The value of Dunfermline-based retinal imaging firm Optos tumbled by a third early yesterday after the company warned profits would miss year-end targets.
Stock in the medical technology firm tumbled by 33% in early trading after it was forced to admit that it was finding the transition to selling its new scanning products more difficult than anticipated.
Chief executive Roy Davis said software bugs in the new system had helped to frustrate progress as it moved away from its previous rental and licensing business model.
But he said there were positive signs despite the slower-than-expected progress during a period of transition.
“We did have a softer first half than we expected, but there was some good news underlying that reduction,” Mr Davis said.
“We saw significant growth in new customer numbers, our installed base went up by 9% and we saw lower uninstall rates.
“But we always knew we were going to cross the Rubicon this year if we really wanted to grow this business then we were going to have to find new customers. The glitches didn’t help us and that cost us a lot of momentum.”
He said 400 Daytona scanning machines had been installed despite the troubles while Optos also has an order backlog of a further 400 and managed to secure an additional 200 sales after the interim period’s close.
Revenues in the six months to the end of March fell 15% to $73m, with pre-tax profits before exceptionals sent into a tailspin and falling 89% on last year to $700,000.
Optos said its strategy remained unchanged, and momentum for Daytona was being regained, but blamed the “inherent difficulty in forecasting growth trajectories and timing of sales during the initial launch of a new product”.
Mr Davis said Optos’ ultrawide 200Tx device was also struggling against headwinds, having sold 57 units against 100 in the same six-month period last year.
“We are seeing some competition, and there is also the macroeconomic aspect in European markets,” the CEO said.
But he also claimed the machine was up against a tough comparator after the firm made quick wins by targeting leading decision-makers and professionals this time last year.
The strength of the previous year’s overperformance in Japan also presented a challenge, he added.
Meanwhile, the group plans to shed around 50 jobs as part of what Mr Davis called an organisational “realignment”.
It plans a programme of restructuring which will deliver savings of up to $4m a year.
Most of the impact will come in Optos’ operations in the US, though a handful of individuals in Fife are expected to be affected.
“For the individuals concerned, it is very difficult,” Mr Davis said. “But Dunfermline is our global R&D site for new products nothing is going to change that.
“We have winning technology and remain confident about the future of the company.”
Following the update, analysts at Numis said they expected Optos’ full-year revenues to be more than $30m lower than previously anticipated, with more than 300 fewer device sales.
Expectations for pre-tax profit were cut 65% to 6m euro.