H1 2024 Results - Continued Performance & Growth

24% revenue growth, 28% on a constant currency basis

Record order book of £27.9m provides good visibility on full year revenue

55% of revenues recurring, on track to achieve 70% in 2025

26% growth in number of customer therapeutic brands and three new customer enterprise-wide engagements added

Successfully launched PMx and secured first commercial contract as a promotional partner with a leading biotech for the launch of a breakthrough oncology precision medicine in the US

Two-year accelerated investment phase nearing completion - forecast shift to profitability and cash flow generation from 2025

Strong balance sheet with cash of £16.7 million

Belfast and London, 17 September 2024 - Diaceutics PLC (AIM: DXRX), a leading technology and solutions provider to pharma and biotech companies, today announces its unaudited results for the half-year ended 30 June 2024.

Ryan Keeling, Diaceutics' Chief Executive Officer, commented: "As we approach the end of our two-year accelerated investment plan, we are seeing tangible results being delivered. We are now working with more customers, across more brands and generating increased revenue per brand. We are constantly growing our data gathering capabilities and improving the efficacy of the DXRX platform through the use of AI, and can now provide our customers with the critical data insights they need within 24 hours which is hugely valuable to their efforts to identify patients in need. We are very excited by the recent launch of PMx which enables us to offer a full promotional solution for customers and also allows us to retain a greater share of the value we create. Given our strong performance in the first half, we remain confident in our full year revenue target and our ability to deliver profitability and cash flow generation from 2025."

Financial Highlights:

   * Annual Recurring Revenue is the value of recurring subscription revenue at a specific point in time, that is expected to be recognised from contracts in the next twelve months.

** EBITDA is earnings before interest, tax, depreciation, amortisation and exceptional items.

H1 2024 Strategic & Commercial Highlights:

Current Trading & Outlook:

Analyst Presentation:

A webinar presentation for investors and analysts will be held at 1330 BST (0830 ET) on Tuesday, 17 September 2024. Those wishing to attend can register using the following link:

https://sparklive.lseg.com/Diaceutics/events/30b6a0fa-97bd-4e8e-b03e-69b2ee50e3ea/diaceutics-h1-2024-results-analyst-investor-call

Investor Meet Presentation:

A webinar presentation for investors will be held via the Investor Meet platform at 1630 BST (1130 ET) on Tuesday, 17 September 2024. The presentation is open to all existing and potential shareholders and registration can be completed via the following link:

https://www.investormeetcompany.com/diaceutics-plc/register-investor

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. The person responsible for making this announcement on behalf of the Company is Nick Roberts, Chief Financial Officer.

Enquiries:

About Diaceutics

At Diaceutics we believe that every patient should get the opportunity to receive the right test and the right therapy to positively impact their disease outcome. We provide the world's leading pharma and biotech companies with an end-to-end commercialisation solution for precision medicines through data analytics, scientific and advisory services enabled by our platform DXRX - The Diagnostics Network ®.

STRATEGIC AND OPERATIONAL REVIEW

Strategic Milestone: PMx

2024 has seen Diaceutics make remarkable progress in advancing its accelerated investment strategy (announced January 2023) across its four value drivers. A major highlight has been the commercial launch of PMx, which through significant investment over the past 2 years, represents an inflection point as the Company moves from being a data vendor to becoming a promotional partner for pharmaceutical companies launching precision medicines in the US. The launch of PMx also corresponded with its first commercial contract win and the Company's seventh enterprise-wide customer engagement.

We remain resolutely driven by our purpose; ensuring every patient should get the right test and the right therapy to positively impact their disease outcome. This shapes the strategic decisions we make and ultimately the shareholder value we deliver.

Value Drivers

Data

Our competitive advantage continues to be reinforced through our unrivalled depth of data. The expansion of our data supply network in 2024 has significantly augmented our data coverage.

In February, the Company expanded its data supply network, significantly increasing the number of labs through which it is sourcing data in Europe and broadening the Company's European data coverage. This data facilitates the rollout of the DXRX Signal products in key EU markets of Germany, France, Italy, Spain and the UK and the Company is currently initiating trials with pharma customers in some of these markets.

