Lumos Diagnostics (ASX:LDX) share price adds 9% on IPO, raising $63m

Lumos hits the ASX, riding COVID testing momentum.

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Shares in diagnostics company Lumos Diagnostics Holdings Ltd (ASX: LDX) have started trade on a successful IPO. At the time of writing, the point-of-care (POC) diagnostic testing company's shares are trading at $1.36, up 8.8%.

Lumos hits the decks after successfully raising $63 million through its initial public offering (IPO).

Let's look at what exactly the company does.

Lumos Diagnostics hits the ASX after IPO

Bringing testing to the bedside

Lumos Diagnostics operates in the healthcare technology space, specifically, developing, manufacturing, and selling point-of-care (POC) diagnostic solutions.

"What are POC diagnostic solutions?" you might ask. These are healthcare tests not carried out in a laboratory, such as those conducted bedside or during a visit to the GP.

In the case of Lumos Diagnostics, the primary focus is on testing for infectious diseases. This includes testing for bacterial versus viral infections, influenza, HIV, hepatitis, tuberculosis, sexually transmitted diseases, healthcare-associated infections, tropical diseases and, more recently, COVID-19.

At the moment, the company is concentrating on the United States and European markets. These locations account for around 64% of the global market for POC diagnostic testing.

Additionally, the company derives revenue through two distinct divisions: 'products' and 'commercial services'. The first is self-explanatory while the other involves developing and manufacturing POC tests on behalf of clients for a fee.

Lumos Diagnostics' current products comprise of two POC diagnostic tests. The first, FebriDx, is a test that rapidly identifies microbial infections in patients with acute respiratory infection symptoms.

CoviDx is the company's other POC test. It detects antigens present on the COVID-19 virus. This POC test has been granted a CE Mark for sale in Europe, with the company also seeking regulatory clearances in the US and Canada. Given the proliferation of COVID-19 around the world, now probably seemed like a good time for Lumos Diagnostics to launch its IPO.

Backers and forecasts

According to the company's disclosure, the IPO received backing from top-tier institutional funds, alongside existing investors including the Australian Unity Future of Healthcare Fund, Perennial, Washington H. Soul Pattinson and Co Ltd (ASX: SOL) and Ellerston.

Lumos CEO Rob Sambursky said:

Receiving support from so many institutional investors reflects the underlying strength of Lumos' business and technology platforms.

The funds raised via the IPO will facilitate the continued expansion and commercialisation of our suite of rapid diagnostic products that have the potential to transform point of care diagnostics for the benefit of clinicians, patients and the health system as a whole.

Of the $63 million raised, $38 million went to Lumos and the remaining $25 million went to selling shareholders.

For the half-year ending December 2020, Lumos Diagnostics delivered $11.56 million in revenue. This represents an increase of 239% from its previous year. Pleasingly for shareholders, losses narrowed from $6.28 million to $5.63 million.

Finally, Lumos' pro forma revenue in FY21 is forecasted to be $23.765 million from its two operating divisions. On this figure, the company's market capitalisation of $202.8 million would represent a price-to-sales ratio of 8.5 times.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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