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What’s next after stellar 2020 performance?

Ergomed 1 June 2021 Outlook
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Ergomed

What’s next after stellar 2020 performance?

Company outlook

Healthcare services

1 June 2021

Price

1,225p

Market cap

£598m

Net cash (£m) at end 2020

19.0

Shares in issue

48.8m

Free float

78%

Code

ERGO

Primary exchange

AIM

Secondary exchange

Frankfurt Xetra

Share price performance

%

1m

3m

12m

Abs

5.2

(2.0)

222.4

Rel (local)

4.0

(9.6)

172.8

52-week high/low

1,430p

380p

Business description

Ergomed is a global full-service contract research outsourcing business with a core focus on the US and EU. It provides Phase I–III clinical services in addition to post-marketing pharmacovigilance services through its PrimeVigilance division. Ergomed is predominantly focused on oncology, orphan drugs, rare diseases and pharmacovigilance.

Next events

AGM and AGM statement on trading

June 2021

H121 interim results

July 2021

Additional bolt-on acquisitions

2021/22

Analysts

Dr Jonas Peciulis

+44 (0)20 3077 5728

Dr Sean Conroy

+44 (0)20 3077 5700

Ergomed is a research client of Edison Investment Research Limited

Although most of 2020 was challenging for the contract research outsourcing (CRO) sector, for Ergomed it was a transformative growth period due to well-balanced pharmacovigilance (PV) and CRO offerings. Ergomed managed to withstand global woes caused by the COVID-19 pandemic and delivered another solid year of growth, organically and through acquisitions. We believe the company will continue to benefit from a clear strategic focus (oncology, rare diseases and pharmacovigilance), order book growth and margin control and strong secular CRO sector growth. Our valuation of £683m or 1,400p/share is virtually unchanged.

Year end

Revenue (£m)

Adjusted EBITDA* (£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/19

68.3

12.5

19.8

0.0

61.9

N/A

12/20

86.4

19.4

23.7

0.0

51.7

N/A

12/21e

119.6

21.7

30.4

0.0

40.3

N/A

12/22e

136.8

23.2

32.9

0.0

37.2

N/A

Note: *Adjusted EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Brimming book underpins a stellar performance

Ergomed’s revenue was up 27% to £86.4m in FY20 with gross margin improving to 45.9% from 43.3%. FY20 adjusted EBITDA increased to £19.4m from £12.5m in FY19. Throughout 2020, Ergomed grew its order book substantially, which stood at an all-time high of £193m at the end of 2020, up 55.5% y-o-y. This provides high revenue visibility for FY21. Ergomed had cash of £19.0m (no debt) at the end of FY20, up from £14.3m a year ago (operating cash flow £18.1m), which is impressive considering it made two acquisitions in 2020 with outflows of £12m.

M&A remains on the agenda with plenty of firepower

Ergomed has repeated on several occasions that it aims to expand via both organic top-line growth and M&A. The latter was evident from the two acquisitions completed in 2020. Furthermore, MedSource was acquired in December 2020, when the pandemic was at its peak in many Western Countries (which complicates the due diligence process). We believe, this exemplifies the determination to pursue growth through acquisitions. Looking forward, with cash of £19.0m at hand (end-2020) and access to £30m in unused credit facilities, Ergomed has plenty of firepower to continue pursuing its active M&A strategy.

Valuation: £683m or 1,400p/share

We maintain our estimates and our valuation is virtually unchanged at £683m or 1,400p/share derived from our DCF model implying an EV/EBITDA multiple of 30.5x based on our FY21 forecasts. We note that Ergomed trades at a premium EV/EBITDA (FY21e) of 26.9x compared to the peer average of 20.0x (in line with Medpace). In this report, we analyse the sensitivity of our valuation to a set of DCF assumptions (long-term sales growth and profit margins). We find that a bull case would correspond to a valuation of 1,950p/share, while a bear case 995p/share. The AGM trading update in June 2021 and full H121 trading update in July 2021 are the next catalysts.

