26 May 2011: Sales for NorDiag's Sample preparation segment showed a healthy growth of 11 per cent compared to last year, but this was not enough to out-perform the record sales in Q4-2010. On the other hand, gross margin for the segment improved from 35 to 49 per cent from previous quarter.  Post-quarter, the Company has divested its HLA business. "It was time to leave the partnership," says CEO Mårten Wigstøl, who is satisfied to get SEK 8 million in cash from an investment of SEK 50 000." NorDiag must capitalize on the Arrow success, which will need our full attention. Besides, continued success in the HLA market is not depending on the JV going forward."
 
NorDiag had operating revenues of NOK 26.1 million in Q1-2011, the same as in Q1-2010. The Sample Preparation segment reached NOK 7.7 million in operating revenues in Q1-2011, compared to NOK 6.9 million in Q1-2010; an increase of 11%. The Q1-2011 sales are down from NOK 11.1 million in Q4-2010.  HLA Typing segment contributed with NOK 18.4 million in operating revenues in Q1-2011, compared to NOK 19.2 million in Q1-2010.
 
Sales and gross margin
NorDiag sold 48 Arrow instruments in Q1-2011. Accumulated number of instruments sold/leased by March 31 2011 amounted to 40 Bullet and 292 Arrow instruments. Sale of the Bullet instrument is affected by longer lead times between upgrade and commercial close and few tenders due in Q1-2011, no instruments were sold this quarter. However, the target list for Bullet instruments for 2011 looks promising. The sale of Arrow kits is picking up, and ended 43 % higher than previous quarter.  Bullet kits showed also a positive progress.
 
The gross margin for the Sample Preparation segment improved from 35% in Q4-2010 to 49% in Q1-2011. "This was partly due to a higher portion of kit sales, but we can now also see the first effects of the margin improvement program," comments Wigstøl.
 
NorDiag Group had NOK 17.0 million in total operating expenses in Q1-2011, compared to NOK 15.3 million in Q1-2010 and NOK 18.0 million in Q4-2010. Operating expenses for the Sample preparation segment decreased by NOK 1.7 million in Q1-2011 compared to Q4-2010. "The total operating expenses for Sample preparation segment in Q1-2011 are the expected cost level going forward with today's activity level," says Wigstøl.
 
EBITDA in Q1-2011 was NOK - 7.6 million, same as in Q1-2010. Sample preparation segment had an EBITDA of NOK - 9.9 million in Q1-2011. This is an improvement of NOK 1.6 million compared to the previous quarter.
 
Cash burn higher than expected
Net cash flow in Q1-2011 was NOK - 15.8 million compared with NOK - 8.1 million in Q1-2010, providing cash balances at the end of Q1-2011 of NOK 20.1 million. The operating cash flow in Q1-2011 was NOK - 12.8 million, compared with NOK -12.1 million in Q1-2010. Sample preparation segment had a cash burn in Q1-2011 of NOK - 15.2 million, compared to NOK - 13.9 million in Q1-2010."The reason for the high cash burn this quarter is increased inventory, as we have focused on ability to deliver to OEM customers, and they have at the same time delayed ordering. The cash burn adjusted for Arrow instruments currently in stock is NOK 12.0 million", explains the CEO. 
 
Outlook remains positive
CEO Mårten Wigstøl remains optimistic about the future despite slightly disappointing sales and cash pressure this quarter."We have closed two new OEM-deals. One of them is in the Life Science market and in US; with large potential. In addition, we are close to present a prototype of the integrated system based on the Arrow technology. I expect an exciting second half for the Company," he concludes. 
 
Q1-2011 report and presentation enclosed.
 
Contact: CEO Mårten Wigstøl                  Phone. +47 911 65775
              CFO Tone Kvåle                       Phone: +47 915 19576
 
About NorDiag:
NorDiag is a biotechnology company developing, manufacturing and marketing automated solutions (instruments and reagents) for sample preparation of DNA from difficult biological samples. DNA diagnostics give more rapid and precise answers, and are the fastest growing field within diagnostics. The Company's sample preparation solutions are today used in connection with STI, tuberculosis, MRSA, respiratory pathogens and viruses on instruments for large and small laboratories. NorDiag was founded in 2003 and has its headquarters in Oslo, Norway. The Company has offices and laboratories in Stockholm, Sweden and in Atlanta (GA), USA. The group has today 35.3 man-labour years. NorDiag is listed on Oslo Stock Exchange with ticker NORD.

For further information - www.nordiag.com

Find the report and the presentation here

Read the notice in Norwegian here