While an unwelcome and ultimately costly interruption, the coronavirus lockdown has presented some opportunities to Medica Group PLC (LON:MGP), the teleradiology specialist.
It has afforded the chance to work more closely and proactively with its customers - the 90 NHS trusts it works with.
“We have changed how we are interacting with our partners to engage in a more proactive way,” chief executive Stuart Quin said in an interview with Proactive.
“There’s a real opportunity when we come out of this to build on that partnership approach.”
Lockdown has also provided time to iron out some kinks in the processes that cause bottlenecks that the Medica team has just been too busy to look at.
“So, we have run a series of operational excellence workstreams so when we do come back on stream some of the niggles in the system have been ironed out,” the Medica CEO explained.
And the hiatus has allowed Medica to lay the groundwork for some ambitious growth plans post-pandemic (of which more later).
Another unexpected benefit has been the strong recruitment of radiologists “as the teleradiology model is specifically designed to enable them to report remotely from home”.
But make no mistake, the pandemic has been tough for Medica.
Last month, it told the market demand for routine radiology reporting was down 95%.
Nighthawk winging back
Its Nighthawk out-of-hours urgent service saw an initial reduction of 50%, though it is now up to two-thirds of its pre-Covid levels.
Luckily, the company has a strong cash position with almost £20mln on the balance sheet.
Indeed, it was possibly one of the few UK businesses that has opted against furloughing staff.
Looking ahead, CEO Quin said routine services should “build steadily” through the year. “But at this stage, it is hard to know when we’ll be back to pre-Covid levels,” he added.
Pre-lockdown, the company had been ready to embark on an ambitious journey to double its turnover in the next five years, while targeting new sources of business.
The strategy required £5mln-£6mln of capital investment through to March 2022 with the aim of “unlocking capacity and deliver scalability and operating leverage”.
Integral to this will be an upgrade to the picture archiving and communications system (PACS), which is “the engine that drives our business”. The aim of the overhaul is to provide greater productivity.
Medica is also looking to automate the process of allocating work to radiologists using artificial intelligence.
It is working with a company called Qure.ai on this and a decision support tool for CT head scan examinations that will flag potential urgent examinations.
With these initiatives in train, the group is also looking to increase its presence in the independent sector as part of its expansion programme as well moving into new geographic markets that are “a bit more nascent”.
“Where we can access them through acquisitions we will do that,” Quin explained. “However, M&A will be selective and strategic. We’ll also look at partnerships.”
Other growth opportunities include the roll-out its radiology expertise into adjacent areas such as clinical trials – and perhaps even ophthalmology and pathology.
Brokers remain upbeat
According to the broker Numis, “structural trends” should aid Medica’s return to growth once the country returns to normal.
“We anticipate that the private sector will have an important role to play in helping clear the NHS backlog and would hope to see the company capitalise on the potential opportunities that may open up,” it said in a recent note.
“We would also anticipate greater demand for remote reporting from radiologists and restructured imaging and treatment pathways so that key early-stage cancer diagnosis and elective treatments need not be deferred for months again.”
N+1 Singer also reckons the business is “well-placed to bounce back strongly” after Covid.
“Recruitment of radiologists continues and will increase capacity once normal activity resumes,” it added.
“Management is implementing the strategy as outlined in March, including improving operational procedures which should see the business well set for the medium term.”