Stellar performance in unusual times

Founded in 1997, Ergomed is a full-service pharmaceutical services company. Its two divisions are CRO, which provides Phase I to III clinical trial services, and PrimeVigilance, which provides post-marketing PV (Phase IV) services. The company has expertise across all common disease areas but is predominantly focused on oncology and rare diseases/orphan drugs. The company was listed on the AIM market of the London Stock Exchange in 2014. At 31 December 2020, Ergomed employed over 1,150 people and 300 contractors across 16 offices globally, had completed 600 studies with over 125,000 patients enrolled across 60 countries and was supporting products in over 100 countries. It has 240 active clients (including those of the recently acquired PrimeVigilance USA and MedSource) and low client concentration. Because of the well-balanced pharma services offering (PV and CRO), Ergomed has proved to be a resilient business and delivered excellent returns in 2020.

Exhibit 1: Ergomed’s share performance through the COVID-19 pandemic (last 18 months)

Source: Refinitiv

Ergomed’s revenue was up 27% to £86.4m in FY20. Gross profit increased to £39.7m from £29.5m, with gross margin improving to 45.9% from 43.3%. FY20 adjusted EBITDA increased to £19.4m from £12.5m in FY19. Adjusted FY20 EPS increased by 29.6% y-o-y. Throughout 2020, Ergomed grew its order book substantially, which stood at an all-time high of £193m at end-2020, up 55.5% y-o-y. We note that although this benefited from the accretive acquisitions of both Ashfield and MedSource in 2020 (c £40m), underlying organic growth in the order book was also strong (+24.6%, c £31m) in part reflecting an increase in cross-selling between its service offerings (CRO and PV) and its broadening US sales presence. This provides high revenue visibility for FY21.

Exhibit 2: Order book and revenue growth

Source: Edison Investment Research. Note: The number inside each column is book-to-bill ratio.

Ergomed had cash of £19.0m and was debt free at the end of FY20 (vs £14.3m at the beginning of the year), which is impressive considering the company made two acquisitions in 2020 with cash outflows totalling £13m. Underlying organic cash generation was a healthy £18m in FY20, representing strong cash conversion. In addition, the company has access to £30m in unused credit facilities.

CRO: Affected by pandemic, but poised for rebound

Unsurprisingly, the CRO segment was flat in 2020 with like-for-like CRO revenues ending at £31.3m (after adjusting FY19 revenues for a £1.6m one-off). This was entirely related to clinical trial delays caused by workflow disruptions in hospitals. Many trials either slowed down or were forced to slow patient recruitment. Ergomed’s key markets are the US and Europe, where vaccine deployment should be relatively efficient, so we expect the CRO segment to rebound throughout 2021. In H220 CRO segment service fee revenues were up 13.5% over H120 and up 16.7% y-o-y, which indicates the potential magnitude of the rebound. We forecast CRO segment revenues of £56.0m and £63.3m in 2021 and 2022 respectively.

Exhibit 3: CRO segment performance and forecast

Source: Ergomed, Edison Investment Research

The CRO segment was significantly strengthened in the US after the acquisition of MedSource in December 2020. The private US-based CRO booked $19.3m (£14.5m) and $17.0m (£12.8m) in service fees in 2019 and 2020, respectively, while adjusted EBITDA was $1.3m (£1m) in 2019. Ergomed indicated that MedSource is on track to recover from the impact of the COVID-19 pandemic in 2021 and guided to a potential uplift of 4–5% in revenues over 2019. Therefore, in addition to the expected resumption of organic CRO growth, MedSource will significantly boost 2021 CRO revenues and expand Ergomed’s presence in the US.

MedSource was acquired for $16.2m (£12.2m) in cash and $1.8m (£1.4m) in shares (at a 30-day average daily closing price before the acquisition). The initial cash outlay was $7m (£5.2m), as the company retained MedSource’s cash (no debt). There is an earn-out of up to $7m (spilt 90:10 cash and shares) depending on performance in 2021. The transaction was immediately accretive, according to Ergomed.

Ergomed’s CRO business segment is full-service, clinical and able to execute clinical development from the first patient through regulatory approval to post-marketing studies. Services offered include, but are not limited to, clinical trial and project management, medical writing, regulatory affairs, quality management and PV. A typical full-service clinical trial contract would consist of the CRO organising all aspects of a study, including the creation of an internal team to run the trial. A CRO contract is typically signed a couple of months before a clinical trial is expected to start. Revenue is recognised over the life of the contract when hours are billed and targets are met (eg patients are enrolled). Tight control over these margins is critical to ensuring profitability. How effectively a CRO uses its billable employees is key to driving both revenue and profit. A poor understanding by senior management of how its employees are being used will result in missed targets, higher costs and damaged reputations, while good control of this will enable a management team to push margin and revenue growth.

