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Emis revenues flat despite NHS digitisation

Long-term digital transformation in healthcare not losing momentum
Emis revenues flat despite NHS digitisation
  • Topline flat, although management expects to return to growth this year
  • Recurring revenue continues to grow 

Behind dealing with the pandemic, digital transformation was likely one of the NHS’ key priorities last year. But for one of its software providers Emis (EMIS), that did not translate into a huge surge in revenues. In fact, the group’s top-line stayed broadly flat in 2020, though that could still be deemed respectable given the uncommon circumstances. 

Adjusted operating profit was also unmoved at £39.3m, as the group’s revenue mix moved towards lower gross margin products. But Emis made good progress elsewhere, with its recurring revenue growing to 82 per cent of the total, up from 78 per cent in the prior year. That is on top of £28m worth of new business secured in 2020. 

Management said that it expects to return to overall growth this year, with the “more rapid adoption of digital healthcare...here to stay”. With Factset-compiled consensus forecasts pointing to a reasonable forward price to earnings multiple of 28, we're still keen on the shares. 

Last IC View: Buy, 1,082p, 9 Sept 2020

EMIS (EMIS)    
ORD PRICE:1,126pMARKET VALUE:£ 713m
TOUCH:1,098-1,126p12-MONTH HIGH:1,198pLOW: 140p
DIVIDEND YIELD:2.8%PE RATIO:23
NET ASSET VALUE:188p*NET CASH:£46.1m
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201615925.330.423.4
201716010.912.825.8
201815028.134.728.4
201916027.135.331.2
202015936.948.132.0
% change-0.4+36+36+3
Ex-div:15 Apr   
Payment:14 May   
*Includes intangible assets of £85.3m or 134p a share