Tiny AIM-listed clinical decision support systems supplier Avia Health Informatics is still battling to keep itself afloat. Avia, the home of Plain Healthcare, had a torrid Q1 resulting in a change of management in August. But in the words of new non-exec Chairman, Roger Lane-Smith, the first half performance was still ‘unacceptable’. Revenue fell by 10% to £0.9m and the gross profit margin was down on the same period last year at 11.8% (13.8%). Avia is still loss making, although operating losses eased slightly to -£478k (2011: -£485k). The cash position has improved (£137k vs £86k last year) but net current liabilities increased to £915k from £497k at the end of FY12.
When they took the reins, Lane-Smith and new CEO Jeremy Dale wasted no time in implementing a cost reduction programme and attracting additional funding – a £350k convertible, interest-free loan from Advanced Computer Software. They’ve also focused the company on the UK, rather than pursuing the previous US ambitions (see Avia Health Informatics battles on). The aim is to keep the focus on sales activity and cost control in order to significantly reduce losses in the second half and achieve profitability in 2013/14.
Slow progress towards Clinical Commissioning Groups (CCGs) in the English NHS market hasn’t helped Avia’s cause, but the management anticipates the market improving in 2013. Whilst we think things are likely to improve, Avia’s delicate financial position could still make it difficult for the company to win business with risk-averse NHS customers. We still think Avia’s best bet is to get its house in order and attract a trade buyer with the scale and financial stability to make the best of its software – ACS would seem one likely candidate given its existing investment in the company.