UDG Healthcare claims good third quarter performance

International healthcare services provider UDG Healthcare said its group trading performance for the quarter to 30 June had been “good” on Thursday, with revenue and adjusted profit before tax ahead of the same quarter last year.

The FTSE 250 firm claimed group revenue and adjusted profit before tax for the nine months to 30 June were in line with expectations, and well ahead of the prior year.

“Growth has been driven by a combination of underlying growth and the benefit of acquisitions, moderated by a foreign exchange headwind on the translation of non-US profits,” its board said in a statement.

On a divisional basis, UDG said Ashfield was ahead of the same quarter last year, with growth across both the commercial and clinical and communications parts of the business.

Trading apparently benefited from the October 2016 acquisition of STEM which continued to perform well during the quarter.

“In July 2017, the group announced the acquisitions of Vynamic, a US-based healthcare consultancy firm and Cambridge BioMarketing, a US-based healthcare communications business, in addition to receiving competition authority approval for the acquisition of Sellxpert, a German contract sales outsourcing business,” UDG’s board noted.

Its Sharp unit traded in line with the same quarter last year, the board added.

“US legislation requires the mandatory serialisation of prescription medicines from November 2017,” the board noted with regard to Sharp.

“In June 2017, the US Food and Drug Administration announced a one-year delay in enforcement of those requirements until November 2018 to provide additional time to comply and avoid supply disruptions.

“Sharp continues to actively engage with its clients to ensure that they are ready for the new deadline, however, the enforcement delay has slowed the pace of take up of its serialisation services.”

As previously announced in April, Sharp acquired a pharmaceutical packaging facility in Bethlehem, Pennsylvania, from Daiichi Sankyo to provide additional capacity across both commercial and clinical trial packaging, UDG also highlighted.

It said that over the next 18 months Sharp's US clinical business would relocate to the larger, “state-of-the-art” facility to offer clients an integrated clinical development, packaging and distribution service, located in one facility.

Sharp Europe reportedly continued to improve during the quarter driven by increased activity levels from new and existing clients.

Finally, UDG’s Aquilant division saw its underlying operating profit move ahead of the same quarter last year.

“The group has been very active from a corporate development perspective since the start of the financial year, committing $200m to the acquisitions of STEM, Sellxpert, Vynamic, Cambridge BioMarketing and a US packaging facility,” the board said.

“The group's strong balance sheet leaves it well positioned to continue executing strategic

acquisition opportunities to complement its existing growth platforms and generate good returns.”

As part of the group's ‘Future Fit’ initiatives to invest in scalable infrastructure across HR, finance and IT to support continued delivery of sustainable future growth, UDG launched its human resource information system, ‘Workday’, in April.

It said the implementation of Ashfield's new Oracle finance system had now commenced and was expected to complete in late 2018.

“The roll-out of both systems will result in additional operating costs, which will impact the group during the second half of this financial year and subsequent years.

“Based on the group's recent acquisitions of Vynamic and Cambridge BioMarketing, the group is increasing its guidance for constant currency adjusted diluted earnings per share for the year to 30 September 2017 from a range of 15% to 18% previously, to be between 17% and 19% ahead of last year.”

UDG Healthcare said it expected to issue its preliminary results for the 12 months to 30 September on 28 November.