More recently, Diaceutics announced a number of new rare-disease genomic lab data partners having joined the DXRX network. These partners specialise in genetic testing, including the largest recognised testing lab in the US for genetically acquired rare diseases. These partners will enable Diaceutics to identify more rare disease patients, and earlier, helping pharma customers to better commercialise gene therapies for rare diseases.

Lab network

Expanding our lab partner network has empowered labs to improve the patient diagnostic and treatment journeys. Over the last six months, Diaceutics has produced and promoted a range of exciting content to engage these labs and encourage a beneficial two-way relationship. Most recently the Company launched a virtual event named "Precision medicine in oncology". This groundbreaking event consisted of a series of eight live webinars, culminating in a full day of immersive, true-to-life virtual experiences, and was tailored for laboratory professionals, pathologists, and anyone involved in oncology diagnostics and treatment.

DXRX platform

To solidify our market leading position, we continually enhance our capabilities. Development of new functionality for the DXRX platform, including patient level linkable data, generative AI (Diaceutics Large Language Model, DLLM), and comprehensive US data sets that include data on social determinants of health, underscores our commitment to innovation.

The deployment of generative AI in the form of Diaceutics' Large "Lab" Model has enabled the platform to ingest large unstructured data sources from multiple sources on a daily basis, where it is sorted, labelled and communicated on to customers as insights within 24 hours.

The successful launch of new subscription offerings and the securing of seven enterprise-wide engagements to date align with our objective to transition larger customers onto the DXRX platform, driving platform-based subscription contracts. 55% of our revenue is now subscription based, with ultimately 70% of our business expected to be subscription based and platform enabled by the end of 2025. Crucially, we are seeing increasing traction for our enterprise-wide engagements, which enables Diaceutics to increase the average revenue per therapeutic brand and market opportunity it can capture.

Our team

At Diaceutics, our purpose - to ensure each patient receives the right test and right treatment - guides every endeavour.

Investing in our people remains a priority. We have strengthened the team significantly through recruitment and investment in training and development. At a senior leadership level, we have recruited a number of VPs many of whom are in the US, close to our clients, and enhancing our industry expertise and supporting our strategic growth.

Market opportunity

Growing market opportunity and reach

The rapid expansion of the precision medicine market offers significant opportunities for Diaceutics. As global pharma intensifies their focus and dedicates more resources to this field, aiming to improve patient access, capture lost revenue and increase profitability, Diaceutics is well-positioned to capitalise on these trends. Over the past 12 months, we have had regular engagement with over 70 individual therapeutic brands out of an estimated 257 brands¹ that could avail of Diaceutics' solutions. With the launch of PMx we have demonstrated how we can evolve the revenue expectation from the current average of £0.38 million annually per brand in 2023, to potentially in excess of £2.0 million annually per brand in the case of customer deploying Diaceutics' PMx solution.

Diaceutics has further solidified its central position as a thought leader within the precision medicine industry, announcing in April the formation of a landmark Economic Forum, aiming to urgently address the specific economic gaps limiting the advancement of precision medicine, and in early June 2024, we were honoured to be invited to present a poster titled "Effect of real time data-driven physician engagement on appropriate precision oncology testing" at the American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago.

Our recent strategic alliance with KPMG exemplifies our commitment to expanding our commercialisation solutions to life science customers launching precision medicine. The strategic alliance will combine Diaceutics' and KPMG's extensive knowledge, expertise and industry reputation, and enable Diaceutics and KPMG to engage their life science customers, through a new sales channel, and with a broader and more comprehensive range of precision medicine services.

¹ The number of precision medicine brands available is an estimate based on Diaceutics market data.

Capturing the opportunity

The Board is confident that Diaceutics has the right offering and competitive advantage to capitalise upon the growing market opportunity. With our infrastructure investments (our data, lab network, platform and people) largely complete, we are poised for the next phase of growth, extending our market reach through partnerships and sales and marketing initiatives.

PMx represents a novel commercialisation solution which allows pharma and biotech companies to launch precision medicines in a lean and agile way while still maximising patient recruitment to drug - an approach that Diaceutics believes is revolutionary for the precision medicine market. PMx was launched in H1 2024, and in August, the Company announced that it had reached agreement with a leading biotech to become its primary promotional partner for the launch of a breakthrough oncology precision medicine in the US. This agreement is to deploy PMx through to the end of 2025 and is worth at least £2.5 million in service revenue to Diaceutics, with additional milestone fees estimated to be worth another £1.9 million payable during that period based on successful patient recruitment onto therapy - a significant uplift on the annual revenue per therapeutic brand achieved to date.

