Diagnostic demand helps Tristel swing to profit

Infection prevention specialist Tristel (TSTL) is now just weeks away from delivering critical data to the US Food and Drug Administration on its De Novo disinfectant foam. If all goes to plan, the product will receive the regulator’s seal of approval in June this year. This would be a significant development for the Cambridge-headquartered company, which swung to a profit in the six months to 31 December. 

Tristel’s core business is the sale of chlorine dioxide-based disinfectants to hospitals. Revenue has recently been boosted by the skyrocketing level of diagnostic examinations that utilise the company’s products. Growth in these types of procedures is presumably linked to medical backlogs that have been observed across geographies since the pandemic began to abate.

During the period, the company also launched its Duo disinfectant solution in North America. Overseas sales were up 12 per cent to £11.2mn in the half, while UK revenue grew 24 per cent to £6.3mn.

Despite inflationary pressures, Tristel’s gross margin remained steady at 81 per cent – roughly the same as it was during the comparable period in 2021. The macro climate has, however, meant that sales, general and administrative expenses were up 9 per cent to £9.5mn. The company has increased the prices of its products to counter inflation.

In a statement, company management said it was “pleased to see the level of sales and profit growth that characterised Tristel in the decade up to 2020 returning”. Investors will likely be inclined to agree. Buy.

Last IC View: Hold, 299p, 25 October 2022