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Elekta ended FY22 on a healthy note, with Q4 results exceeding street expectations. Sales growth was witnessed in both segments. Importantly, order intake growth was maintained and the dividend was also increased by c.9%. Although profitability was visibly restrained and management expects challenges to remain in Q1, the firm’s innovation prowess, partnership initiatives and promising long-term oncology market dynamics support Elekta’s investment case and, hence, the firm emerges as one of our p
Companies: Elekta (EKTA-B:STO)Elekta AB Class B (EKTA.B:OME)
Elekta has released its Q3 21/22 results. While healthy order intake growth is a validation of the underlying recovery in oncology treatment markets, the firm’s performance is being restrained by supply-chain constraints (resulting in both lower installations and higher costs). While our estimates should reset lower and the near term could remain uncertain, looking beyond the transient challenges, Elekta’s long-term attractiveness remains intact.
Elekta reported weak Q3 21/22 preliminary results, with sales well below street expectations. Supply-chain challenges impacted both sales and operating profitability. Although order intake growth was maintained. Overall, while the firm has promising offerings, which should perform well as underlying demand recovers, the near-term (profitability) is expected to remain under pressure and, hence, our estimates should be rationalised.
Elekta’s Q2 results (particularly profitability) came in ahead of market expectations. While margin pressure has continued, the sales growth and order-book progression have remained encouraging. As oncology markets continue to recover and the promising market potential remains intact, the likes of Elekta remain in a sweet spot. Although, near-term profitability challenges are likely to persist and re-emerging COVID-19 risks could be another sentiment dampener.
Impact of recovering markets was evident in Elekta’s Q1 sales growth and adjusted order intake numbers. However, the material weakening of margins came as a surprise. While the re-emerging pandemic risks are guided to result in near-term margin pressure, the firm remains on track to unlock healthy sales growth opportunities. Moreover, with better-margin products expected to pick up momentum, the margin progression story remains intact. Add on top the expected recovery in oncology markets, and ou
Driven by a growing presence in the underserved emerging markets and an increasing proportion of faster-growing software/ service business in the total mix, Elekta’s sales momentum is set to accelerate in the mid-term. Moreover, innovation and strategic partnerships with industry bigwigs should ensure a sustained market share gain. Top-line growth will be accompanied by margin expansion on the back of operational leverage and efficiency gains, with Unity leading from the front.
Sales momentum decelerated in Q4 as installations took a hit, especially in emerging markets. Profitability came under pressure impacted by higher supply chain and service costs. However, Elekta’s order intake surged 18%, comfortably outpacing the market leader. As pent-up demand is now being unleashed, positive order growth is here to stay. Moreover, as the market situation continues to recover, Elekta’s ability to install systems should improve, thereby pushing up sales. Details on the new mid
Sales momentum accelerated in Q3 driven by improving market conditions and better access to customers’ installation sites – the solutions business grew faster than services business. Geographically, Asia-Pacific led the pack and the Americas returned to growth, though recovery lost pace in EMEA. Notably, profitability was hit by higher supply chain costs and an unfavourable product mix. Although the gross order intake was back in the black, it missed expectations with EMEA playing spoilsport. Gi
Despite the challenging market conditions, Elekta outperformed its rivals in Q2 – in both terms of revenue and order growth. Operating profitability reached a new high driven by a favourable product mix and strict cost management. Although Q3 could be negatively impacted due to the new wave of lockdowns, a new product launch, Harmony, which complements Unity, could enable Elekta to outgrow the market when a rival is undergoing an integration phase. The new reimbursement model could also be favou
Companies: Elekta AB Class B
Elekta’s Q1 results showed resilience in challenging market conditions. While the top-line benefited from higher service revenue and double-digit growth in China, profitability outperformance was driven by a favourable product mix and strict cost management. Importantly, in the weak radiotherapy market, gross order intake was in the black on the back of a big order from GenesisCare in the US. With Unity now in the growth phase of commercialisation and a new linac around the corner, Elekta’s mid-
Benefiting from the super-rich valuations offered by Siemens Healthineers for the proposed acquisition of Varian Medical, Elekta, a direct competitor, surged c.15% yesterday. With the No.1 player in the oligopolistic radiation therapy market now grabbed, there is a possibility that the No.2 player, Elekta, might also be grasped by an industry bigwig. In our view, Royal Philips, which has been a strategic partner for Elekta, might be interested in the family-owned business in the mid-term.
While Q4 sales and order intake growth were affected due to limited access to hospitals, the speed-up of installations in April meant that FY19/20 targets were over-achieved. Positive sales development in the US and the resilience of the services business, thanks to digitalisation, also played a part. Although order growth could be under pressure in H1 20/21 – as hospitals trim their capex – Elekta’s healthy order backlog should ensure steady revenue in FY20/21. The big order from GenesisCare an
Sales missed expectations in Q3 due to the delay in installations of linacs in the US. Order intake was also weak with the US being the main drag. However, the new regional manager’s aggressiveness could put the US back on track. Also, given the robust sales funnel of Unity, the 75 units order target could be achieved three months early. While margin expansion also remains on track, driven by an improving product mix and the cost-cutting programme, Coronavirus is a near-term threat.
