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LiDCO given notice to terminate Argon distribution contract
AIM-quoted hemodynamic monitoring company LiDCO has been given notice to terminate its distribution contract with Argon Medical Devices after seven years of business.
In its most recent trading year, Argon contributed £1.4m to LiDCO's overall sales at a 20% gross margin.
Given the timing of the termination and the low margin achieved, LiDCO told investors on Tuesday that the termination was not expected to have a material impact on its results for the year ending 31 January 2019, adding that it was already in discussions with a number of companies about other distribution opportunities at higher margins.
Merit Medical Systems, who acquired Argon Medical Devices's critical care business back in February 2017, maintain a significant sales presence in the UK and, in accordance with the terms of the contract, has provided LiDCO with the required notice period to terminate the contract on 30 September 2018.
Separately, Merit indicated to LiDCO that it would like to have discussions to ascertain whether there is a role for the firm in the UK distribution of Argon products after the termination of the current distribution contract.
Matt Sassone, chief executive officer of LiDCO, said, "This change is understandable given the change of ownership and Merit's sales resources in the UK. We have already had discussions with a number of companies about other opportunities and expect to announce further distribution arrangements that complement our approach in the UK before the end of the current financial year."
As of 1000 GMT, shares had lost 1.89% to 6.50p.