Inspiration Healthcare Share Discussion Threads

[mtioc] 02/2/2024 10:26

I have managed to read the broker's note and it is more alarming than reassuring.

I assume the analyst reflects the company's current expectations. This raises the question of why not issue a trading up-date to all shareholders rather than release material news via a broker report that is only accessible to institutions and subscribers.

It appears that revenue will be £6.5m off (£37m vs forecast £43.5m), EBITDA £1.9m vs £5m, EBITA £0.5 vs £3.5m and net debt -£6.4m versus - £1.1m.

The explanation is not reassuring. Apparently, the company has produced £3.5m of goods for a Middle East customer but the "final contract details are not quite in place". The associated margin is 50%. Normally, a company would only produce to a "firm" order either via a PO or contract. However, the company believes the order should be delivered this year.

In the rush to produce this large "undeliverable" order, they appear have disrupted the "manufacturing schedule" to the tune of £1.3m again at 50%. The new facility is supposed to be able to produce £100m, but is spluttering at a third of that.

The last £1.3m just "did not materialise".

The business is barely breakeven and cashflow negative and we currently have 5 non execs including the new chair designate. Given the repeated screw ups, I feel the shareholders would welcome one "ars* kicker" rather than five "box tickers".

The new chair appears to have joined a few days before a major profit warning and surprise covenant breach. Hopefully, recent events will give Roy Davis the impetus and mandate to drive change quickly. Mr Davis, who is very senior, appears to be accumulating several non executive roles. Let's hope he has the energy, time and drive to deliver the requisite change. I fear for the worst, but will await Mr Davis' first public pronouncement or appearance with interest.

The analyst report appears rushed and he waffles on about "repeated bad luck", which is possibly City code for mismanagement. He must be ruing "winning" the mandate from Canaccord!

[mtioc] 01/2/2024 17:49

trmum. Thanks. Interesting re Porsches. Fingers crossed.

[trmum] 01/2/2024 15:32

Thanks MTIOC, having stalked this board for a while now I can only offer the observation that when I found out there were nice new Porsches in the car park at IHC, I assumed the good times were about to role.

That now seems a bit tone deaf by Campbell et al. And my assumptions also terrible.

Old chair seemed happy with everything, as you say, hope new chair evaluates decision making over past few years, not excuses ("error-prone"), and takes some decisive action.

[gopher] 01/2/2024 12:37

Thanks for clarifying my thoughts here.Holders want this to turn into a reliable small cap growth stock, they seem to have the markets and margins but do they have the management.

[mtioc] 01/2/2024 07:17

Again, this is worryingly poor with the caveat that I cannot read the broker note that may have more explanation.

The business still seems to have lost control of its cash. It should have been de-gearing following the working capital fiasco at the last year end. The business has spent cash (it apparently did not have) on a US acquisition only to breach a covenant a few weeks later. The business seems to be surprised by the cash position otherwise it would have got the waiver before the year end. To have a cash covenant breach at the year end is not good. The year end accounts will show all bank debt as due and payable immediately. Even if they get the waiver after the event, I think it will just be a note to accounts. This raises real questions re the CFO and financial forecasting/controls.

I am not sure I believe the explanation. I doubt one customer or order is big enough to account for all of this. As I have said before, I don't think the current team, who came from running a UK distributor, are capable of running a complex manufacturer that exports across the globe. In my view, they overspent on the Croydon facility (were the pollen free palm trees essential and a good use of shareholder capital?). The recurring capitalistion of labour costs to development suggests actual cash earnings are lower than presented profits. Despite previous warnings, the control environment is demonstrably poor.

That said, I still believe the technology, particularly with a US approval, is worth more to a trade buyer than the current market cap.

I will hold to see if the new chair does not "waste" this crisis. The chair needs to focus the basics of controls, costs and cash. I don't think anyone, and new institutions in particular, will back the current error-prone executive management team. The chair will need to reflect on changes that may be required to that team and whether the expensive non executive heavy Board is delivering value.

If there is not a reaction in the first quarter of this year, I suspect I will depart.