Elekta, a market leader in radiotherapy, is set to outgrow the industry in the mid-term – driven by potential pick-up in demand for its new linac (Unity) and expected orders from China. Moreover, with robust margin expansion potential – led by an increasing proportion of Unity and software/service revenue and targeted cost-savings – earnings should grow healthily. Throw on top a sturdy balance sheet and a consistently-increasing dividend flow, Elekta is attractive at current levels. We initiate
The cancer burden is growing globally. Each year >18 million people are diagnosed, nearly 10 million die and the estimated economic cost exceeds $1 trillion. From early diagnosis to late-stage disease, cancer care often involves inappropriate or unnecessary interventions that drive costs but provide limited clinical benefit. Coupled with an increased understanding of cancer biology and rapid technological advances, this has been driving momentum for precision medicine, leading to patient and soc
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Weekly round-up of AIM-listed healthcare news.
Venture Life Group, GENinCode, Kromek, Alliance Pharma, Polarean Imaging, Benchmark Holdings, Ondine Biomedical, Verici Dx, Faron Pharmaceuticals, Avacta Group, Abingdon Health, Open Orphan, Belluscura, Hutchmed (China), Oxford Biodynamics
Companies: ANIC RUA CREO GENI HEIQ IHC IXI IUG OPTI SBTX VAL VLG
Companies: Futura Medical plc
Full-year results were in line with the preliminary guidance issued in early 2022. Feraccru revenues in Europe increased with a 60% increase in volumes and the US commercialisation of Accrufer continues, with broader insurance coverage (100m lives covered). As with many small cap companies, access to growth capital is currently difficult; however, the group has raised a $10m loan from a major shareholder providing a cash runway till end-2022. Our assumption is that further funding comes from deb
Companies: Shield Therapeutics Plc
OptiBiotix has reported final results for the year to December 2021, with revenues growing 45% to £2.2m and the EBITDA loss increasing to £1.0m, reflecting the increased investment in the business. Post-period end, OptiBiotix has continued to return value to shareholders through the successful spin-out and listing of its ProBiotix Health division. Future growth of the company is supported by commercial agreements with large partners and a substantial pipeline of opportunities through its 2nd gen
Companies: OptiBiotix Health PLC
Companies: Warpaint London PLC
Trading continues to track ahead of expectations, which have been upgraded twice so far YTD. There is clear evidence the growth strategy is bearing fruit. Distribution gains are increasing brand reach both in the UK and overseas. This appears to be an ideal time for its on-trend value-for-money proposition to gain traction, potentially with counter-cyclical characteristics as consumers start trading down. After the recent pull-back, valuation is undemanding for a 3-yr EPS CAGR of 13% with risk p
Singer Capital Markets
Companies: ORPH STX TSTL
Belluscura has announced the launch of the next generation X-PLOR portable oxygen concentrator and expanded distribution through a D2C offering and partnership distribution plan for smaller DMEs.
Companies: Belluscura PLC
Dish of the day
Visum Technologies has joined the AQSE Growth Market. The Company's business is to own and operate an "on-ride" video and photographic camera system that it sells and/or licenses to customers (being theme parks, ride manufacturers, souvenir imaging providers, and other leisure operators).
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What’s cooking in the IPO kitchen?
Immediate acquisitions (IME.L) is to re-join AIM via a Reverse Takeover of Fiinu Holdings Limited. Once complete the Compan
Companies: VAST TSTL 7DIG AHT CMX JADE
An update from CVS this morning covering conclusion of the CMA process, a further acquisition and update on trading. The CMA investigation into the acquisition of Quality Pet Care (QPC) is now complete, thereby bringing to an end a 9 month process. As part of the undertaking, CVS yesterday completed the sale of QPC for cash proceeds of c.£9m, implying a c.£12m impairment. Whilst the CMA episode has clearly been a setback, it does not seem to have fundamentally impaired ongoing M&A ambitions give
Companies: CVS Group plc
Companies: Oxford BioDynamics PLC
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Tungsten Corp and Sensyne Health have both left AIM. Hibernia REIT has left the Main Market.
What’s cooking in the IPO kitchen?
Visum Technologies seeking admission to The AQSE Growth Market. The Company's business is to own and operate an "on-ride" video and photographic camera system that it sells and/or licenses to customers (being theme parks, ride manufacturers, souvenir imaging providers, and other leisure operators). Due 30 June.
LifeSafe Holdings, a fi
Companies: SOLI REDX POS UFO GML PHC
The strong momentum from Q4-21 has continued into H1-22, with revenues expected to be up by more than 22% YoY. The outlook remains positive supported by strong industry demand and market share gains in the UK, where the group’s sustainability and affordability credentials are increasingly resonating. Whilst some macro pressures remain, these look to be manageable. We therefore make no change to our forecasts at this stage, but are highly encouraged by current trends and remain optimistic for the
Companies: Surgical Innovations Group plc
Companies: SourceBio International Plc
A positive AGM update confirms strong revenue growth has continued YTD and further margin improvement means management again expect EBITDA to be materially ahead of expectations. The business model is now settled, with additional distributors appointed in the US which should help drive further penetration into the Primary Care market there. China revenues were strong and with no sign yet of any slowdown, despite being cognisant of renewed lockdowns there. Gross margins have remained robust on po
Companies: Circassia Group PLC