Surgical Innovations emerges from tough six months looking good

Designer, manufacturer and distributor of innovative medical technology Surgical Innovations Group issued its financial results for the six months ended 30 June on Tuesday, reporting growth in revenues and profit despite some significant headwinds in the market and regulatory environment, primarily due to the acquisition of Elemental Healthcare in August last year.

The AIM-traded company said it had continued to broaden its product base during the period by investing in product innovation, and by entering into both new and extended distribution agreements.

Cash flow from trading was said to have been “enhanced” by significant reductions in inventory, enabling the repayment of net debt by the end of the period.

Looking at the books, revenues rose 52.4% to £5.28m year-on-year, which the company said was primarily due to the acquisition of Elemental Healthcare.

Adjusted EBITDA was ahead 13.3% to £0.94m, with adjusted operating profit up 35.5% at £0.42m.

Reported profit before tax, after acquisition related amortisation costs and share based payment charges, was £0.09m for the six-month period.

Surgical Innovations said adjusted earnings per share were 0.05p for the period, down from 0.06p over the same time last year.

Net cash period end stood at £0.02m, swinging from net debt of £0.73m on 31 December.

“The group has emerged from a challenging period with improved financial results, a strong balance sheet, and net indebtedness incurred in the Elemental acquisition last year fully eliminated,” said Surgical Innovations’ executive chairman Nigel Rogers.

“We have implemented measures to strengthen important distribution relationships, and support the development of our international business through an expanded core range of branded products and a competitive pricing model.

“This is supplemented by close partnerships with our key OEM customers, who are well positioned to generate further growth.”

Rogers said the firm’s UK distribution business was continuing to fulfil a “vital role” in the direct sale of branded products in its home market, and was also building a “valuable portfolio” of specialised products that apparently offered substantial advantages to surgeons, healthcare professionals and patients.

“The ability to obtain detailed first-hand knowledge of the reception of our product ranges from a large cohort of surgeons, who offer suggestions for improvements to existing products and ideas for innovation, is proving to be a valuable asset.

“With these initiatives in process, we continue to look forward to the second half of the year and beyond with confidence.”