PrimeVigilance excels in 2020

Widespread lockdowns caused disruption to the clinical drug development industry in 2020. However, demand for PV services remained high, which allowed Ergomed to record strong organic growth in 2020. Like-for-like revenues in the PrimeVigilance segment increased to £46.0m, up by an impressive 30% and on a par with growth of 29% recorded in pre-pandemic 2019 over 2018. Including the Ashfield Pharmacovigilance (now PrimeVigilance US) acquisition, total 2020 revenues were £55.1m, up 56%. Ergomed acquired US-based Ashfield Pharmacovigilance from UDG Healthcare in January 2020 in a deal that was immediately accretive to earnings, according to the company. We forecast PrimeVigilance segment revenues of £63.6m and £73.6m in 2021 and 2022, respectively.

Ergomed’s PrimeVigilance business segment focuses on PV work across the globe. Once a drug is approved and marketed, regulators require pharma companies to track the safety of their drug to ensure no unforeseen risks arise. This originally involved tracking any adverse events that patients experience, but has evolved to cover a whole suite of product lifecycle management.

Exhibit 4: PrimeVigilance segment performance and forecast

Source: Ergomed

Margins comparable across divisions

Pass-through revenues are Ergomed’s expenses reimbursed by customers, but booked in the top line according to IFRS. To get the true profit per segment, these pass-through revenues need to be adjusted. Reported gross margins for the CRO and PrimeVigilance divisions were 35.1% and 52.0%, respectively, in FY20. Once pass-through revenues are stripped out, underlying gross margins were 46.3% for CRO and 52.5% for the PrimeVigilance division.

Exhibit 5: Underlying gross margins across divisions

2017

2018

2019

2020

CRO

CRO revenue (£m)

25.2

26.6

32.8

31.3

CoGS (£m)

(18.0)

(19.9)

(21.5)

(20.3)

Gross profit (£m)

7.1

6.7

11.3

11.0

Gross margin %

28.4%

25.1%

34.4%

35.1%

CRO service revenue (£m)

17.4

19.7

24.3

23.7

CoGS (£m)

(10.6)

(12.2)

(13.0)

(12.7)

Gross profit (£m)

6.8

7.5

11.3

11.0

Underlying gross margin %

38.9%

38.3%

46.4%

46.3%

PrimeVigilance

PrimeVigilance revenue (£m)

22.5

27.5

35.4

55.1

CoGS (£m)

(12.0)

(14.9)

(17.2)

(26.4)

Gross profit (£m)

10.5

12.6

18.2

28.7

Gross margin %

46.4%

45.7%

51.5%

52.0%

PrimeVigilance service revenue (£m)

22.3

27.1

34.9

54.6

CoGS (£m)

(11.8)

(14.6)

(16.7)

(25.9)

Gross margin (£m)

10.5

12.5

18.2

28.7

Underlying gross margin %

47.1%

46.1%

52.1%

52.5%

Source: Edison Investment Research, Ergomed

Valuation: 1,400p base, 1,950p bull and 995p bear

Our valuation of Ergomed is virtually unchanged at £683m or 1,400p/share from our post-results update in March 2021. This is derived from our DCF model (Exhibit 6) using a 10% discount and 2% terminal growth rates. Our valuation implies an EV/EBITDA multiple of 30.5x based on our FY21 forecasts. We note Ergomed trades at a premium EV/EBITDA (FY21e) of 26.9x compared to peer average of 20.0x (but in line with Medpace).

Ergomed has demonstrated sales growth rates (2017–20 CAGR of 22.0%) that are higher than the growth of most peer group companies (Exhibit 7). Medpace is the smallest company by market cap in the peer group and has demonstrated an even higher CAGR in revenues of 28.5% over the same period. Medpace’s current EV is almost 10x larger than Ergomed’s, which indicates much larger CROs can sustain high growth rates. Ergomed is significantly smaller than the rest of its listed peers, it is also differentiated (focused on orphan drug development) and active in M&A. For these reasons, we believe it can sustain our forecasted growth rates and margins over our projected period in the DCF model.

Exhibit 6. Ergomed base case DCF model

£'000s

2021e

2022e

2023e

2024e

2025e

2026e

2027e

2028e

2029e

2030e

Revenue

119,600

136,813

161,312

187,121

215,502

246,390

279,653

315,075

352,359

391,119

Growth (%)

38.4%

14.4%

17.9%

16.0%

15.2%

14.3%

13.5%

12.7%

11.8%

11.0%

Adj. EBIT

17,595

19,049

28,546

37,424

44,896

53,385

62,922

73,518

85,154

97,780

Margin (%)

14.7%

13.9%

17.7%

20.0%

20.8%

21.7%

22.5%

23.3%

24.2%

25.0%

Tax

(3,111)

(3,387)

(5,192)

(6,933)

(8,326)

(9,909)

(11,689)

(13,669)

(15,844)

(18,207)

Rate (%)

(19.0%)

(19.0%)

(19.0%)

(19.0%)

(19.0%)

(19.0%)

(19.0%)

(19.0%)

(19.0%)

(19.0%)

D&A

4,150

4,150

4,150

4,150

4,150

4,150

4,150

4,150

4,150

4,150

Working capital

(3,371)

2,267

(2,532)

(3,546)

(534)

411

1,540

108

1,595

2,368

CapEx inc M+A

(3,550)

(3,550)

(3,550)

(3,362)

(3,184)

(3,015)

(2,855)

(2,704)

(2,561)

(2,425)

Operating free cash flow

11,713

18,529

21,422

27,733

37,003

45,021

54,067

61,403

72,493

83,666

Sales CAGR

Peak EBIT Margin

Value

Value
/share

DCF for forecast period (2020 to 2023)

23.1%

17.7%

£43.6m

89p

DCF for transition period (2023 to 2030)

13.5%

25.0%

£193.6m

397p

Terminal value

2.0%

25.0%

£426.4m

875p

Enterprise value

£663.6m

1,361p

Net cash/(debt) at 31st December 2020

£19.0m

39p

Equity value

£682.6m

1,400p

Source: Edison Investment Research. Note: 10% WACC.

Exhibit 7: Ergomed comparable companies

Company

Price

EV

EV/EBITDA (x)

EV/sales (x)

P/E (x)

CAGR 2017–20e

EBIT%

2020

2021e

2022e

2023e

2020

2021e

2022e

2023e

2020

2021e

2022e

2023e

Ergomed*

1,200p

£566m

29.2x

26.0x

24.4x

17.3x

6.6x

4.7x

4.1x

3.5x

52.9x

41.0x

38.0x

25.7x

22.0%

16.8%

Syneos

$85

$11.6bn

18.3x

15.1x

13.6x

12.3x

2.6x

2.2x

2.1x

1.9x

25.0x

19.8x

17.2x

15.0x

18.2%

6.7%

PRA

$172

$11.9bn

24.2x

19.9x

17.7x

16.1x

3.7x

3.2x

3.0x

2.7x

36.2x

28.4x

25.2x

22.9x

12.1%

9.5%

ICON

$226

$11.4bn

24.0x

18.8x

17.3x

15.9x

4.1x

3.3x

3.1x

2.9x

34.6x

26.3x

24.1x

22.1x

16.7%

14.1%

Medpace

$162

$5.6bn

29.6x

26.2x

21.3x

17.9x

6.0x

4.9x

4.2x

3.6x

42.3x

37.1x

32.0x

27.1x

28.5%

18.0%

Average

-

$10.1bn

24.0x

20.0x

17.5x

15.6x

4.1x

3.4x

3.1x

2.8x

34.5x

27.9x

24.6x

21.8x

Source: Edison Investment Research, Refinitiv. Note: *Edison numbers; We note the merger of ICON and PRA Health Sciences announced on 24 February 2021.

Bear, base and bull scenarios

After a transformational 2020 for Ergomed, we decided to examine the sensitivity of our valuation to different assumptions and understand how bull and bear case scenarios could look. Sales growth and operating profit margins are the two variables that influence the company’s cash flow generation. Therefore, in our sensitivity analysis (Exhibit 8) we focused on these two underlying inputs:

In our base case, we forecast near-term revenues growth of c 23% CAGR (2020–2023e). Over the longer term, we assume sales will grow at c 13.5% CAGR (2023–2030e) and EBIT margin will peak at c 25% in 2030.

In our bull case scenario, we assume c 17.5% revenues CAGR and c 30% EBIT margin, which results in a 1,950p/share valuation. The sales growth rates and margins in this scenario are based on discussions with the company and considered optimistic.

In our bear case scenario, we assume 9.5% revenues CAGR and c 20% EBIT margin, which results in 995p/share. The sales growth rate in this scenario is based on market growth (Exhibit 10).

Exhibit 8 provides a two-dimensional sensitivity analysis of these two variables. We also note that cash flow-based valuation methods discount cash at WACC and do not assume that the company could grow further via M&A and generate additional returns. Because Ergomed has an active M&A strategy, there is a significant possibility that accumulating cash will be used to acquire businesses, which, if successful, could deliver additional returns. For this reason, there is potential for additional upside on top of the values in Exhibit 8.

Exhibit 8: Valuation (share and FY21 EV/EBITDA) sensitivity to sales growth and peak EBIT margin

Mid/long term growth (sales CAGR 2023–30)

rNPV/share

9.5%

11.5%

13.5%

15.5%

17.5%

Peak EBIT margin

(2030)

20.0%

995p (21.4x)

1089p (23.5x)

1190p (25.8x)

1303p (28.3x)

1423p (31.0x)

22.5%

1079p (23.3x)

1184p (25.7x)

1297p (28.2x)

1423p (31.0x)

1558p (34.0x)

25.0%

1160p (25.1x)

1276p (27.7x)

1400p (30.5x)

1539p (33.6x)

1687p (36.9x)

27.5%

1244p (27.0x)

1371p (29.9x)

1507p (32.9x)

1659p (36.3x)

1821p (40.0x)

30.0%

1325p (28.8x)

1462p (31.9x)

1610p (35.2x)

1774p (38.9x)

1950p (42.8x)

Source: Edison Investment Research

Sensitivities: Reputation is everything

Ergomed is reimbursed on a time and materials basis as a services company and not based on study outcome; as such it is not associated with the usual biotech and drug development risks, including clinical development delays or failures, regulatory risks, competitor successes or partnering setbacks. However, it is subject to business risks that include the loss of key clients, changing costs and increased competition. Ergomed relies on its reputation; any failure to deliver on contractual obligations with clients could affect its ability to win new contracts. It is sensitive to pressure around clinical trials, notably around patient enrolment, where actual timelines and costs could drastically differ from a proposal if the correct planning is not undertaken.

Pharmaceutical services outsourcing is a secular trend

Innovation in healthcare is driving sales and growth in the number of clinical trials being initiated, as pharmaceutical and biotechnology companies continue to invest substantially to remain ahead of competition. The number of trials being initiated globally is increasing, as is their complexity. As a result, the operation of clinical trials in their entirety and on a day-to-day basis is beyond the expertise of many pharmaceutical and biotechnology organisations, especially newly spun-out biotechnology companies. CROs can provide expertise when the industry needs it.

At the same time, the development costs are rising, while success rates remain relatively flat (one in 10 drugs that enter human clinical trials will succeed). As a result, the R&D return on investment is increasingly underwhelming. To counter this, pharmaceutical and biotech companies are choosing to outsource services to specialist CROs, a sector now worth $43bn (2020) and expected to grow to $62bn by 2024 (CAGR or 9.5%, source: Statista).

Exhibit 9: Total industry R&D expenditure

Exhibit 10: Global CRO market

Source: Evaluate Pharma. Note: Four-year CAGR shown.

Source: Statista, Frost & Sullivan; Note: Four-year CAGR shown.

Exhibit 9: Total industry R&D expenditure

Source: Evaluate Pharma. Note: Four-year CAGR shown.

Exhibit 10: Global CRO market

Source: Statista, Frost & Sullivan; Note: Four-year CAGR shown.

Industry-wide consolidation has created several large (>£5bn market cap) CROs (eg IQVIA, LabCorp, Syneos, Parexel) with global capabilities, the recent example being the merger of ICON and PRA Health Sciences announced on 24 February 2021. While these CROs can provide a full range of services, expertise in one specific technology, disease or geography will vary on a company-by-company basis. The opportunity exists for smaller CROs that can offer specific expertise. Ergomed aims to grow its market share by its focus on oncology, rare diseases, PV and its core geographies of the EU and US.

