Emis Group Plc (LON:EMISG) has been informed that it has not been selected as a preferred vendor for the NHS Wales Primary Care framework agreement. The 195 GP practices currently using EMIS Web, which generate annual revenues of c £2m at below group average operating margins, will need to transition to a new supplier over the course of FY19 and FY20. We estimate that this could have a less than 0.5% impact on FY19 EPS and less than 1% on an ongoing basis once all practices have transitioned. So soon after the news regarding issues in the customer support process, this is clearly disappointing. However, the financial impact is marginal and confirms that EMIS is focused on profitability when winning or retaining business.
Not chosen for NHS Wales GP framework agreement
EMIS currently supplies 195 GP practices in Wales, 4% of its total GP estate in the UK. NHS Wales has undertaken a procurement process for its GP software framework agreement and has just announced that it has not selected EMIS to be on this framework. This means that GP practices currently using EMIS software will need to transition to a new supplier over the course of 2019 and 2020. While obviously disappointing news, the company viewed the contract as carrying disproportionate risk for the revenues on offer.
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