[dogwalker] 31/1/2024 19:19

Yes, no, that's what I meant. So we need good news starting tomorrow at 7 saying there's a waiver.

[hedgehog 100] 31/1/2024 18:27

Dogwalker,

We didn't know today that a covenant waiver would be necessary, so it's a bit of a stretch to call it good news.

I think that's why IHC is down 29.91% today (down 16p, from 53.5p to 37.5p).

[dogwalker] 31/1/2024 17:25

Yes, starting with a 'covenant waiver' today, apparently.

[gopher] 31/1/2024 16:44

This is an unwelcome reminder of the serious financial mess they were in this time last year, deservedly obliterating the recent rise in the share price. Need a consistent flow of good news from here to regain credibility.

[blackhorse23] 31/1/2024 14:35

Money moving to APH , better value health care company

[lindowcross] 31/1/2024 09:11

Snakes and ladders!

[peter27] 31/1/2024 07:12

That's a short and unsweet update.

[davidosh] 05/1/2024 11:42

It looks a good deal to me and I will try to get Neil Campbell the CEO to come on the next Mello Monday show to outline the benefits and maybe tell us about the new chairman too.

[lindowcross] 05/1/2024 11:22

This is an extract from an article in Forbes magazine about Airon (written during Covid time) the company just bought by Inspiration.

"Consider Airon, the little ventilator manufacturer that’s at the center of the Ford-GE Healthcare partnership. Eric Gjerde, a former critical-care respiratory therapist, founded the company in 1997 and built it into a respected maker of simple ventilators. But the Melbourne, Florida-based manufacturer produces just three ventilators a day in normal times, a number that Gjerde had increased to 10 a day as the coronavirus spread.

So on March 26, when MedWorld Advisors connected Airon to GE Healthcare, the two companies quickly cut a deal: GE would license Airon’s technology, and Ford would produce 50,000 of its ventilators by July 4. Those machines, which rely on air pressure rather than electricity and sell for about $7,000, are far easier to make than the electronic, full-featured models that sell for $20,000 and up. “They’re complex pneumatic systems, but there aren’t a lot of parts,” Gjerde says. “Cars are much more complex than our ventilators.”

[mtioc] 04/1/2024 17:50

Geovest, I agree. Really hard to sell in US without local knowledge and presence. Each state can have different regulations and distributors. Like you I wonder if it is too small.

This suggests that management have a reasonable confidence in FDA approval for ventilators. If approval received and IHC manages to achieve actual sales (both big ifs), it would shift valuation.

[geovest] 04/1/2024 15:12

Could be a smart move to buy a small name with a distribution network to sell SLE products. Cheaper than to build a network yourself. Question is: Is it too small? Time will tell.

[gopher] 04/1/2024 12:55

I think they know enough about Airon and its markets to make this work and have limited downside with earn out clause.

[alter ego] 04/1/2024 10:43

acquisition of Airon looks smart

[peter27] 02/11/2023 09:30

SLE 1500 launched

[lindowcross] 17/10/2023 09:31

Yes. I topped up at 33p thinking it was a low price. But thought the same at 44p and 51p. Hopefully the business will stabilise and start making money so the share price can recover.

[lammylover] 16/10/2023 16:32

It was a no brainer to buy at 32/33p as the Directors did. Should double money in 6 months. I just can't understand anyone offloading below 30p, must be desperate..

[lindowcross] 16/10/2023 15:18

Well done Lammy, it appears the directors heeded your suggestion (at 610) to buy shares.

[lammylover] 16/10/2023 09:33

Over £50k Director (and Associated Person) buys around 32.5/33.0p.
Chair bought 100k shares at 32.95p
Decent show of confidence in business at bargain share price.

[redwing1] 16/10/2023 09:17

Blackhorse23 - why would anyone care what you have switched to? You lurch around from one failed investment idea to the next (CURY, IHC, APH etc) losing money each time and still have the audacity to keep spouting on this bulletin board as though you are some sort of investment guru.

[blackhorse23] 16/10/2023 08:09

Switched to APH