Emis Group - Final Results

This Aim listed healthcare software supplier which I wrote up last week, reported final results today. These were largely as expected and they described them as in line, although the earnings looked about 1 pence light at 34 pence (+11%) while the dividend was in line at 16 pence (+13%). They said that the acquisitions made a positive contribution (would be alarming if they didn't) and net debt reduced from a pro forma £18.7 million, as announced at the time of  acquisition of Ascribe, to £13.5 million reflecting good cash flow. They reiterated that both of last years acquisitions are expected to enhance earnings in the first full year of ownership in 2014. Specifically, the acquisition of Ascribe is expected to deliver £0.5 million savings from synergies this year, with further potential future efficiencies and economies of scale.

They seem to have increased their market shares slightly in GP's surgeries and pharmacies to 53% (+1.8%) and 35.3% (+0,5%) respectively. They also talked about their expansion into Secondary and Specialist care with acquisitions delivering a strategic platform for integrated care with Ascribe providing substantial UK presence in PAS, A&E, Pharmacy and Mental Health, and Digital Healthcare being England's market leader for diabetic eye screening software and services.

On Current trading they said blandly in the headlines that the "Group continues to trade in line with management expectations and  with continuing strong revenue visibility" While Chris Spencer, Chief Executive Officer of EMIS Group, said:
 "EMIS Group has had an exceptionally productive year with the accelerated roll-out of EMIS Web for GPs, the acquisitions and integration of Digital Healthcare and Ascribe completing our strategic platform for integrated care, strong organic revenue growth and a high level of profitability maintained. As financial and demographic factors continue to impact the NHS, EMIS Group confidently expects to remain at the heart of healthcare IT with our strategic mission of integrating healthcare systems spanning primary, CCMH, community pharmacy, secondary and specialist care."

However in his more detailed overview he gave a better feel for the opportunities they have in facilitating access to patient data in the NHS and beyond with the following comments:

"EMIS Group has had an exceptionally productive year with the accelerated roll-out of EMIS Web for GPs, the acquisition and integration of Digital Healthcare and Ascribe (delivering a strategic platform for integrated care), strong organic revenue growth and a high level of profitability maintained.

As the Group moves towards the effective completion of the roll-out of EMIS Web to GPs in England it sees substantial medium and long term growth opportunities especially related to health record sharing across the Group's own product suite and with third party products. The Medical Interoperability Gateway ("MIG"), from the Group's joint venture Healthcare Gateway Limited ("HGL"), now gives access to virtually all UK primary care and community health records. The Health Application Platform ("HAP") from Ascribe gives access to EMIS Group and third party health records in secondary care. The MIG and the HAP, coupled with other products and tools, like the Group's Medicine Manager for community pharmacy, increasingly facilitate integrated care across the whole "healthcare economy": primary, community, child and mental health ("CCMH"), community pharmacy, secondary and specialist care.

Health Minister, Jeremy Hunt, speaking at Cambridge Health Network on 5 February 2014 described certain things as "absolute givens": that the NHS will become totally dependent on personal and population level electronic health records and that patients will take charge of their own "health destinies".  EMIS Group is closely aligned in facilitating those trends in healthcare: first, as custodian of not only the cradle-to-grave GP record but also of millions of the more episodic records created in CCMH, community pharmacy, secondary and other settings; second through Patient Access, the Group's patient transactional service made available through patient.co.uk which is already used by millions of patients and clinicians every month."

There was one line in the headline statement about a contract that is due to be decided by the end of March. On this they said: "GPSoCR Lot 1 negotiations expected to conclude shortly." They don't seem to be making a big song and dance about it, but It could I assume be reasonably significant either way if they win something from it or not. In deed in their final Summary and Outlook they said the following:

"EMIS Group continues to trade in line with the Board's expectations, with continuing strong revenue visibility and improved profit performance in the second half of 2013 continuing into 2014, principally due to the ongoing growth in the EMIS Web GP estate.  This momentum and the benefits of last year's acquisitions provide confidence that further progress will be achieved in the current year.

A successful outcome to the GPSoC framework renegotiation and completing the roll-out of EMIS Web GP in England through 2014 remain two of the key objectives for the primary care division. Other high priority objectives for the Group include capitalising on the post National Programme re-letting of contracts in the CCMH and secondary markets, continuing to focus on the integration of Ascribe and Digital Healthcare with the Group (both at an organisational and product level) and optimising development delivery and other operational efficiencies. Meeting these objectives will deliver strong and sustainable growth during 2014 and beyond.

As financial and demographic factors continue to impact on the NHS, EMIS Group confidently expects to remain at the heart of healthcare IT while taking further and significant steps towards its strategic vision of integrated healthcare systems joining primary, community, secondary and specialist care."

Overall there didn't seem a lot in the figures to be upset or excited about either way so probably steady as she goes hold / watch for now, but I think the premise of providing IT for patient data to be shared is an interesting one with lots of quality recurring revenue. Having said that I see the price was up first thing in a weak market and that Singer have today reiterated a 748 pence price target and Numis, Company brokers I believe, unsurprisingly reiterated a “buy” rating on shares of Emis Group in a research note on Monday, March 3rd 2014. They now have a 860 pence price target on the stock for what that's worth (Source:tickerreport.com).