The Company announced that the number of enterprise engagements had increased from four to seven in the period, across 31 separate therapeutic brands, and with a total ARR of £10.6 million. These enterprise-wide engagements encapsulate the successful execution of Diaceutics' strategy to offer more products and services to existing customers.

Additional real-world data sales channels have been accessed in 2024 and have resulted in promising sales traction. These sales channels give the opportunity for the business to commercialise existing data assets and products for use within different, non-competitive, industries and customer groups.

The DXRX platform is well invested, highly scalable and can deliver up to $100 in additional therapy revenue for every $1 invested by our customers.

FINANCIAL REVIEW

Diaceutics has continued to deliver strong financial performance in the first six months of 2024, the seventh consecutive period of growth for the Group. With strong cash reserves of £16.7 million and a record order book of £27.9 million at 30 June 2024, the Company enters the second half of the year with an increasing level of visibility to its full year revenue as it continues to complete its two year accelerated investment strategy and deliver upon a forecast shift to profitability and cash flow generation from 2025.

Revenue Growth and Order Book Visibility

Diaceutics' comprehensive suite of data driven insight and engagement solutions, designed to serve the precision medicine commercialisation requirements of pharma and biotech companies, have continued to experience strong organic growth in H1 2024. Despite the ever increasing currency headwinds, revenue grew 24% to £12.3 million in H1 2024 (H1 2023: £9.9 million), 28% on a constant currency basis. This most recent period of growth means that the Company has achieved a 3-year revenue CAGR of 27%.

Revenue growth has been especially strong within the insight and engagement solutions ('IES'), growing 34% to £9.3 million in H1 2024 (H1 2023: £7.0 million). The IES platform-based solutions now represent 76% of all revenues - a transition which has been achieved in just over three years and a standing start in 2021. Scientific and advisory services ('SAS') revenues were £3.0 million in H1 2024, growing slightly on the comparative period of £2.9 million in H1 2023. The growth in these services were impacted by some internal reorganisations and contract losses early in the year. Despite these challenges, SAS remain a fundamental offering of the business and the recently launched PMx precision medicine commercialisation offering.

The Total Contract Value ('TCV') secured by way of sales in the period was £13.8 million, lower than the value of contracts secured in the comparative period (H1 2023: £16.9 million), and predominately driven by change orders reducing the scope and value of some large enterprise-engagement services, lost subscription renewals for non-Signal products and the large enterprise win in H1 2023 which disproportionately skewed those results favourably.

The Company continues to improve the quality of its earnings, with 55% of all revenue in the period being recurring (H1 2023: 47%), and the visibility of its future earnings, with the order book at 30 June 2024 growing 16% to £27.9 million, up from £24.1 million at 30 June 2023.

As at 30 June 2024, the order book that will be realised as revenue in H2 2024 was approximately £8.9 million and gives circa 71% visibility on FY 2024 analyst consensus estimates (H1 FY23: 70% visibility on FY 2023 revenue).  These metrics are in line with the Board's expectations for this point in the year, providing good levels of revenue visibility as the Company enters its traditionally stronger second half of the year.

Annual Recurring Revenue (ARR) was £14.2 million as at 30 June 2024 (£13.7 million at 31 December 2023). ARR is the value of recurring subscription revenue at a specific point in time, that is expected to be recognised from contracts in the next twelve months. The value renewal rate for ARR contracts in the 12 months ending 30 June 2024 was 93%. The volume renewal rate for the same period was 80%, and increases to 94% for Signal ARR contracts.

Diaceutics continues to work with 17 of the top 20 global pharma companies and has increased the number of enterprise-wide engagements it has with pharma and biotech customers from four to seven engagements, including the Company's first PMx engagement, where Diaceutics is the primary partner for a customer launching an oncology precision medicine. These enterprise-wide engagements demonstrate the successful execution of Diaceutics' accelerated investment strategy to offer more products and services to existing customers.

