“Edison’s accessible and high-quality research gives us the opportunity to communicate an independent perspective of Tyman to a wide variety of potential stakeholders.”
Currency in GBP
Last close As at 09/06/2023
GBP9.48
▲ −40.00 (−4.05%)
Market capitalisation
GBP481m
Research: Healthcare
Ergomed’s H122 trading update re-emphasised its robust business model and resilient growth despite the challenging macro environment. Revenues grew 24.8% y-o-y to £69.9m, underpinned by strong and sustained demand for both the clinical research services (CRO) and pharmacovigilance (PV) segments. In February 2022, Ergomed acquired ADAMAS, which added supplementary quality assurance services to its portfolio, and we expect this to further enhance group margins in the forthcoming quarters. Importantly, the order book continues to be strong, recording 18.7% growth since end-December 2021, indicating robust contractual revenues into H222. With a £12m cash balance and £80m in debt facilities, the balance sheet remains robust. Management expects FY22 revenue and adjusted EBITDA to be ‘in line with market expectations’. We maintain our estimates and valuation for the company.
Ergomed |
Sustained growth momentum in H122 |
H122 trading update |
Healthcare services |
27 July 2022 |
Share price performance
Business description
Analysts
Ergomed is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||
Ergomed’s H122 trading update re-emphasised its robust business model and resilient growth despite the challenging macro environment. Revenues grew 24.8% y-o-y to £69.9m, underpinned by strong and sustained demand for both the clinical research services (CRO) and pharmacovigilance (PV) segments. In February 2022, Ergomed acquired ADAMAS, which added supplementary quality assurance services to its portfolio, and we expect this to further enhance group margins in the forthcoming quarters. Importantly, the order book continues to be strong, recording 18.7% growth since end-December 2021, indicating robust contractual revenues into H222. With a £12m cash balance and £80m in debt facilities, the balance sheet remains robust. Management expects FY22 revenue and adjusted EBITDA to be ‘in line with market expectations’. We maintain our estimates and valuation for the company.
Year end |
Revenue |
Adjusted |
EPS* |
DPS |
P/E |
Yield |
12/20 |
86.4 |
19.4 |
23.8 |
0.0 |
45.0 |
N/A |
12/21 |
118.6 |
25.4 |
41.3 |
0.0 |
26.0 |
N/A |
12/22e |
140.3 |
28.1 |
43.9 |
0.0 |
24.4 |
N/A |
12/23e |
156.3 |
31.6 |
49.5 |
0.0 |
21.7 |
N/A |
Note: *Adjusted EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
H122 growth was driven by sustained demand across both the CRO and PV segments (underlying service fee revenue up by 25.6% y-o-y to £59.8m). FX tailwinds (in particular the appreciation of the US$ against GBP) partially supported this growth as revenues grew 20% at constant exchange rates (CER).
In the first half of 2022, CRO revenues increased 26.2% y-o-y (21.4% CER) to £34.3m, indicating strong demand as the company signed a number of new contracts during the period. The PV segment increased 23.4% y-o-y (18.7% CER) to £35.6m with stable sales and repeat business. Generally, the PV business is less sensitive to macro cycle changes as these services relate to post-marketing requirements for commercialised products, for which customer demand remains sticky. We expect the business integration of ADAMAS (acquired in February 2022) to start showing incrementally in group operations in the coming months (both revenue and margins). The order book, a leading indicator of forthcoming sales potential, remained robust at £284.5m, up 18.7% from end December 2021 and 24.9% from H121 (ahead of our estimates).
Management expects full year revenue and EBITDA to be in line with current market expectations. Our forecasts and consensus estimates for FY22 revenue and adjusted EBITDA are £140.3m/£28.1m and £141m/£28.1m, respectively. Ergomed remains well capitalised to fund further expansion plans with a period-end cash balance of £12m (following its £24.2m net cash purchase of ADAMAS) and an undrawn revolving credit facility worth £80m (increased from £30m in H221). Our estimates and valuation are unchanged.
|
|
Research: Healthcare
OpGen’s subsidiary, Ares Genetics, has signed a research collaboration agreement with the Belgian National Reference Center (BNRC) for invasive Streptococcus pneumoniae at the university hospital Leuven. Under the agreement, the partners will evaluate the utility of Ares Genetics’ next-generation sequencing platform, machine learning tools and bioinformatics to identify and characterize Streptococcus pneumoniae for diagnostic purposes. This agreement marks Ares Genetics’ second collaboration with a reference lab following its 2021 agreement with an unnamed US contract research organization and reference lab.
Get access to the very latest content matched to your personal investment style.
