EKF Diagnostics’ H1 2025: margins up, profits up, and record analyser sales
EKF Diagnostics has delivered a tidy first half. Revenue held at £25.2m, but the quality of those sales improved meaningfully. Gross margin stepped up to 50.2% and profit before tax rose 16.1% to £3.6m. Adjusted EBITDA increased 7.4% to £5.8m, and cash generation allowed EKF to cancel an HSBC loan facility early and fund a near £1.0m buyback.
Guidance is unchanged. Management remains on track to deliver full year revenue and adjusted EBITDA in line with market expectations of £53.6m and £12.4m respectively. In plain English: steady growth this year with momentum into H2 from consumables.
H1 2025 at a glance
| Metric | H1 2025 | Prior period | Comment |
|---|---|---|---|
| Revenue | £25.2m | £25.2m | Flat, +2.2% at constant currency to £25.8m |
| Gross profit | £12.7m | £12.1m | Margin 50.2% vs 48.1% |
| Adjusted EBITDA | £5.8m | £5.4m | Up 7.4% |
| Profit before tax | £3.6m | £3.1m | Up 16.1% |
| Net cash from operations | £4.9m | £7.9m | Prior period benefitted from £2.1m US tax refund |
| Cash and cash equivalents | £16.6m | £14.3m (31 Dec 2024) | No borrowings outstanding |
| Share buyback | £1.0m | n/a | 4.64m shares acquired and cancelled |
Jargon check: adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, excluding exceptional items. “Constant currency” strips out exchange rate moves to show underlying growth.
What drove the improvement
Point-of-Care hematology is doing the heavy lifting
Hematology revenue rose 7% to £7.8m, with HemoControl the star performer. EKF increased HemoControl analyser builds by nearly 125% year-on-year in H1 to meet demand in Peru, Brazil, Italy and the US. Total hematology analyser builds were up 60%, which is important because analysers are low margin but they seed future high margin consumables. That consumable pull-through should benefit H2 2025 and FY 2026.
Post period, EKF signed approximately €4.65m (c. £4.03m) of contracts for hemoglobin analysers and consumables across Latin America and Africa, to be delivered over 12 to 24 months. Production capacity plans aim to lift Point-of-Care output a further 30%.
β-HB keeps compounding in Life Sciences
β-HB LiquiColor reagent sales rose 12% to £7.1m, or 16% at constant currency, as partners widen conversion to own-brand under white label agreements. This is the key margin engine and a big reason group gross margins jumped to 50.2%.
Diabetes stable, fermentation mixed
Despite structural headwinds in HbA1c testing, Diabetes was broadly flat at £5.5m. Within that, Biosen grew 3.4% and Quo-Lab rose 1.1%, offset by a 3.4% decline in Quo-Test. Fermentation revenue dipped 18% to £1.4m, while Contract Manufacturing grew 33% to £0.8m. Management says the pipeline for new manufacturing and fermentation partnerships is encouraging, with at least one significant deal expected in H2 2025.
Geography and mix: why margins rose even with flat revenue
Germany grew 4.8% to £10.4m as the updated Biosen launch effect normalised. The USA was down 5.8% to £12.9m in sterling terms due to currency and the exit from clinical chemistry, but the continuing core US business grew 2% in local currency. Russia increased 20.6% to £2.0m, though repatriation of cash remains restricted.
The key shift is mix: low margin clinical chemistry is now largely discontinued (£0.2m vs £0.7m), and higher margin β-HB and POC hematology are bigger parts of the pie. Admin costs were flat at £9.2m, so more gross profit flowed to the bottom line.
Cash, balance sheet and capital allocation
Net cash from operations was £4.9m, lower than last year due to a one-off £2.1m US tax refund in H1 2024. Even so, cash rose to £16.6m, there are no borrowings, and the HSBC 3-year facility was cancelled early. EKF still has access to a £3.0m undrawn facility from North Atlantic Smaller Companies Investment Trust until 2026, which provides a liquidity backstop if needed.
Shareholder returns shifted from dividends to buybacks. The Board has discontinued dividend payments to prioritise investment in growth areas, but completed a c. £1.0m buyback of 4,636,774 shares, which were cancelled. Authority to buy back more shares has been refreshed. Note that basic EPS dipped to 0.43 pence (H1 2024: 0.46 pence) due to a higher tax charge rather than weaker trading.
Operational momentum into H2 2025
- Record analyser sales set up higher margin consumables in the second half.
- β-HB demand remains strong as US acute care hospitals are targeted for conversion to current Diabetic Ketoacidosis guidelines.
- Production capacity expansion of around 30% planned at Barleben to meet hemoglobin consumable and analyser demand.
- €4.65m of post-period contracts provide visibility over the next 12 to 24 months.
The balanced view: what’s good and what to watch
Positives
- Mix upgrade is working. Gross margin up to 50.2% with flat revenue is no small feat.
- Cash generative and debt free, with optional liquidity available if required.
- Hematology and β-HB showing double-digit or high single-digit growth, exactly where EKF is leaning its five-year plan.
- Clear operating leverage as admin costs held flat while profits grew.
Watch-outs
- Diabetes testing remains structurally pressured by reimbursement trends and Continuous Glucose Monitoring. Stability is fine, but it is unlikely to be a big growth driver.
- Fermentation softness this half. Management is guiding to at least one significant H2 partnership, but that still needs to land.
- Currency is a swing factor, particularly for US revenues reported in sterling.
- Russia. £1.9m of cash is restricted and while small in group terms, geopolitical risk persists. Management’s downside scenarios exclude Russia entirely, which is sensible.
Strategy check: targets and trajectory
EKF’s five-year plan aims for more than £80m revenue and £20m adjusted EBITDA by 2029, with leadership ambitions in POC hematology and ketone testing. H1 shows the right behaviours: pruning low margin lines, ramping analyser installs to feed consumables, and investing in capacity. The unchanged FY 2025 guidance, plus the post-period contract wins, suggests confidence in the H2 set-up.
My take for retail investors
This is a quality-over-quantity half. Revenue is flat on the face of it, but the mix upgrade is delivering higher margins, higher profits, and better cash. Record analyser sales and capacity investments set up a consumables-led second half. If management executes on the β-HB push and lands at least one fermentation or manufacturing partnership, FY 2025 should meet the £53.6m revenue and £12.4m adjusted EBITDA consensus.
For income seekers, the dividend pause will sting, but the buyback and reinvestment case is coherent. For growth-minded holders, the thesis is straightforward: more analysers in the field today to drive higher margin consumables tomorrow. Keep an eye on diabetes trends, contract conversion in Life Sciences, and any movement on Russian cash, but overall this is a solid, margin-accretive performance with credible momentum into H2.
