADS (US cents) (17.5 ) (23.5 ) (48.4 ) (95.9 )
         
Weighted average no. of ADSs used in computing basic earnings per ADS 38,327,571   38,107,571   38,257,085   32,261,235  
         
Weighted average no. of ADSs used in computing diluted earnings per ADS 38,327,571   38,107,571   38,257,085   32,261,235  

Trinity Biotech plc

Consolidated Balance Sheets

  September 30,
2023
US$ ‘000
(unaudited)
June 30,
2023
US$ ‘000
(unaudited)
March 31,
2023
US$ ‘000
(unaudited)
December 31,
2022
US$ ‘000

 

ASSETS        
Non-current assets        
Property, plant and equipment 1,804   1,869   5,496   5,682  
Goodwill and intangible assets 16,164   15,756   21,330   35,269  
Financial asset     1,500    
Deferred tax assets 1,507   1,125   4,297   4,218  
Derivative financial asset 196   214   152   128  
Other assets          98   108   120   139  
Total non-current assets 19,769   19,072   32,895   45,436  
         
Current assets        
Assets included in disposal group held for sale     17,746    
Inventories 20,880   22,584   21,532   22,503  
Trade and other receivables 15,095   13,866   13,594   15,753  
Income tax receivable 1,592   2,240   1,858   1,834  
Cash, cash equivalents and deposits 6,261   14,228   3,532   6,578  
Total current assets 43,828   52,918   58,262   46,668  
         
TOTAL ASSETS 63,597   71,990   91,157   92,104  
         
EQUITY AND LIABILITIES        
Equity attributable to the equity holders of the parent        
Share capital 1,972   1,972   1,967   1,963  
Share premium 46,619   46,619   46,532   46,458  
Treasury shares (24,922 ) (24,922 ) (24,922 ) (24,922 )
Accumulated deficit (42,135 ) (36,153 ) (31,140 ) (26,695 )
Translation reserve (5,753 ) (5,628 ) (5,787 ) (5,775 )
Equity component of convertible note 6,709   6,709   6,709   6,709  
Other reserves 23   23   23   86  
Total deficit (17,487 ) (11,380 ) (6,618 ) (2,176 )
         
Current liabilities        
Liabilities included in disposal group held for sale     1,386    
Income tax payable 252   287   33   28  
Trade and other payables 10,626   12,570   12,910   15,375  
Exchangeable senior note payable 210   210   210   210  
Provisions 50   50   50   50  
Lease liabilities 1,600   1,643   1,561   1,676  
Total current liabilities 12,738   14,760   16,150   17,339  
         
Non-current liabilities        
Senior secured term loan 39,947   39,791   49,199   44,301  
Derivative financial liability 1,138   1,526   1,517   1,569  
Convertible note 14,337   14,137   13,936   13,746  
Lease liabilities 10,921   11,547   12,026   12,267  
Deferred tax liabilities 2,003   1,609   4,947   5,058  
Total non-current liabilities 68,346   68,610   81,625   76,941  
         
TOTAL LIABILITIES 81,084   83,370   97,775   94,280  
         
TOTAL EQUITY AND LIABILITIES 63,597   71,990   91,157   92,104  

Trinity Biotech plc

Consolidated Statement of Cash Flows

  Three Months 
Ended
September 30, 2023

US$ ‘000  
(unaudited)
Three Months 
Ended
September 30, 2022
US$ ‘000
(unaudited)
Nine Months
Ended
September 30, 2023

US$ ‘000
(unaudited)
Nine Months
Ended
September 30, 2022

US$ ‘000
(unaudited)
         
Cash flows from operating activities        
Loss for the period (6,721 ) (8,945 )   (18,517 )   (30,930 )
Adjustments to reconcile loss to cash used in operating activities:        
Depreciation 173   478   829   957  
Amortisation 56   266   486   708  
Income tax expense/(credit) 222   3   (56 ) (177 )
Financial income (389 ) (329 ) (605 ) (329 )
Financial expense 2,387   2,184   8,761   22,488  
Share-based payments 738   119   3,078   438  
Foreign exchange gains on operating cash flows 40   163   (147 ) 15  
Impairment charges   2,288   10,815   2,808  
Gain on sale of business     (12,718 )  
Excess inventory obsolescence charges 932   4,697   932   4,697  
Other non-cash items (178 ) (398 ) (50 ) (96 )
         
Operating cash (outflows)/inflows before changes in working capital (2,740 ) 526   (7,192 ) 579  
Net movement on working capital (2,327 ) 153   (4,984 ) (3,328 )
         
Cash (used in)/generated by operations before income taxes (5,067 ) 679   (12,176 ) (2,749 )
Interest paid   (1 )                 –   (4 )
Interest received                     –   2  
Income taxes received/(paid) 403   (2 )           377   (1 )
         
Net cash (used in)/generated by operating activities (4,664 ) 676   (11,799 ) (2,752 )
         
Cash flows from investing activities        
Payments to acquire intangible assets (492 ) (1,003 ) (1,260 ) (4,214 )
Acquisition of financial asset     (700 )  
Proceeds from sale of business (net of transaction costs) (266 )   28,160    
Acquisition of property, plant and equipment (128 ) (321 ) (553 ) (626 )
         
Net cash (used in)/generated by investing activities (886 ) (1,324 ) 25,647   (4,840 )
         
Cash flows from financing activities        
Issue of ordinary share capital including share premium (net of issuance costs)  –       25,019  
Net proceeds from new senior secured term loan     5,000   80,014  
Proceeds for convertible note issued       20,000  
Expenses paid in connection with debt financing     (147 ) (2,356 )
Repayment of senior secured term loan     (10,050 ) (34,500 )
Penalty for early settlement of term loan     (905 ) (3,450 )
Purchase of exchangeable notes       (86,730 )
Interest paid on senior secured term loan (1,781 ) (1,609 ) (6,181 ) (5,315 )
Interest paid on convertible note (75 ) (75 ) (225 ) (124 )
Interest paid on exchangeable notes (4 ) (4 ) (8 ) (1,293 )
Payment of lease liabilities                                                                                            (571 ) (684 ) (1,763 ) (2,184 )
         
Net cash used in financing activities (2,431 ) (2,372 ) (14,279 ) (10,919 )
         
Decrease in cash and cash equivalents (7,981 ) (3,020 ) (431 ) (18,511 )
Effects of exchange rate movements on cash held 14   (179 ) 114   (145 )
Cash and cash equivalents and short-term investments at beginning of period 14,228   10,453   6,578    25,910   
         
Cash and cash equivalents at end of period 6,261   7,254   6,261   7,254  

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).

LifeSci Partners, LLC                                  
Eric Ribner          
(1)-646-751-4363                        
E-mail: investorrelations@trinitybiotech.com                                            

 


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