Advanced Medical Solutions upbeat on strong first half

Advanced Medical Solutions reported a 16% improvement in first-half revenue on Wednesday, to £58.3m, primarily driven by commercial progress and increased pricing to recover inflationary cost increases.

The AIM-traded company said its gross margins expanded to 58.9% in the six months ended 30 June, from 55.9% in the same period last year, as a result of increased volumes.

Total investment in research and development increased to £5.4m from £4.4m year-on-year, representing 9.3% of revenue as progress was made on its key projects.

The firm reported a 10% increase in adjusted profit before tax to £13.6m despite the increased investment in research and development.

Its adjusted profit before tax margin of 23.4% remained in line with that generated for the full 2021 year.

Net cash increased to £75.3m, from £73m at the end of December, which the board said was driven by strong trading and operational cash flow, partly offset by the acquisition of AFS Surgical.

The company’s surgical Business Unit revenues increased to £35.9m from £30.4m year-on-year, for an increase of 18% at constant currency, while its wound care unit revenues rose to £22.4m from £19.8m, making for growth of 11% at constant exchange rates.

Given the group's “strong” net cash position and reflecting the board's continued confidence, the directors hiked the interim dividend to 0.64p per share, compared to 0.58p at the 2021 half-year.

Looking ahead, AMS said trading had continued to progress well in the third quarter, with the board “confident” that momentum would continue through the second half, with the company on-track to meet expectations for the full year.

“I am pleased to report AMS' continued robust financial performance in the first half with strong revenue, profitability and cash generation,” said chief executive officer Chris Meredith.

“We have also seen significant regulatory and clinical progress in meeting enhanced regulatory requirements and developing the next generation of innovative products, including the launch of ‘LiquiBand XL’, that we expect to drive further growth over the coming years.”

Meredith said the progress was achieved against a backdrop of “challenging” macroeconomic conditions, which he said was testament to the “quality and dedication” of the AMS teams involved.

“The group's ongoing, robust financial health makes it well placed to deliver organic and acquisitive growth.

“Reflecting this confidence, the board has decided to increase the dividend for the first half.”

At 1303 BST, shares in Advanced Medical Solutions Group were up 1.97% at 266.14p.

Reporting by Josh White at Sharecast.com.