ClearStar shares surge as trading starts to recover

Background and medical screening technology company ClearStar updated the market on the first six months of the year on Friday, saying that after entering 2020 with its “highest ever” order book and a “healthy” pipeline, the outbreak of Covid-19 impacted its business due to widespread job losses and freezes on recruitment.

The AIM-traded firm did note that it experienced a “significant” uptick in revenue run rate from the end of May, which had continued throughout June and into July.

As a result, revenue for the first half totalled $8.9m (£7.09m), down from $11.6m year-on-year.

The company said revenue for June was 74% higher than for April, and returned to the same level of revenue as seen in February.

It added that growth in revenue from May was primarily from financial institutions preparing for a return to normal employment levels, business staffing companies, and an increase in demand for medical information services.

The firm said it had continued to maintain “tight control” over costs, explaining that as a result of the increased revenue and the mitigation measures implemented at the start of the outbreak, it was able to return to generating positive EBITDA for May and June.

Consequently, ClearStar said it had continued to reduce net debt to $1.4m as at 30 June, and increase available funds to $2.2m at the same time. The board said it remained confident that the company had sufficient funds to remain viable for the foreseeable future.

During the period, ClearStar said it made “significant progress” with the onboarding of previously-won customers, and continued to generate new business, adding that it was encouraged that it had not lost a single customer through the pandemic.

The growth in revenue from the end of May was driven by the ramp-up in volume of one of the three new financial institutions that ClearStar was appointed to this year, which was described as a “sizable household name investment bank”, and by a human resources business outsourcing customer.

“We are greatly encouraged by the strong recovery in revenue since the peak of the crisis,” said chief executive officer Robert Vale.

“The areas that are driving this growth - business outsourcing, financial institutions, home healthcare - are well-positioned for the current environment and the changing needs of workplaces and individuals.

“We have continued to win and onboard customers, and secured an important new integration that will expand our presence in home healthcare.”

At 0834 BST, shares in ClearStar were up 14.75% at 36.72p.