Induction Healthcare Group PLC (LON:INHC) and its listing on the stock market can offer startup firms in the health sector an attractive way to ride a growth trajectory with the support of a larger company, according to its joint chief executive.
Speaking to Proactive on Monday, Hugo Stevenson said that many start-ups in the healthcare space have been “nurtured over many years” but they do not have the scale to be adopted by large health systems.
He said that the Induction can offer start-ups a different method of breaking into the market by interfacing with its so-called “user backbone”, comprised of around 150,000 doctors that regularly use its platform, as well as the company’s infrastructure around “sales, quality assurance, tech development and processes”.
This user backbone was provided with another boost on Monday when Induction announced a deal with global healthcare technology firm Cerner Corporation (NASDAQ:CERN) to develop a joint patient engagement solution for NHS trusts. Cerner’s electronic health records system is utilised by more than 144,000 health and care professionals across 24 NHS Trusts to manage 1.5mln patients every month.
Public listing provides acquisition flexibility
A key difference between AIM-listed Induction and one of Stevenson’s previous projects, private firm DrugDev, a unified solutions platform for the pharmaceuticals industry, is that Induction’s status as a public company allows it to offer owners of potential acquisitions the option of share-based payment rather than purely cash-based purchases.
“Some of these [startup] companies weren’t prepared to sell for cash, but as a public company we can do deals with stock”, the joint CEO said, adding that this paradigm suits the founders of many startups that want to be “along for the ride” of share price growth as their product develops under the Induction umbrella.
This ability to offer shares as well as cash offer Induction an advantage for the company’s buy and build model, with its last acquisition of digital healthcare patient engagement platform, Zesty, completed mostly through the issue of company shares rather than cash.
The acquisition trend also shows no signs of slowing down, with Stevenson saying while the firm is aiming to reach a cash neutral position within two years, it will continue to pursue an “aggressive” acquisition strategy and will “err on the side of investing” if opportunities present themselves.
“There are many reasons that make us an attractive partner for smaller sub-scale businesses that want to be bigger in tech”, he added.
Induction shares were 16.8% higher at 87p in late-afternoon trading on Monday.