EMIS reported growth in revenues (+7%), adjusted operating profit (+8%) and adjusted EPS (+11%) in H119. Management restructured the business during H1 to reflect the two key customer groups for EMIS products and, with the disposal of the Specialist & Care division, streamlined the product portfolio. Development of EMIS-X continues on track, with the first application based on the platform launched within the Patient Access app. We view the share price as likely to tread water until the outcome of the GP IT Futures procurement process is announced in the next few months.
During H1, management restructured the business to reflect the differing needs and market dynamics of its two main customer groups: the NHS and the private sector. Both divisions saw revenue growth year-on-year, although profitability for EMIS Health was slightly lower reflecting increased investment in the EMIS-X platform. Net cash was boosted by proceeds from the Specialist & Care disposal and an interim dividend of 15.6p (+10% y-o-y) was announced.
Management’s expectations for FY19 are unchanged, with operating profit growth in the mid- to high single digits targeted. We have revised our estimates to reflect H1 results, exceptional costs for restructuring, a higher dividend, and higher product development expenditure in FY20 and FY21. The company has submitted its bid for the IT Futures framework (which will take effect on 1 January 2020) and is now waiting for NHS Digital to review all bids. Management expects the outcome to be announced in the next few months.
Management’s expectations for FY19 are unchanged, with operating profit growth in the mid- to high single digits targeted. We have revised our estimates to reflect H1 results, exceptional costs for restructuring, a higher dividend, and higher product development expenditure in FY20 and FY21. The company has submitted its bid for the IT Futures framework (which will take effect on 1 January 2020) and is now waiting for NHS Digital to review all bids. Management expects the outcome to be announced in the next few months.
