Medica Group PLC Trading and business update (0491G)

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RNS Number : 0491G

Medica Group PLC

22 July 2021

22 July 2021

Medica Group Plc

Trading and Business Update for the six months ended 30 June 2021

Medica Group Plc (LSE: MGP, "Medica" or the "Company"), the UK and Ireland market leader in the provision of teleradiology services and a US expert in imaging services for clinical trials, today announces an unaudited trading update for the six months ended 30 June 2021, as well as a business update.

The Company expects to report its financial results for the six months ended 30 June 2021 on 27 September 2021. Medica also plans to hold a Capital Markets Day on 7 September 2021.

Trading update

Overall, the Group had a positive first half performance with the UK and Ireland performing strongly against a backdrop of a sustained recovery in activity in diagnostic services.

United Kingdom

We are pleased to report a marked increase in Elective activity and continued positive growth in our NightHawk out of hours reporting since our last market update on 11 May 2021.

As our NHS partners successfully resume their focus on the backlog of cases arising from the pandemic, Elective activity has continued to grow month-on-month and is now 75% of pre-Covid levels*. We expect this recovery to continue and to strengthen over the summer period as elective scanning activity in the NHS continues to increase. However, we are yet to see the full impact of the removal of Covid restrictions and the rate of hospitalisation and hence remain cautious on the impact this may have on NHS scanning capacity. The well-publicised backlog in NHS elective activity, together with inherent growth in elective scanning, is expected to drive sustained demand into and beyond 2022.

As expected, NightHawk continues to perform strongly and this is being driven by underlying demand, gradual easing of lockdown restrictions, service expansions, contract extensions and tender wins.

The combination of an increasing mix of Elective revenues, the positive impact of increasing volumes from existing NightHawk contracts and cost efficiencies has resulted in gross margins being above 2020 levels in the first half. Whilst we expect this to be tempered by the impact of contract wins and changing case mix in H2 2021, the overall outlook for gross margins for the full year is at least in line with 2020 levels.

Ireland

We have also seen strong growth in Ireland during the first six months of the year as we are increasingly working with hospitals and healthcare providers to scan patients as part of recovery efforts, as well as to report elective cases. In parallel, the increase in scanning is putting pressure on radiology department capacity and, in line with our strategy, we are increasingly supporting out-of-hours reporting provision across Ireland. In addition, our Ophthalmology screening contract has reported a strong performance in the first half.

United States

Reported revenues for RadMD, acquired in March 2021, have continued to grow although this growth has been tempered by a continuation of slower-than-normal patient recruitment into existing clinical trials due to the ongoing pandemic. As restrictions are lifted across the US, we are starting to see patient numbers, and therefore RadMD's activity and orderbook conversion increase. We expect, in line with 2020 under previous ownership, to see a significant catch-up in activity in H2 resulting in performance for the full year being in line with our expectations.

Business update

In the UK, the FutureTech programme is advancing in line with our plan and we are on target to deliver the new Sectra Picture Archiving and Communication System in Q1 2022. We have continued to expand the roll-out of our augmented intelligence tool such that the vast majority of computerised tomography head scans are routinely screened for intracranial haemorrhage prior to the image being reported by the radiologist. We are also pleased to have expanded our multi-disciplinary team support for clients, as well as having launched a new Cardiac Magnetic Resonance service.

In Ireland, the integration of Global Diagnostics, now re-branded as Medica Ireland, is largely complete. We have strengthened the team by hiring an Operations Director and have made good progress winning new clients, as well as expanding our independent sector relationships.

In the US, RadMD has strengthened the team appointing a Head of Operations, Chief Commercial Officer and Finance Manager to support and drive business growth.

Finally, the MedX joint venture (JV) with Integral Diagnostics (IDX) in Australia is now using a new Virtual Desktop Infrastructure (VDI) reporting solution. The solution allows radiologists in Australia to report with no loss of image quality on MedX, Medica or IDX workstations with shorter deployment timescales and easier day-to-day support. The second phase of our strategy for the JV is now underway to continue to diversify our service offering into new areas of telemedicine and expand into new markets.

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

"The recovery of elective scanning activity in health services is now well underway . Medica is seeing a sustained recovery in Elective scanning volumes as a result, as well as a sustained strong performance of our NightHawk business in the UK due to continued growth from existing customers, good progress with new client wins, and providing expanded services to existing clients.

"We continue to execute against our strategy and are pleased with the progress of the ongoing integration of our recent acquisitions in Ireland and the US. As a result of our considerable efforts over the last 18 months to position our business for the Covid recovery, combined with our expansion into new markets and services in the US, Ireland and Australia, we are well placed to continue our ambitious growth trajectory at Medica."

*Monthly activity volumes compared to the average monthly volumes for the period January and February 2020.

For further information, please contact:

 
 Medica Group Plc: 
  Stuart Quin, Chief Executive 
  Officer 
  Richard Jones, Chief Financial 
  Officer                           [phone] 
 FTI Consulting 
  Victoria Foster Mitchell 
  Sam Purewal                       [phone] 
 
 
 Investec Bank plc (Joint Broker) 
  Sara Hale 
  Daniel Adams 
  Virginia Bull                      [phone] 
 Liberum (Joint Broker) 
  Bidhi Bhoma 
  Richard Lindley 
  Euan Brown                         [phone] 
 

About Medica Group PLC

Medica is the market leader in the UK and Ireland for the provision of teleradiology services, providing outsourced interpretation and reporting of MRI (magnetic resonance imaging), CT (computerised tomography), ultrasound and plain film (x-ray) images. Medica also offers diabetic retinopathy screening in Ireland.

Medica contracts with the largest pool of consultant radiologists in the UK and Ireland, performing remote access teleradiology across its customer base of more than 100 NHS Trusts in the UK, the Irish HSE, private hospital and insurance groups, as well as diagnostic imaging companies. This enables the Company to offer a fast, responsive service. In addition, Medica operates in Australia and New Zealand through MedX, a 50:50 Joint Venture with Integral Diagnostics Limited Pty.

The Company currently offers two primary services to hospital radiology departments:

   --      NightHawk - urgent reporting service 

-- Elective - includes routine cross-sectional reporting on MRI and CT scans, and routine plain film reporting on x-ray images.

These services are underpinned by Medica's bespoke, secure IT platform that provides market-leading linkage between a hospital's Radiology Information System (RIS) and consultant radiologists who contract with the Company. Direct RIS access ensures that where the wider patient medical history is available, it can be reviewed by the consultant as part of every report.

Through its subsidiary, RadMD, in the United States, Medica also provides pharmaceutical and biotech clients and contract research organisations (CROs) with high quality, complex imaging services for international clinical trials. RadMD has gained vast experience in the space, having contributed to over 500 international clinical trials, in all phases of clinical research from proof of concept to phase III and with expertise in oncology, as well as a wider range of therapeutic areas including medical devices, neurology and cardiovascular.

For more information please visit: www.medicagroupplc.com

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July 22, 2021 02:00 ET (06:00 GMT)