Medica (MGP) - a UK provider of radiology services - has arrived on the stock market in style. Raising £121m at 135p a share via a placing, the shares closed the first day of trading up 37 per cent to 185p.
Medica employs experienced radiologists to remotely assess human body scans for diagnostics purposes and uses its bespoke IT platform to report its findings. Its diverse client base includes 190 NHS trusts, various private hospitals and diagnostic imaging companies.
Looking at the financials, it's not surprising that Medica's shares were swept up with such gusto this week. The group has grown cash profits by more than a fifth since 2013 and has an operating cash conversion of more than 90 per cent. Plus, more than three-quarters of its revenue comes from recurring sources.
The market for medical imaging is also attractive and forecast to grow to $49bn by 2020, 52 per cent up on the market size in 2014, according to broker FinnCap. Although a considerable amount of this growth is expected to come from emerging markets, western societies are expected to benefit from advances in digital imaging technologies. Meanwhile, in the UK, cost-cutting measures at the NHS are likely to play in Medica's favour as the group claims to take considerable costs out of diagnostics.
