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Emis looking healthier

The healthcare software group lifted sales and profits, despite continued investment in its patient products
September 3, 2018

Emis’s (EMIS) share price chart tells a revealing story. The healthcare software group endured a challenging start to the year, but has since shown promising signs of recovery – enjoying a modest mark up on the latest half-year numbers to June.

IC TIP: Hold at 927p

To recap: in January, Emis said that it had failed to meet certain reporting obligations within NHS Digital in relation to its web product for GPs. March’s preliminary results revealed that it had taken an £11.2m provision to cover the potential financial impact.

So, the latest half-year results were broadly – and reassuringly – positive, with decent top-line growth and recurring revenues up 4 per cent to £69.4m, representing 82 per cent of total sales. This, along with a good order book for the rest of the year, helped underpin management’s confidence about meeting expectations for 2018.

We also learnt that the NHS Digital recovery plan is “well advanced”. As at 1 July, Emis was meeting its key service level obligations under the contract. Meanwhile, reported operating profits soared 23 per cent to £12.9m, although last year’s first half did include business restructuring costs. Adjusted operating profits rose just 1 per cent, dampened by costs tied to the service-level reporting issues, and by greater investment in Emis’s patient segment.

Bloomberg consensus data reveals that analysts expect adjusted EPS of 45.9p for 2018.

EMIS (EMIS)    
ORD PRICE:985pMARKET VALUE:£624m
TOUCH:963-1,002p12-MONTH HIGH:1,034pLOW: 689p
DIVIDEND YIELD:2.8%PE RATIO:62
NET ASSET VALUE:166p*NET CASH:£32.3m
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201779.210.713.112.9
201884.513.116.114.2
% change+7+23+23+10
Ex-div:27 Sep   
Payment:2 Nov   
*Includes intangible assets of £95.8m, or 151p a share