EKF Diagnostics sale of Selah Genomics Inc

EKF Diagnostics Holdings plc (AIM: EKF) announces that it has reached an agreement to sell its wholly owned subsidiary Selah Genomics, Inc. (“Selah”), a US-based developer of molecular diagnostics for personalised medicine, to the co-founders, Michael Bolick and Jeremy Stuart (the “Purchasers”).

The consideration for the acquisition of Selah by EKF was US$35.6 million, paid in shares on 17 April 2014. Selah reported a loss after tax for the period from acquisition to 31 December 2014 of £0.6 million and an unaudited loss after tax from 1 January 2015 to 30 November 2015 of £2.6 million. As of 31 December 2014, Selah was disclosed in the Company’s balance sheet in intangible assets valued at £41.4 million, which will now be written off. Selah, as of 31 December 2014, had net liabilities of £3.6 million.

The Board estimates that the future annual cost savings for EKF will be in the region of £2 million. The consideration paid by the Purchasers is nominal. The sale and purchase agreement with the Purchasers contains additional consideration provisions for EKF. If Selah secures further equity funding within twelve months from today’s date, EKF will obtain a 10% equity interest in Selah. Alternatively, if no external funding is obtained and Selah or its business is sold, EKF will receive 10% of the net proceeds of such a sale.

As a director of Selah, Michael Bolick is a related party of the Company; therefore, the sale of Selah constitutes a related party transaction. EKF’s Directors, having consulted with its nominated adviser, consider the transaction terms fair and reasonable insofar as its shareholders are concerned.

Ron Zwanziger, Non-Executive Chairman, commented: “Today’s sale of Selah, with the associated cost savings, is another step towards re-establishing EKF as a profitable, cash-generating point-of-care diagnostics business.”