Having announced the retirement of long-term CEO Sean Riddell last month following a surprise year-end warning (see EMIS CEO to retire and work back), it was a sad end to an otherwise successful year for GP systems supplier EMIS.
Top line revenue shot up 17.9% to £86.3m (although slightly short of analysts expectations), and adjusted operating profits were up 10% to £22.8m. However due to the higher capex associated with investments in rolling out its next generation system EMIS Web, the margin actually fell to 26% vs. 28% last time. Net cash meanwhile was also a disappointing £7.7m vs. £8m last time.
Despite this set-back, there are plenty of opportunities for EMIS, and management are sticking with their expectations for 2013 - concensus estimates put FY13 revenue at £97m (up c12%). Interim CE Chris Spencer said EMIS continue accelerating the roll-out of EMIS Web, and seeing its pharmacy business RX Systems continuing to grow its estate. At the year end, EMIS Web had been installed at 2,007 GP practices, and as of today, there are 1,200 unfulfilled orders (down from 1,252 in January). EMIS expects to have cleared all outstanding orders by the end of 2013. Barring any unforeseen issues, this should be easily doable given its capability to roll out 200 orders per month.
EMIS is also investing in new versions of EMIS Web. For instance a mobile version was completed, tested and released in early 2013, which now enables GPs and those in Centre for Child Mental Health (CCMH) and other integrated care settings to access EMIS Web on a tablet device when away from their clinical base. This should open up new opportunities for EMIS beyond the GP practice.
There are however two elephants in the room facing EMIS. First is the healthcare reorganisation occurring in 2013, which sees the transfer of budgetary control to Clinical Commissioning Groups, and the other is the renegotiation of the GP Systems of Choice framework also this year (see here). Both have the potential to be lucrative for EMIS given its close links to the GP sector. However competition from the likes of TPP and INPS, and other ambitious plays like ACS, are unlikely to make it a shoo-in.