By providing tele-radiology reporting services to more than 100 NHS trusts, Medica (MGP) is continuing to capitalise on the imbalance between an increasing number of scans being conducted and the lack of capacity to interpret their results. With scan volumes in its out-of-hours ‘Nighthawk’ service having outpaced wider UK growth, adjusted operating profit rose 7 per cent to £5.3m.
Yet margins are still being squeezed amid perennial pressures on the NHS to curb costs. Pricing reviews at the contract renewal stage and a shift to framework agreements meant the gross profit margin dipped 1.3 percentage points to 47.6 per cent. Management hopes these pressures can be offset by volume increases.
Higher investment in data centre equipment and an increase in trade debtors from NHS trusts pushed the group into a small net debt position. As the NHS pushes for greater use of artificial intelligence and machine learning, analysts at Peel Hunt question whether Medica is building its cash pile fast enough to make the necessary strategic investments – big players like IBM Watson and Google are rapidly advancing in this space.
Peel Hunt expects adjusted pre-tax profit of £10.3m and EPS of 8.6p for the full year, rising to £11.4m and 9.3p in 2020.
| MEDICA (MGP) | ||||
| ORD PRICE: | 128p | MARKET VALUE: | £ 142m | |
| TOUCH: | 124-132p | 12-MONTH HIGH: | 164p | LOW: 107p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 29p* | NET DEBT: | 2%** | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 18.6 | 4.35 | 3.19 | 0.75 |
| 2019 | 22.0 | 4.66 | 3.49 | 0.85 |
| % change | +18 | +7 | +9 | +13 |
| Ex-div: | 26 Sep | |||
| Payment: | 25 Oct | |||
| *Includes intangible assets of £23.7m or 21p a share, **Excludes lease liabilities of £0.6m | ||||
