Healthcare services provider UDG Healthcare (UDG) is struggling to shake off a $41.9m loss from its Aquilant sale, overshadowing otherwise healthy annual results and dragging the shares 5.3% lower to 587.5p.
Earlier this year, UDG decided to sell pharmaceutical products distributor Aquilant to H2 Equity for up to €23m ($26m) to focus on developing its higher margin Ashfield and Sharp divisions.
The price tag for Aquilant was significantly lower than the level it was valued at before the sale and this sours an otherwise robust performance as sales jumped 5% to $1.3bn in the year to 30 September.
Good demand for communications and advisory services, new acquisitions and a better performance at packaging solutions business Sharp in the US helped drive the improvement in sales.
WEAKNESS TO CONTINUE IN COMMERCIAL AND CLINICAL
In the Commercial and Clinical division, trading was not as strong as the timing of contract activity levels and fewer new business development opportunities impacted performance.
Underlying sales declined 6% and operating profit dropped by 10%, which is unlikely to improve anytime soon as challenges are expected to continue into 2019.
Investment in an expansion programme for medical audit specialist STEM, known as STEM aXcellerate, is anticipated to hit underlying profit growth rates next year by an undisclosed amount.
Davy Research analyst Allan Smylie forecasts a $3m investment in staff for the expansion programme, which could potentially offer ‘meaningful’ growth opportunities.
Berenberg analyst Charles Weston says sales at Sharp beat analysts’ forecasts by 2% despite weaker trading in Europe, although this is not enough to boost overall expectations due to a mixed divisional performance.
