An interesting conversation with EMIS's new CEO Chris Spencer points to an ambitious change of direction for the GP systems supplier.
Following its recent acquisition of diabetic retinopathy screening provider Digital Healthcare in August (see here), Spencer sees significant opportunities to create a new managed business process service for retinopathy screening - what he is calling Digital Retinopathy-as-a-Service (DRaaS). This would involve EMIS taking on responsibility for the entire screening process, including the software, hardware and people to process images for screening patients for diabetes. Spencer is considering partnering or acquiring capability to break into this new market.
EMIS also adelivered a strong set of results for the first half of 2013. Revenue was up 11% to £47.1m, which Spencer said is all organic. However operating margins fell 300 basis points to 25.6% due to increased costs taken on to drive the roll out of its next generation GP system EMIS Web.
Revenues grew across all bar one of EMIS’ operations. Hosting (mostly EMIS Web) showed the biggest jump, albeit from a low base - up 62% to £6.3m. Licences and software support, network support, and hardware and training were all up 7.3%, 1.7% and 12.9% respectively. However delays within its defence sector operations for the MoD and Australian armed forces pushed other revenue down 41% to £2.2m. Spencer expects deployment to now be deferred to Q114.
EMIS Web roll outs are on track. By the end of the half, there were 2,580 live GP practices, up from 1,635 at the end of December. Nonetheless, Spencer is more cautious on the roll out than his predecessor Sean Riddell, guiding to 150 per month, versus Riddell’s 200.
Other growth opportunities include plans to take on up to two-thirds of iSoft’s GP estate in England and Wales following CSC's decision to exit the market. EMIS has already made headway with 174 migrations in the first half. Meanwhile, it is also seeing progress with its first two EMIS Web Community Care, Child Health and Mental Health (CCMH) pathfinder projects in Glasgow and Bromley. Most interesting (and risky) though is Spencer’s plans for DRaaS, which could see EMIS competing with a whole new set of players, such as Atos and Capita in healthcare BPS.