Advanced Medical Solutions ends tough year in line with forecasts

Surgical and advanced wound care specialist Advanced Medical Solutions reported a 50% fall in adjusted profit before tax in its preliminary results on Wednesday, to £13.4m.

The AIM-traded firm said its adjusted profit margin was 10.6 percentage points weaker in the year ended 31 December at 15.4%, while adjusted diluted earnings per share were 45% lower at 5.44p.

On a reported basis, the company’s net operating cash flow slipped 1% to £21.5m, while net cash at year-end was 17% lower year-on-year at £53.8m.

The board proposed a full-year dividend of 1.7p, up 10% on its final distribution for 2019.

Given its strong net cash position, Advanced Medical Solutions said it had repaid the £0.4m of UK government furlough support that was received during 2020.

During the year, it was granted approval for, and launched, ‘LiquiBand Rapid’, although at a restricted level due to a current lack of access to surgeons.

The successful completion of ‘LiquiBand XL’ clinical trials, meanwhile, kept the firm on track for approval and launch towards the end of 2021.

Investment in research and development increased to £7.9m from £6.5m in the prior year, as progress continued on all of the group’s key projects.

A United States clinical trial, to support premarket approval for ‘LiquiBandFix8’, progressed well, with more than 65% of the total required patient procedures now complete.

Filing for the device was expected in 2022, following the 12-month follow-up stipulated by the US Food and Drug Administration (FDA).

Patient enrolment for the first human clinical study of ‘Seal-G’ and ‘Seal-G MIST’ began in February, the board said, with CE mark extensions for the product expected imminently, giving the firm access to a new $1bn addressable market with a “differentiated” product to fulfil a significant unmet need.

The acquisition of Raleigh Adhesive Coatings in November for £22m provided a “strong” strategic fit, the board said, with commercial synergies and new commercial opportunities.

“In what was a very challenging year for everyone, I am pleased with how the team and the business performed and the group closed the year in line with current consensus forecasts,” said chief executive officer Chris Meredith.

“Despite the severe Covid-19 disruption, the Group remained profitable and generated strong operational cash flows, whilst continuing to invest in key projects and an increasing dividend with significant progress across many of the Group's key strategic initiatives.”

Meredith said the progress made on LiquiBand XL, Sealantis and the Fix8 premarket authorisation, as well as the acquisition of Raleigh, would be catalysts for accelerated growth as elective surgery volumes recovered.

“Looking forward, the group saw a continuing gradual recovery over the last two quarters of 2020, and 2021 has started well with a healthy order book in both business units.”

At 0916 GMT, shares in Advanced Medical Solutions Group were down 1.08% at 229.5p.