Negative result: Atomo Diagnostics (ASX: AT1) shares plunge 18% on half-year earnings

What did the diagnostics report in its results?

| More on:
a woman winces as she inserts a home diagnostic test for COVID-19 up her nose with her sofa in the background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Atomo Diagnostics share price is sinking more than 18% on Tuesday
  • The company's half-yearly results show gross profit fell 30% to $1.76 million 
  • Atomo believes the diagnostic market has permanently changed. 

The Atomo Diagnostics Ltd (ASX: AT1) share price is falling today after the company reported its half-year results.

The company's shares are currently swapping hands at 14.7 cents each, a loss of 18.33% on the day so far.

Let's take a look at what the diagnostic testing company reported to the market after close yesterday.

Atomo share price slips amid half-year results

Highlights of the company's half-year (H1 FY22) results include:

  • Gross profit fell 30% to $1.76 million, down from $2.52 million in the previous corresponding period (PCP)
  • Gross margin of 33%, down from 55% in the PCP
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of -$1.48 million
  • Revenue up 17% on PCP (H1FY21) to $5.34 million
  • Cash balance of $13.68 million at 31 December 2021

What else happened in the half?

The company said its overall gross revenue from customers grew 53% to $7 million versus the PCP. This was driven by the huge demand for COVID-19 tests. There was also growth in sales of HIV self-tests.

Atomo sold 420,000 rapid COVID tests in the first half of the 2022 financial year although the company said its January sales have outstripped total sales for the entire first half. Since then, however, market demand has fallen as "Omicron infection rates drop and free government tests impact the market".

Nonetheless, the company has more than 120 enterprise and government customers and is still seeing demand for its products.

Management commentary

In its investor presentation, Atomo said Therapeutic Goods Administration (TGA) has "significantly relaxed" conditions of supply related to home-use, self-test products in Australia.

Given greater acceptance of home testing in the community Atomo sees an opportunity to commercialise a range of rapid tests in the local market and has first mover advantage in HIV as well as established consumer product support established in country.

What's next

In the near term, Atomo sees "immediate" revenue growth potential for COVID rapid testing. In the medium term, it foresees consumers globally accepting rapid testing in the home and the increased importance of home-based healthcare solutions.

Long term, it predicts fewer regulatory barriers to home testing, particularly in the United States. It expects well-capitalised market entrants building home-delivered healthcare will emerge. And there will be more demand for convenient healthcare services.

The company said the diagnostic market has "permanently changed".

Atomo believes it can continue to meet demand for COVID tests in the Australian and New Zealand markets. HIV testing is also an opportunity and Atomo plans to target commercial agreements in the USA and China. The company also believes it has "first mover" advantage on Australia's HIV self-test market.

The company's cash balance has increased by more than $2 million since 31 December to $15.8 million at 31 January 2022.

Atomo Diagnostics share price summary

The Atomo Diagnostics share price has sunk 46% in the past year and is down 50% year to date.

For perspective, the benchmark S&P/ASX 200 Index (ASX: XJO) has returned around 5% over the past year.

Atomo has a market capitalisation of roughly $61 million based on today's share price.

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.

More on Earnings Results

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Earnings Results

ASX 200 stock jumps 10% on strong FY24 results

How did this KFC restaurant operator perform in FY 2024?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »