EMIS Group — H123 on track; 21.3p interim dividend declared

EMIS Group (AIM: EMIS)

Last close As at 22/05/2024

GBP19.20

0.00 (0.00%)

Market capitalisation

GBP1,232m

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Research: TMT

EMIS Group — H123 on track; 21.3p interim dividend declared

EMIS reported H123 revenue and adjusted operating profit in line with board expectations. Revenue grew 2% year-on-year and adjusted operating profit was 7% higher, with an adjusted operating margin of 26.9% (+120bp y-o-y). The company closed H123 with net cash of £48.5m. Assuming the takeover of EMIS is not effective prior to 7 October, on 23 October the company will pay an interim dividend of 21.3p to shareholders on the register on 6 October.

Katherine Thompson

Written by

Katherine Thompson

Director

TMT

EMIS Group

H123 on track; 21.3p interim dividend declared

H123 results

Software and comp services

8 September 2023

Price

1,922p

Market cap

£1,211m

Net cash (£m) at end H123

48.5

Shares in issue

63.3m

Free float

98%

Code

EMIS

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

Business description

EMIS is a software supplier to the UK healthcare market, with two divisions. EMIS Health supplies integrated care technology to the NHS, including primary, community, acute and social care. EMIS Enterprise is a business-to-business software provider to the healthcare market, including medicines management, partner businesses, patient-facing services and healthcare analytics.

Analyst

Katherine Thompson

+44 (0)20 3077 5730

For the purposes of the Takeover Code, Edison Investment Research is deemed to be connected with EMIS Group.

EMIS Group is a research client of Edison Investment Research Limited

EMIS reported H123 revenue and adjusted operating profit in line with board expectations. Revenue grew 2% year-on-year and adjusted operating profit was 7% higher, with an adjusted operating margin of 26.9% (+120bp y-o-y). The company closed H123 with net cash of £48.5m. Assuming the takeover of EMIS is not effective prior to 7 October, on 23 October the company will pay an interim dividend of 21.3p to shareholders on the register on 6 October.

Year end

Revenue
(£m)

PBT*
(£m)

Diluted EPS* (p)

EMIS adjusted diluted EPS** (p)

DPS
(p)

P/E
(x)

12/19

159.5

41.0

53.5

51.1

31.2

35.9

12/20

159.5

43.4

56.4

50.4

32.0

34.1

12/21

168.2

43.5

55.0

55.5

35.2

34.9

12/22

175.4

48.1

60.9

61.2

38.7

31.6

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **EMIS adjusted EPS – cash accounts for development costs and excludes exceptional items and amortisation of acquired intangibles.

EMIS reported H123 revenue of £88.8m (+2% y-o-y) and recurring revenue of £76.0m (+6% y-o-y). Adjusted operating profit of £23.9m was 7% higher y-o-y. EMIS Health reported revenue of £52.8m (+3% y-o-y) including a £1.9m contribution from Healthcare Gateway, which was acquired in H222. Adjusted operating profit of £14.0m (+12% y-o-y) benefited from tight cost control and a better revenue mix. EMIS Enterprise reported revenue of £36.0m (flat y-o-y) and adjusted operating profit of £10.8m (+1% y-o-y), with growth in analytics offsetting one-off revenues from Pinnacle and Partners in H122. Reported operating profit of £12.7m included one-off costs of £8.4m (£3.1m in transaction costs for the takeover and £5.3m for the ongoing technology transformation programme). EMIS announced an interim dividend of 21.3p, payable on 23 October to shareholders on the register on 6 October, assuming the deal has not become effective prior to 7 October. This will be paid without any reduction in the acquisition cash consideration of 1,925p per EMIS share. As a reminder, on 11 August the Competition and Markets Authority (CMA) gave provisional approval to the takeover of EMIS by UnitedHealth. The deadline for the public consultation period was 1 September and the CMA’s final report is due by 5 October, after which EMIS expects to provide a further update.

General disclaimer and copyright

This report has been commissioned by EMIS Group and prepared and issued by Edison, in consideration of a fee payable by EMIS Group. Edison Investment Research standard fees are £60,000 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.

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London │ New York │ Frankfurt

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London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by EMIS Group and prepared and issued by Edison, in consideration of a fee payable by EMIS Group. Edison Investment Research standard fees are £60,000 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 2023 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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