The Group's customer base is heavily weighted towards blue chip pharma companies, with 92% of revenue generated by customers based in the USA (H1 2023: 83%). Diaceutics increased the number of customers it worked with in H1 2024 by 19% to 44 (H1 2023: 37) and worked across 63 individual customer brands in H1 2024, an increase of 26% on the comparative period (H1 2023: 50).

In 2023 the revenue weighting first vs. second half of the year was 42:58 compared to 38:62 in 2022.

Although it is anticipated that the second half revenue weighting will reduce in future years as a result of the Group's shift to an increasingly recurring revenue model, approximately 60% of the Group's full year 2024 revenue is expected to occur in the second half of 2024.

Gross Profit and Margins

The gross profit for the first six months of 2024 increased 23% to £10.7 million (H1 2023: £8.7 million). The gross margin remained strong for H1 2024 at 87%, down one percentage point from the gross margin in H1 2023 of 88%, and above management's expected margin of 85%.

The high gross margin is enabled by Diaceutics' investment in the DXRX platform. The primary direct selling costs of the business relate to platform and compute power, time and materials relating to project-based work and some customer pass-through costs.

EBITDA and Loss Before Tax Performance

In line with management's expectations, the Company generated an EBITDA loss of £1.3 million, higher than the comparative period loss of £0.2 million. The increased EBITDA loss reflects the impact of the Company's planned accelerated investment strategy which predominately materialised as increased headcount and people related costs in H1 2024 (headcount up to 206 vs. 161 in H1 2023) as well as a higher proportion of platform development costs expensed during the period.

Loss before tax increased from £2.0 million in H1 2023 to £3.3 million in H1 2024. This was driven by an increases in operating overheads as well as an increase in amortisation costs which rose by £0.4 million in the period. The increasing amortisation costs were the result of the capitalisation of material internal development costs in prior years, purchased data costs in the current and prior years, and a reduction in the useful economic life of purchased data costs - a change in accounting estimate implemented in H2 2023.

Reconciliation of Operating Loss to EBITDA  

Balance sheet strength

At 30 June 2024, the Company reported a strong net asset position of £38.7 million (31 December 2023: £40.8 million).

During the period, the Group invested in its customer service capabilities, platform development and its data repository.

Platform development spend, in the form of technology stack capacity and scale, was £1.8 million of which £0.3 million was capitalised in the year (2023: £1.8 million of total platform development spend of which £0.8 million was capitalised). As set out in our accelerated investment strategy, the intensity of platform development spend has remained relatively consistent with comparative periods, however the proportion of development costs which are capitalised has decreased from £0.8 million in 2023 to £0.3 million as the platform reaches maturity.

The business continues to prioritise the investment in its proprietary data repository, focusing on opportunities identified through its lab network and existing data supply chain. The investment has enabled the Company to procure a richer, more unique and more timely data dataset. The value of data acquired has reduced from £1.8 million in H1 2023 to £1.1 million in H1 2024. The reduction in spend was a timing difference between periods, and the Company expects the overall level of data expenditure for the year to be higher than 2023, but for future increases to be more proportionately linked to increases in the overall level of IES commercial engagements.

Cash at 30 June 2024 was £16.7 million, unchanged compared to the reported cash of £16.7 million at 31 December 2023, with the overall cash position remaining strong and underpinning the Company's ability to continue to execute against its ambitious growth plans.

CURRENT TRADING & OUTLOOK

The market opportunity available to Diaceutics is significant and continues to grow. In June, Diaceutics launched PMx, an innovative commercialisation solution enabling pharmaceutical and biotech companies to launch precision medicines more efficiently while still optimising patient recruitment for these drugs. This approach aims to maximise the value per brand opportunity available to Diaceutics. The first PMx contract was signed in 2024, and the Company is actively pursuing more of these enterprise-wide engagements. A significant benefit of PMx is that it allows Diaceutics to significantly boost the average revenue generated per brand it works on.

The Board will continue to monitor economic factors which could enhance or detract from the Company's revenue performance, including pharma industry spending trends, the geopolitical backdrop and the strengthening of sterling against the US dollar. However, given the strategic progress made against the accelerated investment strategy and the positive momentum in H1 2024, the Board has confidence over its full year revenue expectations and the Company's ability to deliver upon a forecast shift to profitability and cash flow generation from 2025.

​

Condensed Profit and Loss Account

for the six months ended 30 June 2024

All activities in the current and prior periods relate to continuing operations.