Omega shares fall 30% amid legal fight with Govt

Shares of Alva-based Omega Diagnostics Group fell about 30% on Friday after it published a stock exchange statement about a legal fight with the UK Government’s Department of Health and Social Care over a £2.5 million repayment being demanded by the DHSC related to a contract for COVID-19 lateral flow antigen tests.

Omega shares, which were trading at £1 in March this year, fell another 30% to around 23p as the firm’s stock market value slipped to around £42 million.

“Omega, the specialist medical diagnostics company focused on industry-leading Global Health (CD4 and COVID-19) and Health and Nutrition products, provides an update in relation to the company’s contract with the Department of Health and Social Care (DHSC) to provide manufacturing capacity for COVID-19 lateral flow antigen tests.

“As previously disclosed, the DHSC was unable to move into Phase 2 of the contract, which would have seen Omega progress to manufacturing tests using Government-furnished equipment.

“Omega has received confirmation from the DHSC that they acknowledge that the contract expired on 1 October 2021 and a request that Omega submit a proposal for the repayment of the pre-production payment of £2.5m (net of VAT).

The board of Omega, having taken initial legal advice, do not believe that the company is required to repay the pre-production payment and will respond in writing as requested.

“The board will continue to take further legal advice on this matter and hopes to reach a resolution swiftly.”

Omega Diagnostics CEO Colin King said: “It is clearly disappointing to receive this request for repayment given the efforts we have gone to ensure manufacturing capacity for COVID-19 lateral flow test was available for the DHSC and that we did not progress to Phase 2 of the contract due to the lack of confirmation from the DHSC regarding which test they require us to manufacture. 

“Acting in good faith we used these pre-production payments, along with our own funds, to upgrade our manufacturing facilities to be able to integrate the Government-furnished equipment and bringing on the additional staff required to be able to supply the DHSC using our UK-based volume manufacturing services.

“We therefore are confident that, having sought legal advice, we will not be required to make this repayment.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.