MGP.L Regulatory News (MGP)

26 July 2022

Medica Group Plc

Trading update for the period ended 30 June 2022 and full year outlook

Strong first half performance in NightHawk services with recovery in Elective to pre-pandemic levels and continued growth in Ireland and RadMD

Medica Group Plc (LSE: MGP, "Medica", the "Company" or the "Group"), an international provider of high-quality telemedicine services, is pleased to announce an unaudited trading update for the six-month period ended 30 June 2022, as well as setting out the outlook for the remainder of the year.

The Company expects to report its unaudited half year financial results on 26 September 2022. The Board continues to expect the full year financial performance will be in line with expectations.

Trading update

Demand for Medica's services remains strong, driving continued growth across the business. We expect Group revenue for the period ended 30 June 2022 to be £36.0 million, in-line with expectations and representing an increase of 36% over the same period last year. On a like for like ("LFL") basis, excluding the positive impact of RadMD in the US which was acquired during the comparative period, Group revenue is expected to increase 27% over the same period last year.

The UK business has continued to perform well during the period. We have seen strong ongoing demand for our NightHawk services with expected revenues of £16.2 million, representing an increase of 14% over the same period last year. NightHawk growth has been driven by a combination of underlying market growth, successful contract renewals with existing clients and net new contract wins. Additionally, demand remains high for Elective reporting services as our NHS clients deal with the continued backlog resulting from the Covid-19 pandemic. Medica has been actively recruiting radiologists to support this demand but, at present, this remains a capacity-driven market where demand is exceeding the availability of radiologists across the market in the UK and Ireland. Elective revenues have recovered to pre-pandemic levels and are expected to be £9.9 million for the period, representing an increase of 61% over the same period last year.

We are pleased to have successfully launched our new Picture Archiving and Communication System (PACS) in the UK in February 2022 as the first key deliverable of our FutureTech programme. Further progress is planned during the remainder of 2022 and into 2023 as we continue to invest in our teleradiology reporting platform to deliver efficiencies in our core teleradiology reporting process and drive productivity.

Medica Ireland performed strongly during the period, exceeding our expectations. Revenue is expected to be £5.6 million, representing an increase of 24% over the same period last year. This was driven by a combination of an increased number of scan and reporting contracts in ultrasound and x-ray plain film, as well as a significant increase in the number of new out-of-hours teleradiology hospital clients. Medica has also expanded its partnership with Ireland's leading health insurer, providing diagnostic services at a new state-of-the-art clinic in Dublin. Additionally, the Medica Vision diabetic retinopathy screening service is performing to plan and supporting the National Screening Service in Ireland to return to pre-pandemic levels of patient screening.

In April 2022, we reported that RadMD had significantly increased the size of its combined backlog and pipeline by 34% since acquisition with the team having secured contracts with additional sizeable pharmaceutical and biotech companies in a number of therapy areas. For the period, RadMD revenue is expected to be £4.3 million, 15% ahead of the second half of last year following the acquisition in March 2022, with further strong growth expected in the second half of 2022 as the contracted orderbook converts into revenue.

Whilst we have seen some inflationary pressure on our cost base, we have continued to carefully control costs and progress our FutureTech programme, which will support productivity and efficiency improvements and mitigate against further inflationary pressure over time. Overall, our cost base remains controlled and is tracking in line with expectations.

We started the year with net cash(1) of £3.9 million. During the period, working capital continued to be carefully managed and our cash conversion remained strong. After taking into account contingent consideration payments for the RadMD and Global Diagnostics Ireland (now Medica Ireland) transactions, net cash(1) at 30 June 2022 was £0.6 million.

Outlook

We continue to experience strong demand across our business and expect growth to be driven by the same factors currently at play.

We expect an increase in demand for our reporting services in the UK and scan and reporting services in Ireland as national health services tackle the significant backlog of elective patients waiting for diagnosis and treatment. Medica continues to be well-positioned to capitalise on this growth and the focus remains on recruitment and collaborative working with our network of highly skilled sub-specialist radiologists, ophthalmologists, radiographers, sonographers and other clinical experts, to increase our reporting capacity.

Additionally, the demand for imaging expertise in clinical trials continues to drive the market opportunity for RadMD and the team remains focused on developing our service offering and expanding both our client and radiologist reader network. We anticipate strong growth in reported results in RadMD as the pipeline and orderbook for clinical imaging services continues to develop.

The Board continues to expect that the full year financial performance will be in line with expectations.

In addition, we continue to evaluate strategic acquisition opportunities, on a highly selective and disciplined basis, to expand the scale and breadth of our existing telemedicine services and supplement organic growth.

Dr. Stuart Quin, Chief Executive Officer of Medica, commented:

"Medica has made good progress assisting our clients in managing the backlog of patients requiring scanning and reporting services, as well as responding to an increasing need for our emergency reporting service in the UK and Ireland. Demand for our services is expected to remain high and, to address this, we continue to work to increase our reporting capacity by adding new reporters to our network and through improvements to our technology platform to support increased productivity. Further, we are growing our RadMD team to support the increase in clients and growth in our order book and to build the pipeline for the remainder of 2022 and beyond. I am pleased the business has continued its strong momentum and I remain confident that we can continue to deliver on our ambitious growth strategy."

(1) Net cash is a non-IFRS measure and is calculated by subtracting bank borrowings from cash and cash equivalents.

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About Medica Group PLC

Medica (LSE:MGP) is an international provider of high-quality telemedicine services. It is the market leader in teleradiology in the UK and Ireland, working with more than 100 NHS Trusts and HSE hospitals in Ireland, in addition to private hospitals, insurance groups and diagnostic imaging companies. Its network of consultant radiologists, radiographers and specialist doctors interpret and report MRI, CT, ultrasound and X-ray images on behalf of healthcare providers, using Medica's bespoke, secure technology platform for fast and responsive delivery. The company's core services include NightHawk, an urgent, out-of-hours offering available to clients 24/7 with dedicated pathways for stroke and major trauma, and Elective, for routine reporting.

In Ireland, Medica carries out patient scanning, as well as reporting, and runs a diabetic retinopathy screening programme for the National Screening Service. Through its US business, RadMD, Medica provides global pharmaceutical and biotech companies, as well as contract research organisations with specialist imaging services for clinical trials. 

For more information, please visit: www.medicagroupplc.com