Soon we’ll not be supporting this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

EMIS - Trading in-line, but service problems emerge

George Salmon | 18 January 2018 | A A A
EMIS - Trading in-line, but service problems emerge

No recommendation

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Emis Group Plc Ord 1p

Sell: 1,394.00 | Buy: 1,398.00 | Change -12.00 (-0.85%)
Chart View factsheet

Market closed | Prices delayed by at least 15 minutes | Switch to live prices

A year-end trading update from EMIS confirms trading has been in-line expectations for the full year. However, the group also confirmed problems with its EMIS Web service, which has failed to meet required service levels and reporting obligations with NHS Digital.

EMIS is not yet in a position to ascertain the exact cost, but it looks to be in the upper end of the £5m-£10m mark.

The shares fell 15.9% on the news.

View the latest share price and how to deal

Our View

EMIS' main business is providing software to GPs and pharmacies to manage their practices and patient record keeping.

The business model carries plenty of advantages, not least the lack of meaningful capital outlay and the fact its loyal GP customers generate significant recurring revenues. However, execution has been poor, with the group failing to live to its promise all too often.

It would be unfair to blame the group for the headwinds of the NHS's spending squeeze. However, we've also seen delays in the roll out of services in Northern Ireland, while the Specialist & Care division, which includes the business acquired in 2013's £57.5m deal for Ascribe, has run into problems with its contracts. The latest issue is a failure to properly report data back to NHS Digital. Details are thin on the ground at this stage, but we'd hope to hear more at or before full year results, due on 14 March.

EMIS' saving grace has been its impressive cash generation has enabled it to quickly repay the debt taken on to fund its acquisitions, while still increasing the dividend. Prior to the price move on 18 January, the shares offered a prospective yield of 2.8%.

While we think the dividend should still be well supported, the challenges facing the new CEO mean he'll likely need to do a bit of firefighting before settling into business-as-usual.

Looking further ahead, the foray into clinical services seems to have taken a back seat, with the focus returning to software provision. However, with the NHS unlikely to allow any one provider to gain full control of its systems, further meaningful market share gains in Primary Care are unlikely. That might explain the plan to grow Patient.info as an e-commerce platform servicing patients directly.

Register for updates on EMIS

Trading details

Revenue is said to be slightly ahead of last year, driven by growth in recurring revenues, market share gains and increasing order books.

The roll-out of EMIS web in Northern Ireland and Scotland continues in Primary, Community & Acute Care. The group expects an update shortly regarding progress in the Welsh re-procurement. Community and Acute both saw contract wins over the period.

In Patient, the websites and mobile applications for both Patient.info and Patient Access have been refreshed as part of the plan to deliver an evolving online digital platform.

The group now holds a net cash position of £14m, after reporting net debt of £0.4m last year.

Find out more about EMIS shares including how to invest

Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Thomson Reuters. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.