Shares of Alva-based Omega Diagnostics Group plc fell about 25% on Thursday after it said it is “very disappointed with the lack of progress and commitment from the Department of Health and Social Care (DHSC) to place an order for the manufacture of Covid 19 lateral flow tests (LFT).”

Announcing results for the six months ended September 30, 2021, Omega Diagnostics said its COVID-19 revenues remain “extremely difficult to predict.”

Omega first-half revenue increased 81% to £5.73 million, but statutory loss for the period widened to £2.75 million.

Gross margin decreased to 34.4% from 42.9% “caused by increased direct labour” in anticipation of DHSC COVID-19 contract work.

“Whilst we still remain confident that we are well-positioned for future growth, we recognise that many investors will be disappointed in the lack of progress with the DHSC, and uncertainty about their future utilisation of our manufacturing capacity,” said Omega.

“This is a disappointment that we share. Our contract with DHSC dated 12 February 2021 was made up of two phases.

“Phase one was a scale up phase, where DHSC furnished the company with equipment and working capital in order to support its scale up activities whilst DHSC selected and licenced the chosen test to the company.

“Unfortunately, DHSC did not provide the company with a licence to manufacture an approved test and as such Phase 2 of the contract, covering manufacturing, has not been activated and therefore no orders have been placed.

“We now have confirmation that the contract expired at the end of Phase 1, although both parties remain in dialogue and DHSC are still providing us with access to their Government-funded equipment to provide the infrastructure to grow our businesses.”

Omega said it has “substantial growth opportunities in the areas of Food Sensitivity, CD4 testing for the management of people living with HIV, and COVID-19 antibody and antigen testing and provides high quality in-vitro diagnostics products for use in hospitals, clinics, laboratories and healthcare practices in over 75 countries.”

On the outlook for the company, chairman Simon Douglas said: “We are confident that revenues in the second half will see significant growth in Health & Nutrition and for our CD4 product, and while COVID-19 revenues remain extremely difficult to predict they are expected to be more reliant on commercial partnerships than UK Government supply opportunities and are impacted by the timing of pending regulatory approvals being granted.

“Overall, we expect to see an improved sales performance across the Group for the full year and to see losses reduced in the second half.”