Trinity Biotech plc — Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022. The filing is an annual Form 20-F, not a standalone fourth-quarter filing; clear Q4-only financial results are not provided. Financial statements are prepared under IFRS and presented in U.S. dollars. Trinity develops, manufactures and markets diagnostic products for clinical laboratories and point-of-care settings, operates a U.S. reference laboratory, and supplied life-science raw materials through Fitzgerald Industries during 2022.
Financial performance and position
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | $74.8 million | $93.0 million | Down 19.6% |
| Gross profit | $22.0 million | $38.1 million | Down $16.1 million |
| Gross margin | 29.5% | 41.0% | Down 11.5 percentage points |
| Operating income/(loss) | $(16.8) million | $6.6 million | Turned to loss |
| Net financing expense | $24.4 million | $5.9 million | Up $18.6 million |
| Loss from continuing operations | $(41.0) million | $0.9 million profit | Material deterioration |
| Net loss | $(41.0) million | $0.9 million profit | Includes $7,000 discontinued-operation loss in 2022 |
| Operating cash flow | $(0.9) million | $13.2 million | Down $14.2 million |
| Capital expenditures and intangible additions | $6.0 million investing outflow | $8.7 million | Lower outflow |
| Cash and cash equivalents | $6.6 million | $25.9 million | Down $19.3 million |
| Total indebtedness carrying value | $73.8 million | $99.2 million | Down $25.4 million |
Revenue by category was $58.3 million from clinical laboratory goods, $7.3 million from clinical laboratory services and $9.2 million from point-of-care products. Revenue by customer geography was $40.2 million from the Americas, $25.0 million from Asia and Africa, and $9.6 million from Europe.
The company reported total assets of $92.1 million, total liabilities of $94.3 million and an equity deficit of $2.2 million at December 31, 2022. Goodwill and intangible assets were $35.3 million, while inventory was $22.5 million net of a $16.3 million allowance for slow-moving and obsolete inventory.
Material changes versus 2021
- Revenue declined primarily because COVID-19 PCR Viral Transport Media sales fell sharply as large-scale testing programs were curtailed. VTM revenue was approximately $3 million in 2022 versus more than $50 million cumulatively in 2020 and 2021.
- Excluding COVID-focused VTM products, revenue declined approximately 1.0%. Diabetes-related haemoglobin revenue increased 26.6%, supported by a larger installed instrument base and demand in Asia and Latin America.
- Gross margin was pressured by product-mix changes, lower-margin activity, inflation in raw-material costs, under-recovered manufacturing overhead and $4.7 million of inventory write-downs, including $3.5 million related to VTM inventory.
- SG&A increased 18.2% to $29.2 million because of higher share-based compensation, travel and promotional activity, legal and professional fees, refinancing costs, credit-loss provisions and recruitment expenses.
- Impairment charges totaled $5.8 million, including $4.6 million for internally developed projects. The impaired projects included a rapid COVID-19 antigen test, an autoimmune smart reader, the Tri-stat instrument and a COVID-19 ELISA test.
- Financial expenses increased to $24.7 million, including a $9.7 million loss on retiring exchangeable notes and a $3.5 million early repayment penalty on the term loan.
- In January 2022, the company retired approximately $99.7 million of exchangeable notes using cash, term-loan proceeds and 5.3 million ADSs. At year-end, only $0.2 million remained outstanding.
- In May 2022, MiCo invested approximately $45.2 million through $25.2 million of equity and a $20.0 million seven-year convertible note. The note mandatorily converts into ADSs if the ADS volume-weighted average price reaches $3.24 for five consecutive trading days.
- Average workforce declined to 398 employees from 477 in 2021, and the Amherst, New York facility was vacated and operations consolidated in Williamsville.
Debt, liquidity and going concern
- The senior secured Perceptive term loan had a nominal balance of approximately $46.8 million at December 31, 2022, with a carrying value of $44.3 million. It matures in January 2026 and bears variable interest at 11.25% plus the greater of Term SOFR or 1.0%.
- The term loan is secured by substantially all company assets and subsidiary equity interests. A 1 percentage-point increase in interest rates was estimated to increase annual interest expense by approximately $0.5 million.
- The $20.0 million MiCo convertible note had a $13.7 million liability component and a $6.7 million equity component at year-end. Lease liabilities totaled $13.9 million.
- Management concluded that the financial statements could be prepared on a going-concern basis and believed the group could operate for at least 12 months from the report date. However, 2022 included a $41.0 million loss, negative operating cash flow and substantial debt-service obligations.
- In February 2023, the Perceptive facility was amended to increase the term loan by $5.0 million and add a $20.0 million acquisition facility, which was undrawn at the relevant disclosure date. In April 2023, proceeds from the sale of Fitzgerald Industries were used to repay approximately $10.1 million of term debt plus a $0.9 million penalty.
Outlook, management commentary and risks
- Management expects COVID-related revenue to decline further in 2023. The company does not currently plan to pursue additional regulatory approvals for its rapid COVID-19 antigen test, although it will monitor market and regulatory developments.
- Management expects haemoglobin revenue to continue growing, driven by diabetes testing, increased instrument placements and supply-chain changes intended to improve margins.
- TrinScreen HIV received WHO approval in February 2022. Kenya adopted a new HIV testing algorithm in March 2023 that includes TrinScreen as the screening test; the company estimated the Kenyan program at 7 million to 9 million annual screening tests.
- The Premier Resolution haemoglobin instrument was launched in selected international markets, and a U.S. 510(k) submission was filed in 2022 with a planned U.S. launch in 2023, subject to clearance.
- Fitzgerald Industries, which generated approximately $12 million of 2022 revenue and was EBITDA positive, was sold in April 2023 for approximately $30 million subject to customary adjustments. The business was no longer considered core to the company’s strategy.
- Key risks include high leverage and variable interest rates, minimum-revenue covenants, potential need for additional capital, competition and pricing pressure, supply-chain disruption, regulatory approvals and recalls, product liability, impairment of goodwill and intangibles, foreign-exchange exposure, distributor dependence and uncertainty over COVID-related demand.
- The company reported no material legal proceedings of which it was aware. Potential repayment of certain Irish employment and training grants could total approximately $3.3 million if specified conditions are not met.
- MiCo held approximately 29.3% of voting share capital and had rights to nominate directors. The filing also describes disputes regarding management and strategic direction between MiCo and the company.
- Management reported effective disclosure controls and internal control over financial reporting as of December 31, 2022. As a non-accelerated filer, Trinity Biotech was not required to obtain an auditor attestation on internal control effectiveness.
Investor verification checklist
- Verify the company’s current liquidity after the Fitzgerald sale, the $10.1 million debt repayment, transaction costs and any subsequent operating cash burn.
- Review compliance with the amended Perceptive credit agreement, including minimum cash and revenue covenants, collateral provisions and the January 2026 maturity.
- Assess whether haemoglobin growth and TrinScreen HIV commercialization can offset the continuing decline in COVID-related products and mature infectious-disease assays.
- Monitor inventory provisions, especially VTM and other slow-moving inventory, which represented approximately 42% of gross inventory at year-end.
- Evaluate the risk of additional impairments to goodwill, capitalized development costs and other intangible assets.
- Track FDA clearance for Premier Resolution and any regulatory developments affecting laboratory-developed tests and international product approvals.
- Assess dilution from the MiCo convertible note, Perceptive warrants and outstanding employee options; the filing disclosed 11.2 million ADS-equivalent options and 2.5 million Perceptive warrants at year-end.
- Confirm the final accounting and proceeds from the Fitzgerald divestiture, including the treatment of the disposed business and any customary adjustments.