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26 January 2022
Medica Group Plc
Trading and business update for the year ended 31 December 2021
Robust recovery in core teleradiology business and strong performance from acquisitions
Medica Group Plc (LSE: MGP, "Medica", the "Company" or the "Group"), the UK and Ireland market leader in the provision of teleradiology services and a US expert in imaging services for clinical trials, today announces an unaudited trading update for the year ended 31 December 2021, as well as a business update.
The Company expects to report its annual financial results for period ended 31 December 2021 on 4 April 2022.
Trading update
Overall, the Group demonstrated a robust recovery during 2021, seeing accelerated growth in the second half of the year as the impact of the global pandemic started to abate and clients largely returned to pre-pandemic levels of radiology scanning. We expect Group revenue for the year to be £61.9 million, in-line with expectations and representing an increase of approximately 68% year-on-year and 33% compared to 2019, the last full annual results before the pandemic. An increase in gross margin compared with 2020, together with careful control of costs during the pandemic means that underlying profit(1) for the year is expected to be ahead of market expectations.
We started the year with net debt(2) of £3.9 million. During the year, working capital was carefully managed as our revenues recovered, and we are pleased to report that our cash conversion remained strong through H2 2021. After taking into account the acquisition of RadMD, the equity fundraising in March of £15.6m (net of costs) and the return to our progressive dividend policy, net cash(2) at 31 December 2021 was £3.6 million.
In March 2021 we acquired RadMD, an expert in imaging for clinical trials based in Pennsylvania. The Group results for 2021 include the nine months of trading for RadMD since acquisition, which were broadly in-line with our pre-acquisition expectations and saw an increase in overall pipeline and order book by year-end compared to March 2021. Medica Ireland, acquired in November 2020, also delivered a positive operating performance in 2021. Both acquisitions are performing to plan, and we are satisfied with our progress in their integration in the Group.
Business update
United Kingdom
As previously communicated, Elective scanning activity had recovered to pre-pandemic levels by summer 2021. However, the emergence of the Omicron variant in late November 2021, whilst less impactful than previous waves, negatively affected Elective reporting volumes towards the end of the last quarter. This was largely due to a higher-than-expected number of doctors and healthcare workers being unavailable to work. Elective reporting volumes are now rising swiftly again, and the NHS has made funds available to support the management of waiting lists and to provide increased capacity for scanning of elective cases.
Our NightHawk service continued to grow throughout 2021 driven by demand for urgent imaging of patients during out-of-hours. In Q4 2021, Medica secured net growth through 2022 via new clients, in addition to the renewal of several key contracts generating revenue for the longer term.
In terms of our FutureTech programme, we are on-track to launch our new PACS reporting system in Q1 2022, which we expect will deliver improved productivity over time and a better user experience for our radiologists, as well as improved functionality and workflow improvements. This is the first major deliverable in our £6 million investment programme that will continue throughout 2022 and 2023.
Ireland
Demand for our services in Ireland remained strong with the team focused on supporting the Health Services Executive (HSE), insurance companies and independent providers with backlog initiatives including scanning of patients, as well as reporting of ultrasound and radiology images. In addition, Medica has signed contracts with several new public hospital customers in 2021 and is well placed to continue to support the HSE to manage their elective scanning and reporting volumes. Medica Vision, our diabetic retinopathy screening service, also reported continued positive progress as the team continued to work through the large backlog of patients requiring ongoing retinal screening as well as expanding on surveillance services throughout 2021.
United States
In September 2021, we reported that during the first three months of our ownership (April-June) of RadMD there had been some instances of clients delaying patient recruitment into new clinical studies due to Covid-19. However, the growth rate increased in the second half of 2021 due to the resumption of trials that had been put on-hold. This, combined with new contract wins, led to an overall increase in our order book and backlog, providing a platform for growth in 2022 and beyond. The new senior management team is now in place supporting the founders to drive new opportunities and to scale operations to meet client demands.
Outlook
Building on a successful 2021 and our recent acquisitions, we believe Medica is well positioned to take advantage of future opportunities. Having largely recovered from the impact of Covid-19 in all markets, it is still possible the business may be impacted by new variants of the virus. However, whilst we may continue to experience an impact on elective demand, we are confident that most of our clients have now developed strategies to minimise the disruption to hospital capacity and staffing.
Dr. Stuart Quin, Chief Executive Officer of Medica, commented:
"We are pleased to deliver a positive set of results whilst integrating acquisitions and executing our growth strategy. Throughout 2021, we saw improvement in demand for our services and I am increasingly confident that our clients are now well prepared to continue to manage elective procedures and to continue clinical trial enrolment despite the ongoing pandemic. We have made significant progress with our FutureTech programme and are looking forward to the benefits that we expect this to bring in 2022 and beyond. I am also very pleased to see that our recently acquired businesses in Ireland and the US are performing to plan and are well placed for continued growth this year. Medica continues to focus on driving reporter capacity and to look at opportunities to internationalise and further diversify its services going forward."
(1) Underlying profit is a non-IFRS measure and is calculated as profit before exceptional items, share based payments and amortisation in respect of assets acquired on acquisition and other one-off costs including deal fees.
(2) Net cash/(debt) is a non-IFRS measure and is calculated by subtracting bank borrowings from cash and cash equivalents.
For further information, please contact:
| Medica Group Plc: Stuart Quin, Chief Executive Officer Richard Jones, Chief Financial Officer
| +44 (0)33 33 111 222
|
| FTI Consulting Victoria Foster Mitchell Sam Purewal
| +44 (0)20 3727 1000 |
| Liberum (Joint Broker) Phil Walker Richard Lindley
| +44 (0)20 3100 2000 |
| Numis (Joint Broker) Freddie Barnfield Duncan Monteith Euan Brown
| +44 (0)20 7260 1000
|
About Medica Group PLC
Medica is the market leader in the UK and Ireland for the provision of teleradiology services, providing outsourced interpretation and reporting of MRI (magnetic resonance imaging), CT (computerised tomography), ultrasound and plain film (x-ray) images. Medica also offers diabetic retinopathy screening in Ireland.
Medica contracts with the largest pool of consultant radiologists in the UK and Ireland, performing remote access teleradiology across its customer base of more than 100 NHS Trusts in the UK, the Irish HSE, private hospital and insurance groups, as well as diagnostic imaging companies. This enables the Company to offer a fast, responsive service. In addition, Medica operates in Australia and New Zealand through MedX, a 50:50 Joint Venture with Integral Diagnostics Limited Pty.
The Company currently offers two primary services to hospital radiology departments:
· NightHawk - urgent reporting service
· Elective - includes routine cross-sectional reporting on MRI and CT scans, and routine plain film reporting on x-ray images.
These services are underpinned by Medica's bespoke, secure IT platform that provides market-leading linkage between a hospital's Radiology Information System (RIS) and consultant radiologists who contract with the Company. Direct RIS access ensures that where the wider patient medical history is available, it can be reviewed by the consultant as part of every report.
Through its subsidiary, RadMD, in the United States, Medica also provides pharmaceutical and biotech clients and contract research organisations (CROs) with high quality, complex imaging services for international clinical trials. RadMD has gained vast experience in the space, having contributed to over 500 international clinical trials, in all phases of clinical research from proof of concept to phase III and with expertise in oncology, as well as a wider range of therapeutic areas including medical devices, neurology and cardiovascular.
For more information please visit: www.medicagroupplc.com
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