IDT Australia’s Reset Gains Traction as Losses Narrow and API Roars Back

IDT Australia has delivered the kind of half-year update long-suffering shareholders have been waiting for: still loss-making, but materially less so, and with signs that the strategic reset under new leadership is starting to bite.

In its H1 FY26 result, the Boronia-based contract manufacturer reported a 20.3% lift in ordinary revenue from its three core verticals to $8.4 million, while EBITDA improved by $2.3 million to a modest $436,000 loss, compared to a $2.7 million deficit in the prior corresponding period .

For a business that had been grappling with deepening losses and operational drift, that is meaningful progress.

A more balanced revenue mix

The headline numbers only tell part of the story. The more interesting shift is under the bonnet.

API manufacturing contributed 35.4% of vertical revenue, specialty orals 30.0%, and sterile fill or advanced therapies 34.6% . A year earlier, specialty orals dominated the mix at 56.4%, with API a modest 14.7%.

That swing reflects management’s deliberate move to re-establish the active pharmaceutical ingredient business as the “foundation of growth”. API revenue surged 191.4% to $3.0 million in the half, the standout performance across the group.

The logic is straightforward. API manufacturing acts as a funnel for follow-on work across the value chain. If IDT can produce the active ingredient, it can potentially capture the downstream specialty oral or sterile fill manufacturing as well. That end-to-end, cGMP-certified offering remains one of its competitive advantages.

Specialty orals also pulled its weight, with revenue up 25.8% to $2.5 million, driven in part by radiopharmaceutical opportunities . Management is pivoting away from more commoditised medicinal cannabis and psychedelic work towards higher-margin radiopharma contracts, where barriers to entry are higher.

Sterile fill revenue fell 25.7% to $2.9 million, but this was attributed to project timing, with activity expected to normalise in the second half . Importantly, IDT retains its status as Australia’s first mRNA vaccine manufacturer and has produced more than 20 mRNA constructs to date .

Cost discipline finally evident

Revenue growth alone would not have impressed the market without cost control. Here too, the numbers show tangible improvement.

Operating expenses fell 14.2%, or $1.1 million, excluding direct material costs reimbursed through disbursements . Total expenses were down around 20% on the prior period, according to the cost optimisation slide on page 6 .

Normalised interim EBITDA, excluding one-off redundancy costs, improved further to a $256,000 loss . That narrowing suggests the underlying business is approaching break-even territory, provided revenue momentum holds.

Perhaps most telling is the upgrade to the cost savings target. Management now expects annualised savings of $2 million in FY26, double the initial ~$1 million forecast flagged in October . These savings stem from headcount reductions, use of internal expertise over consultants, and digitisation and automation initiatives .

For a company with historically high fixed costs and underutilised facilities, this operating leverage matters. Current plant utilisation sits between 20% and 35% depending on manufacturing cycles, based on one shift and commissioned facilities, not the entire site . Incremental revenue should therefore carry a higher contribution margin.

Strategic reset under new leadership

The half also marked a period of stabilisation following leadership changes and financial pressure.

Executive Chair Mark Simari described the result as a “significant improvement in underlying earnings this early in our strategy reset”, while acknowledging “there is still more work to be done” .

The reset has centred on targeting clients with the scale and pipeline to award follow-on work, reallocating resources towards near-term earnings opportunities, and exploring new revenue streams that leverage IDT’s technical capabilities .

In other words, less scattergun, more focus.

mRNA and radiopharma: the longer game

Beyond the half-year numbers, IDT continues to position itself in two structurally growing markets: mRNA therapeutics and radiopharmaceuticals.

The Company forecasts the global mRNA market to reach US$26.1 billion by 2034 and the radiopharmaceutical market to hit US$21.9 billion by 2029 . While such macro forecasts should be treated cautiously, they underscore why management is leaning into these segments.

IDT’s sterile fill facility is purpose-built for high-containment work, and management points to a global shortage of such specialised capabilities . If the company can convert pipeline into commercial contracts, the operating leverage could be significant.

The road to positive operating profit

Management has stated a clear near-term goal: achieve a positive operating profit and build sustainable growth .

The H1 FY26 result does not yet get IDT there, but it narrows the gap meaningfully. Revenue from core operations is rising, the mix is more balanced, costs are coming out of the system, and the cost savings target has been upgraded.

For investors, the key question is whether this momentum can be sustained into the second half and beyond. The pipeline is described as solid across all three verticals , but execution remains everything.

After a period of turbulence, IDT appears to have steadied the ship. The next test will be whether the strategic realignment translates into consistent profitability rather than just a promising half-year rebound.