The CRO industry is broadly split into companies that offer pre-clinical services and those that offer clinical services. Pre-clinical work involves pre-discovery work (finding new targets and causes of disease), drug discovery (finding a promising lead compound) and pre-clinical research (testing lead compounds in cellular and animal models). In the clinical CRO sector, companies are broadly focused on delivering human clinical trials through Phase I, II and III, in addition to post-approval studies (Phase IV) and support.

Exhibit 11: Financial summary

Accounts: IFRS, year end 31 December (£000s)

2019

2020

2021e

2022e

INCOME STATEMENT

 

 

 

 

 

 

Total revenues

 

 

68,255

86,391

119,600

136,813

Cost of sales

 

 

(29,790)

(38,686)

(59,198)

(76,176)

Reimbursable expenses

 

 

(8,940)

(8,055)

(22,650)

(24,371)

Gross profit

 

 

29,525

39,650

53,522

60,035

Gross margin %

 

 

43%

46%

45%

44%

SG&A (expenses)

 

 

(23,513)

(27,803)

(36,700)

(41,755)

R&D costs

 

 

(545)

(152)

(203)

(207)

Other income/(expense)

 

 

51

1,839

0

0

Exceptionals and adjustments

 

 

3,265

993

976

976

Reported EBITDA

 

 

9,230

18,378

20,769

22,223

Depreciation and amortisation

 

 

3,712

4,844

4,150

4,150

Reported EBIT

 

 

5,518

13,534

16,619

18,073

Finance income/(expense)

 

 

(245)

(395)

(245)

(245)

Other income/(expense)

 

 

(286)

(511)

0

0

Reported PBT

 

 

4,987

12,628

16,374

17,828

Income tax expense (includes exceptionals)

 

 

583

(2,936)

(3,111)

(3,387)

Reported net income

 

 

5,570

9,692

13,263

14,441

Basic average number of shares, m

 

 

46.6

48.5

48.7

48.7

Basic EPS (p)

 

 

12.0

20.0

27.2

29.6

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

12,495

19,371

21,745

23,199

Adjusted EBIT

 

 

8,783

14,527

17,595

19,049

Adjusted PBT

 

 

8,637

14,442

17,950

19,404

Adjusted EPS (p)

 

 

19.8

23.7

30.4

32.9

Adjusted diluted EPS (p)

 

 

19.8

22.7

29.3

31.6

Order book

 

 

124,100

193,000

246,902

274,995

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

Property, plant and equipment

 

 

1,110

1,742

1,742

1,742

Right-of-use assets

 

 

5,171

4,715

4,715

4,715

Goodwill

 

 

13,380

24,605

24,605

24,605

Intangible assets

 

 

2,755

9,618

9,018

8,418

Other non-current assets

 

 

2,616

4,310

4,310

4,310

Total non-current assets

 

 

25,032

44,990

44,390

43,790

Cash and equivalents

 

 

14,259

18,994

29,485

46,793

Trade and other receivables

 

 

14,359

22,224

30,767

36,123

Other current assets

 

 

3,382

7,009

7,009

7,009

Total current assets

 

 

32,000

48,227

67,261

89,925

Lease liabilities

 

 

3,716

3,128

3,128

3,128

Long term debt

0

0

0

Other non-current liabilities

 

 

635

2,529

2,529

2,529

Total non-current liabilities

 

 

4,351

5,657

5,657

5,657

Trade and other payables

 

 

10,373

15,702

20,874

28,497

Lease liabilities

 

 

1,718

1,978

1,978

1,978

Other current liabilities

 

 

3,770

17,388

17,388

17,388

Total current liabilities

 

 

15,861

35,068

40,240

47,863

Equity attributable to company

 

 

36,820

52,492

65,755

80,196

 

 

 

 

 

 

 

CASH FLOW STATEMENT

 

 

 

 

 

 

Profit before tax

 

 

4,987

12,628

16,374

17,828

Cash from operations (CFO)

 

 

11,788

18,084

14,042

20,858

Capex

 

 

(996)

(974)

(3,550)

(3,550)

Acquisitions & disposals net

 

 

(107)

(11,969)

0

0

Other investing activities

 

 

(1,728)

0

0

0

Cash used in investing activities (CFIA)

 

 

(2,831)

(12,760)

(3,550)

(3,550)

Net proceeds from issue of shares

 

 

1,427

(157)

0

0

Movements in debt

 

