The company at a glance
Inspiration Healthcare PLC (LON:IHC) is a supplier of medical technology for critical care, operating theatres and home healthcare applications. Its product range includes respiratory management, thermoregulation and patient warming for newborns and adults in intensive care and the operating theatre. It also supplies equipment used in specialised surgical procedures and infusion therapies.
Last September it paid £4mln for VIOMEDEX, which designs, manufactures and supplies single use respiratory products and sterile medical consumables, principally for the respiratory care market. The business performed in line with financial expectations for the four months from acquisition, Inspiration said.
How’s Inspiration performing?
The company said its work sourcing ventilators for the NHS and health services elsewhere around the world is offsetting any business disruption from the pandemic. The AIM-listed group usually focuses on neo-and perinatal equipment but has switched during the coronavirus crisis to meet the need for additional ventilators, and is part of the UK government’s ventilator challenge consortium.
In June it acquired S.L.E. Limited, a designer and manufacturer of ventilators and capital equipment used in neonatal intensive care, for a consideration of £18mln.
Inspiration said the acquisition is expected to be earnings enhancing in the short to medium term with “significant commercial synergies”.
To help fund the purchase, the company said it has raised £16.5mln through a placing and subscription of around 25.4mln new shares at a price of 65p each, a 1.5% discount to its closing price of the day before.
What the boss says: Neil Campbell, chief executive
Speaking to Proactive, he said the £18mln transaction is “a very big deal” for the group and has shifted the company from “an £18mln turnover business to a £34mln turnover business…almost overnight”.
“Our strategy is to become a world leader in neonatal intensive care and this really helps that fit.”
“It is been very pleasing to see the institutional investors see the synergies in the acquisition, putting these two great brands together to create that leading company in neonatology.”
What the broker says
“We expect Inspiration Healthcare to deliver strong revenue growth, with a focus on its own-brand products supporting margin improvement,” said ‘house broker’ Cenkos. “Ongoing internal investments in disruptive technologies and regulatory support functions provide a solid foundation for future growth and further business development including selective acquisitions.”
It added that even with the general virus uncertainty, it is comfortable with its forecasts for the current year (£2.8mln underlying profits).
"While there are obvious current risks which could have negative short-term operational impacts, recent significant NHS contract awards and pandemic-related activities are expected to at least offset any negative impact," added Cenkos.
It is worth noting that based on Cenkos’ analysis, Inspiration is significantly undervalued trading on a forward enterprise multiple (EV/EBITDA) of 6.8-times compared with a sector average of 25.9-times.