Advanced Medical Solutions reports slight increase in first-half profit

Tissue-healing technology developer Advanced Medical Solutions reported an 8% improvement in first-half revenue in its interim results on Tuesday, to £63.1m.

The AIM-traded company said the surge in revenue was mainly due to a 20% growth in non-US markets compared to the first half of last year.

Despite the revenue growth, AMS reported a decline in gross margins to 56.5%, a drop from 58.9% in the year-ago period due to a temporary shift in product mix.

AMS said it prioritised innovation, with a total of £6m invested in research and development in the six months ended 30 June, up from £5.4m in 2022.

That investment, 9.5% of revenue, was directed towards pivotal projects such as new product development and medical device regulation (MDR).

An adjusted profit before tax of £13.8m was recorded, marking a modest 1% increase from £13.6m in the first half of 2022.

However, the adjusted profit before tax margin decreased slightly to 21.8% from 23.4% year-on-year.

The company’s net cash dropped to £69.1m on 30 June, down from £75.3m a year earlier, following AMS' acquisition of Connexicon Medical in February.

It said its surgical business unit's revenues saw an increase to £39.4m from £35.9m year-on-year, while the wound care business unit revenues reached £23.7m from £22.4m at constant currency.

Reflecting its solid net cash position and positive outlook, AMS' board proposed an interim dividend increase to 0.7p per share, up from 0.64p for the first six months of 2022.

Since the end of the first half, AMS said it had made progress in several key projects projected to open new commercial opportunities soon.

However, one factor impacting the results was the temporary destocking effect from the US LiquiBand strategic growth initiative.

“I'm pleased to report first-half growth at group level driven by our diverse portfolio of products, despite the short-term disruption to US LiquiBand sales and the changes to the Organogenesis royalty stream,” said chief executive officer Chris Meredith.

“This demonstrates the increasing strength of our existing portfolio, which will play a big part in generating and sustaining stronger growth in the future.

“I am particularly excited at the breadth of opportunities now open to us as a number of new initiatives and product launches, such as Liquifix in the US and Seal-G in Europe, come into effect this year.”

At 1144 BST, Advanced Medical Solutions Group shares were up 3.39% at 186.1p.

Reporting by Josh White for Sharecast.com.