 

(1,677)

(2,189)

0

0

Other financing activities

 

 

0

0

0

0

Cash from financing activities (CFF)

 

 

(250)

(477)

0

0

Increase/(decrease) in cash and equivalents

 

 

8,707

4,847

10,492

17,308

Currency translation differences and other

 

 

363

(113)

0

0

Cash and equivalents at start of period

 

 

5,189

14,259

18,993

29,485

Cash and equivalents at end of period

 

 

14,259

18,993

29,485

46,793

Net (debt) cash

 

 

14,259

18,993

29,485

46,793

Source: Ergomed accounts, Edison Investment Research

Contact details

Revenue by geography

1 Occam Court
The Surrey Research Park
Guildford, Surrey, GU2 7HJ
United Kingdom
+44 (0)1483 503 205
www.ergomedplc.com

Contact details

1 Occam Court
The Surrey Research Park
Guildford, Surrey, GU2 7HJ
United Kingdom
+44 (0)1483 503 205
www.ergomedplc.com

Revenue by geography

Management team

Executive Chairman: Dr Miroslav Reljanović

Chief Financial Officer: Richard Barfield

Miro is a medical doctor and a board-certified neurologist who founded Ergomed in 1997 and co-founded PrimeVigilance in 2008. Miro led Ergomed through its IPO onto the AIM market of the London Stock Exchange in July 2014 and the subsequent completion of numerous acquisitions. Miro brings to the board his in-depth experience in clinical development and the operational execution of drug development, as well as a detailed knowledge of the group and its operations.

Richard joined Ergomed as chief financial officer in June 2019. He has gained more than 25 years’ experience at CFO level in the healthcare, technology and business services sectors in US multinational companies as well as in UK-listed and private equity-backed businesses. Most recently Richard was CFO at Chiltern International, a leading global mid-tier private CRO, from July 2013 to March 2018. During his term, Richard was instrumental in transforming the corporate finance and strategy of the business, enabling it to grow revenues from $160m to $560m.

Chief Commercial Officer: Roy Ovel

Roy has a wealth of experience with more than 30 years in international business development with some of the leading global CROs. His reputation as a leader with strong commercial acumen focused on working with customers to meet their needs is key in an environment where customers’ demands on pharmaceutical and biotech continues to grow. Roy has worked for both small, local CROs and larger CROs like ICON, TFS and Worldwide Clinical Trials.

Management team

Executive Chairman: Dr Miroslav Reljanović

Miro is a medical doctor and a board-certified neurologist who founded Ergomed in 1997 and co-founded PrimeVigilance in 2008. Miro led Ergomed through its IPO onto the AIM market of the London Stock Exchange in July 2014 and the subsequent completion of numerous acquisitions. Miro brings to the board his in-depth experience in clinical development and the operational execution of drug development, as well as a detailed knowledge of the group and its operations.

Chief Financial Officer: Richard Barfield

Richard joined Ergomed as chief financial officer in June 2019. He has gained more than 25 years’ experience at CFO level in the healthcare, technology and business services sectors in US multinational companies as well as in UK-listed and private equity-backed businesses. Most recently Richard was CFO at Chiltern International, a leading global mid-tier private CRO, from July 2013 to March 2018. During his term, Richard was instrumental in transforming the corporate finance and strategy of the business, enabling it to grow revenues from $160m to $560m.

Chief Commercial Officer: Roy Ovel

Roy has a wealth of experience with more than 30 years in international business development with some of the leading global CROs. His reputation as a leader with strong commercial acumen focused on working with customers to meet their needs is key in an environment where customers’ demands on pharmaceutical and biotech continues to grow. Roy has worked for both small, local CROs and larger CROs like ICON, TFS and Worldwide Clinical Trials.

Principal shareholders

(%)

Miroslav Reljanović

22.3

BlackRock

12.5

JPMorgan Chase

11.7

Jupiter Fund Management

10.2

Standard Life Aberdeen

10.0

Slater Investments

5.3

Hardwood Capital

5.2

Octopus Investments

3.5

Premier Miton Group

3.5

Aegon

3.0


General disclaimer and copyright

This report has been commissioned by Ergomed and prepared and issued by Edison, in consideration of a fee payable by Ergomed. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Ergomed and prepared and issued by Edison, in consideration of a fee payable by Ergomed. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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