Below the radar: Surgical Innovations back in good health
(), a provider of technologies used for minimally invasive surgery, reported its full year figures which marked a return to profitability after the disruption caused by the pandemic.
Like many companies, the company saw trading hit as hospitals around the world focused on dealing with the pandemic and put other procedures on hold. That’s led to a huge backlog in elective surgeries, with healthcare systems now increasing capacity to work through as quickly as possible. In the UK alone the backlog of patients requiring treatment stood at 7.2m at the end of last year.
That’s good news for Surgical Innovations, which saw sales in 2022 climb 24.3% to exceed pre-pandemic levels, in line with upgraded expectations and all the more impressive achievement given disruption across the NHS this year as a result of staff shortages and industrial action. The company said that conditions in all of its key markets had now normalised.
That means the quality of the company’s now products now gives the company the opportunity to make further sales progress, and help it build on the return to profitability it achieved in the second half of the year. Overall adjusted profit before tax for the year was £0.01m, marking a strong recovery from the £0.1m lost in the first half and well up from the £0.33m loss in 2021.
Getting back into the black was again a major achievement given higher input costs and ongoing supply chain disruption meant shortages of some key components which delayed new product launches. The company was able to mitigate these by passing on cost increases to customers and driving manufacturing efficiencies, and increasing inventories.
Despite this, the company managed to deliver net cash from operations, and despite doubling its investment spend to £1.24m ended the period with cash in the bank and £1m undrawn from its invoice discounting activity. The company is boosting its sales and marketing teams in its key markets of the UK, Japan and within the EU, and is now looking to expand geographically into India and Germany where surgeons are evaluating its products.
Growth has continued into the current year, with SI Brand and Distribution sales up 9.2% year on year. That’s being helped along by increasing recognition among healthcare practitioners of the cost and environmental advantages of its “resposable” products – part reusable, part disposable – over fully disposable alternatives.
New product launches should keep that growth going, and the company remains on track with the EU Medical Device Regulation (MDR) after successfully completed a quality management system (QMS) audit, with a range of new products set to be launched towards the end of 2023. The company notes that changes to MDR regulation had raised the barrier to entry for many of its MedTech competitors and will help it gain market share.
That means the profit recovery should continue, with broker Singer forecasting Ebitda to increase 27.6% to £0.9m in 2023. “The group is now moving firmly towards sustained growth and margin improvement, and remains attractively valued in our opinion. We continue to view the shares as an excellent way to play the elective recovery theme, supported by enhanced sustainability credentials,” it said.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.