Instem, the provider of IT applications to the early development healthcare market, clawed back ground in H113 following a disappointing H112 and FY12 (see the HotViews archive here) but owes a lot to its Logos Technologies acquisition and is still struggling with profitability.
The top line revenue number is healthy enough, up 13% to £5.5m in the six months to June 30, but the organic growth rate was a more moderate 4%. However the Logos acquisition was strategic (taking Instem into the early stage clinical market) so is expected to open up new and bigger opportunities. The business appears to have settled in well as it won a six figure deal with a major new client during the period. The company says the global pharmaceutical market, particularly the contract research organisation segment, is slowly recovering and the results were felt in H1. Instem also says the trend which loaded deals towards the last quarter of the year – and was the cause of some of its pain in 2012 – has eased so H1 bookings have improved. A more even business profile will be a welcome relief.
Profits are still an issue – operational profit was £0.7m vs. £0.3m – but are heading the right way even with the shift to SaaS. SaaS revenues were up 16% yoy and generated £0.7m revenue during the half year. The SaaS transition will cause further issues but overall Instem is in a better shape now than it was a year ago and has an expanded portfolio to take to market.