Surgical Innovations pleased with progress after Elemental acquisition

The AIM-traded firm said the integration of Elemental Healthcare, acquired on 1 August, was now complete, with the group reporting “good progress” in product range development and in new and extended distribution relationships.

It said its revenues were up by 44% to £8.75m, with revenues from Surgical Innovations (SI) branded products increasing 15% to £5.35m.

Underlying organic sales growth at constant currency rates was 8%, with the group’s gross margin improving to 42.5% from 33.8% in the prior year.

Its adjusted operating margin rose to 13.0% from 8.1%, while its reported operating margin stood at 6.8%.

Adjusted profit before tax was £1.10m, with reported profit before tax standing at £0.54m, compared to £0.28m in the prior year.

Surgical Innovations said its adjusted earnings per share were 0.19p, with reported earnings per share standing at 0.10p, compared to 0.15p in 2016.

The company’s closing net debt was £0.73m, swinging from net cash of £0.72m.

“I am pleased to report that Surgical Innovations Group has again delivered strong financial results,” said executive chairman Nigel Rogers.

“The integration of Elemental Healthcare into the group has now been fully implemented, with all commercial and marketing activity coming under the new operation.”

Rogers said that, through the acquisition of Elemental Healthcare, the group had the exclusive UK distribution rights to a range of premium medical devices, which further complemented the laparoscopic range of ports and instrumentation within the Surgical Innovations branded portfolio.

Those products offered a “wider field of use”, he explained, including bariatric and metabolic surgery, breast and abdominal wall reconstruction and abdominal hernia repair.

“The acquisition has been well received by third party manufacturers served by Elemental Healthcare, and looking ahead there are further opportunities to enhance the scope of our UK distribution business.

“Total revenue for the current year to date is well ahead of the corresponding period last year as expected.

“On a like-for-like basis - adjusting for the effect of acquisition - revenue has been adversely affected by constraints experienced in NHS hospitals in the UK, however there are now clear signs of a return to more a normal level of activity.”

Meanwhile, Rogers added that the company completed extensions to agreements with key vendors to its UK distribution business, and its international business had started the year on a “more positive” note.

“Accordingly, we remain optimistic that the prospects for the year as a whole remain consistent with our earlier expectations.

“Looking to the future, we continue to anticipate numerous opportunities to enhance the depth and range of products we offer through our internal development programme, and through further corporate activity.”