Sparks - Creo Medical

Creo’s H126 trading update provides further evidence that management’s strategic reset is beginning to translate into operational improvements. Revenue grew 45% y-o-y to £3.2m (H125: £2.2m), keeping the company on track to achieve its FY26 guidance of 50–60% growth. More encouraging, in our view, is the meaningful operating leverage, with underlying operating costs falling 15% (to £7.8m) and the underlying operating loss narrowing by more than 25% to £4.9m, reflecting management’s restructuring initiatives and the disposal of its manufacturing operations. Importantly, revenue growth appears increasingly underpinned by commercial adoption, with over 100 MicroBlate Flex procedures completed and expanding utilisation of Speedboat. The strong Q3 order book and Creo’s traditionally H2-weighted revenue profile provide good visibility on second-half performance.

From a balance sheet perspective, management expects the disposal of its remaining 49% stake in Creo Medical Europe (CME) to complete in Q326, following the sale of the initial 51% interest to Micro-Tech in February 2025, which generated net proceeds of c €30m at an implied valuation of €72m for CME. Combined with the recently completed £5.5m equity raise and £2.0m convertible loan facility from the Development Bank of Wales, the completion of the transaction should materially strengthen liquidity and reduce near-term funding risk while allowing management to remain focused on commercial execution.