The Genetic Signatures Ltd (ASX: GSS) share price was on form on Monday.
At one stage the molecular diagnostics company's shares were up as much as 10% to $1.83.
The Genetic Signatures share price ultimately closed the day 6% higher at $1.75.
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Why did the Genetic Signatures share price surge higher?
The catalyst for the strong rise in the Genetic Signatures share price today was the release of its half year results. Those results revealed record sales and its maiden profit.
For the six months ended 31 December, the company reported a whopping 638% increase in revenue to $18.7 million. This was driven by exceptionally strong demand for its EasyScreen SARS-CoV-2 (COVID-19) Detection Kit globally.
Thanks to its strong sales growth and improvements in its gross margin due to a higher average selling price, Genetic Signatures reported its first significant profit of $4.5 million for the half. This compares to a net loss of $2.35 million in the prior corresponding period.
Positively, the company was cash flow positive in both quarters. It generated $5.2 million overall and $7.8 million in positive operating cashflow. This includes a $2.6 million refund from the ATO in relation to the Research and Development (R&D) tax incentive program. However, it is worth noting that management doesn't expect to qualify for this refund next year as its sales are likely to exceed the $20 million threshold.
At the end of the half, the company had a cash balance of $36.3 million and no debt.
Outlook
No guidance has been provided for the full year. However, management spoke positively about demand for its products.
It commented: "COVID-19 testing is expected to continue for the foreseeable future even with the rollout of the various vaccines around the world, and this is expected to benefit Genetic Signatures, though the Company is unable to determine whether testing volumes will change and/or by what proportion."
"As new variants of the virus are detected it is unclear if the vaccines will be effective against them nor how transmissible the variants will be. Our platform technology, 3base is less susceptible to these variants and the company has confirmed that our current assay detects all reported variants."
