A mixed bag
Emis Group Plc (L:EMISG)'s recent trading update was uncharacteristically disappointing, with the company expecting to miss revenue guidance for FY15 due to the slower pace of contract wins in Secondary Care. Offsetting this was confirmation that adjusted operating profits should be in line with expectations and news of significant contract wins in the Pharmacy and CCMH businesses. We view the pullback in the share price as a buying opportunity.
Secondary Care holds back FY15 growth
EMIS expects to report revenue growth of 13% for FY15, below our 16.6% forecast. The c £5m shortfall was mainly due to signing fewer contracts than expected in the Secondary Care business. Careful control of costs means that the company expects to report adjusted EBIT in line with market expectations. Net debt was £9.1m at year-end, higher than our £2.3m forecast due to a combination of the revenue shortfall and higher than expected working capital. The company is impairing the value of goodwill in the Secondary Care business and writing down the carrying value of its 20% investment in Pharmacy2U.
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