Novacyt Acquires Southern Cross Diagnostics in Earnings-Accretive Move to Boost APAC Presence

Novacyt buys Southern Cross Diagnostics to deepen APAC reach and accelerate profits

Novacyt has conditionally agreed to acquire Southern Cross Diagnostics (SCD), a profitable Australian distributor and long-time partner of Yourgene Health, for an initial AUD$8.5m (approximately £4.4m/€5.1m). The deal is being executed via Novacyt Holdings UK Limited and is expected to complete by the end of February 2026, following a pre-sale reorganisation by SCD.

The standout here: it is immediately earnings and revenue accretive. In plain English, Novacyt expects the acquisition to lift group profit and sales straight away, and to pull forward the Group’s breakeven point.

Why Novacyt is buying SCD now

This move slots neatly into Novacyt’s October 2025 strategy: grow revenue, edge closer to profitability, and expand the product portfolio by getting closer to end customers. Australia is a timely target. Reimbursement tailwinds for Novacyt’s cystic fibrosis and DPYD (pharmacogenetics) assays are driving uptake, and the Australian clinical diagnostics market is projected to grow at a CAGR (compound annual growth rate) of 8.5% between 2025 and 2030.

SCD already distributes Yourgene’s reproductive health PCR assays, including cystic fibrosis screening, and the Yourgene DPYD test into major pathology and lab customers in Australia. Bringing SCD in-house gives Novacyt direct access to key accounts, on-the-ground execution in a fast-growing market, and a platform to seed future launches.

Deal terms and valuation in context

The structure is straightforward: AUD$8.5m cash up front, plus up to AUD$16.5m of contingent earn-out based on SCD’s EBITDA performance over up to four years to 28 February 2030. For every AUD$1 over the EBITDA target, 83.3% is paid as earn-out. The full earn-out pays only if SCD delivers over AUD$30m in aggregate EBITDA across the period.

On trailing numbers, the initial consideration equates to roughly 5.5x FY25 net profit (£4.4m initial price against circa £0.8m profit) and about 0.7x FY25 revenue (£6.7m). If SCD over-delivers and the full earn-out is paid, total consideration could reach around £13.0m (based on 1.92 AUD/GBP), which would imply closer to 1.9x FY25 revenue – but that upside is conditional on future EBITDA, not guaranteed.

What SCD brings: profitable growth and strategic accounts

SCD has shown strong momentum: sales have climbed from circa £2.4m in FY23 to circa £6.7m in FY25, with a 39% gross margin and circa £0.8m net profit. In the six months to 31 December 2025, revenue totalled circa £3.4m, suggesting growth is holding up into FY26. Net assets being acquired were circa £2.0m at 30 June 2025 (after adjusting for loans to be settled pre-completion).

Crucially, SCD serves some of the largest pathology and lab customers in Australia. That gives Novacyt a direct line into high-value accounts for current products and a ready-made channel for future launches, including the expanding DPYD range.

Impact on Novacyt’s top line and breakeven

Novacyt highlights that approximately £2.0m of annual revenue will be removed from the combined businesses post-deal, because those are existing Novacyt direct sales to SCD that will be eliminated on consolidation. With SCD delivering circa £6.7m revenue in FY25, the rough pro forma uplift to group sales is therefore around £4.7m.

Given SCD’s circa £0.8m FY25 net profit and Novacyt’s statement that the acquisition is immediately earnings accretive, this looks supportive for the Group’s push to breakeven. Retaining SCD’s leadership, including CEO and founder Nick Thliveris, should help keep execution tight and customer relationships warm.

Founder alignment and funding signal

The vendor has committed to subscribe for up to AUD$0.8m in new Novacyt shares via a Preferential Subscription Rights (PSR) issue following completion. A PSR is a rights-style raise that lets eligible shareholders buy new shares, typically to support growth initiatives. It is a modest but useful alignment signal, though the precise terms of the PSR will come in a separate announcement. Thliveris will not join the Novacyt Board, but will continue to lead SCD.

Strategic upside across APAC

Beyond Australia, Novacyt calls out two levers: access to third-party products that could be distributed in other regions, and leveraging SCD’s APAC know-how and key opinion leader relationships. With offices in Singapore and a growing precision medicine portfolio (notably DPYD), Novacyt is positioning itself to scale selectively across the region.

The reimbursement-led growth story in Australia is a helpful proof point: when health systems fund the right tests, adoption follows. If similar dynamics emerge elsewhere in APAC, Novacyt will want to be in the room.

The good, the watch-outs, and what matters next

Positives

• Earnings and revenue accretive from day one, supporting a faster path to breakeven.
• Direct access to a high-growth diagnostics market with reimbursement tailwinds.
• Solid historic performance: circa £6.7m FY25 revenue, 39% gross margin, circa £0.8m net profit.
• Founder-led continuity with customer relationships and regional expertise retained.
• Clear cross-sell and future launch potential, especially for DPYD assays.

Watch-outs

• Earn-out up to AUD$16.5m ties future cash outflows to EBITDA delivery – sensible, but investors should track performance against targets.
• Integration is always a risk, though mitigated by keeping the SCD team in place.
• Currency exposure to AUD and continued reliance on favourable reimbursement settings in Australia.
• About £2.0m of existing Novacyt-to-SCD sales will be eliminated post-acquisition, so not all of SCD’s revenue is incremental to the Group.

Near term, watch for completion by the end of February 2026, details of the PSR issue, and confirmation of how SCD’s performance tracks through 2026. Management commentary suggests this deal should make the breakeven maths meaningfully easier.

Key numbers at a glance

Target	Southern Cross Diagnostics Pty Ltd (SCD)
Location	Sydney, Australia
Employees	11
FY25 revenue (year ended 30 June 2025)	circa £6.7m (€7.7m)
FY25 gross margin	39%
FY25 net profit	circa £0.8m (€0.9m)
6 months to 31 Dec 2025 revenue	circa £3.4m (€3.9m)
Net assets at 30 June 2025	circa £2.0m (€2.2m) (adjusted for loans settled pre-completion)
Initial consideration	AUD$8.5m (approximately £4.4m/€5.1m)
Contingent consideration (earn-out)	Up to AUD$16.5m in cash over up to 4 years, based on EBITDA targets (approx. £8.6m using 1.92 AUD/GBP)
Revenue elimination post-deal	Approximately £2.0m of existing Novacyt-to-SCD sales
Completion timing	Expected by end February 2026 (subject to pre-sale reorganisation)
Vendor reinvestment	Up to AUD$0.8m via a Preferential Subscription Rights (PSR) issue

Final take

This is a neat, strategically aligned bolt-on that adds profitable revenue, locks in a strong Australian channel, and supports Novacyt’s breakeven journey. The headline price looks reasonable on trailing numbers, with the larger cheque only due if SCD materially outperforms.

Execution now matters. If SCD sustains growth under Novacyt’s umbrella and reimbursement momentum holds, this could prove a quietly powerful move in APAC. For the full details direct from the company, see the Novacyt investor page at novacyt.com/investors.