Slower-than-expected pricing adjustments and more complex work meant gross margins were stable for Medica (MGP) during 2018, with gross profits rising 16 per cent to £19.1m. However, chief executive John Graham – who announced his intention to step down at some point this year – continues to expect margins to "edge down" over the coming years as the contracts migrate to framework agreements, which have higher costs attached to them.
However, demand from the NHS continues to rise, with closer partnerships amplifying revenue across the company’s three main segments. Notably, sales from the out-of-hours NightHawk service, accounting for half of total revenue, increased by 15 per cent to £19.3m. With a stable client base of 100 NHS trusts, 85 per cent of revenue growth came from expanding existing contracts.
Financial reporting from Australia and New Zealand has now commenced, signalling management’s intentions to transform into a global teleradiology business serving UK and international clients.
Analysts at Investec forecast adjusted pre-tax profits of £11.4m and EPS of 8.2p this year, rising to £13.0m and 9.5p in 2020.
| MEDICA GROUP PLC (MGP) | ||||
| ORD PRICE: | 126p | MARKET VALUE: | £140m | |
| TOUCH: | 125.8-129.8p | 12-MONTH HIGH: | 169p | LOW: 107p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 273p* | NET CASH: | £0.68m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014**† | 17.9 | 0.8 | na | na |
| 2015 | 22.2 | 2.1 | 1.7 | nil |
| 2016 | 28.5 | 4.3 | 3.3 | nil |
| 2017 | 33.7 | 5.7 | 4.0 | 1.65 |
| 2018 | 39.0 | 9.2 | 6.6 | 2.25 |
| % change | +16 | +62 | +66 | +36 |
| Ex-div: | 30 May | |||
| Payment: | 28 Jun | |||
| **Pre-IPO figures, †Eighth-month period. *Includes intangible assets of £24.2m, or 21.8p a share | ||||
