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FY18 trading in line

Flash note | Technology | 24 Jan 2019

EMIS finished FY18 in a better position than it started the year. Trading was in line with expectations and the customer support issue uncovered a year ago has been resolved. The company has a strong cash position and can now focus fully on the development and roll-out of the EMIS-X platform. We maintain our forecasts pending FY18 results on 20 March.


Unveiling EMIS-X

Update | Technology | 04 Dec 2018

At its recent capital markets day, EMIS outlined its plans to reinvigorate revenue growth and unveiled its new platform, EMIS-X, onto which it plans to move all of its software. With new applications just launched and under development, the company expects to expand its addressable market. In the medium term, it is targeting an acceleration of annual revenue growth to mid to high single-digits and an expansion in operating margins from the current 21% towards 30%.


Acquiring blockchain expertise

Update | Technology | 06 Nov 2018

EMIS has announced two investments: the acquisition of the remaining 21.1% minority interest in Rx Systems and the acquisition of Dovetail Digital, a healthcare blockchain technology start-up. This gives EMIS full control of the community pharmacy business and a head start in the use of blockchain to provide secure access to patient data. These investments have consumed c GBP 9.5m in cash. The net effect of these acquisitions is an increase in our normalised EPS forecasts of 0.6% in FY18 and 2.4% in FY19 and FY20.


Preparing for the next stage of growth

Update | Technology | 04 Sep 2018

EMIS saw revenue growth from all divisions in H1, which helped to offset the additional costs incurred to strengthen service delivery. The company has worked hard to resolve customer support issues in primary care and is now focused on the IT Futures procurement bid in England. Investment in Patient is ongoing and the company expects to unveil its longer-term growth strategy at its capital markets day on 29 November. We have upgraded our revenue forecasts for FY18-20, but our adjusted operating profit and EPS forecasts are substantially unchanged.


Executive Interview – EMIS Group

Edison TV: | Technology | 31 Aug 2018

EMIS is a clinical software supplier to the UK healthcare market. The company was originally established to serve the GP market, where it has a dominant position with a market share of 56% of UK GP practices. It has expanded from this position to create a broad range of products serving the community, child and mental healthcare (CCMH) market, the acute sector, and community pharmacies (where it has c 37% share), as well specialist software and screening services for diabetic retinopathy. The company strategy is to provide connected healthcare solutions to facilitate patient-centric care.


Solid H1; on track to meet FY18 expectations

Update | Technology | 17 Jul 2018

In H118, EMIS traded in line with management’s expectations and generated year-on-year revenue growth. All divisions saw solid performance and management expects to meet FY18 expectations. The company continues to work on developing longer-term growth plans; these will be key to reinvigorating revenue and earnings growth, which in our view will be the trigger to closing the valuation discount versus peers.


GPSoC extension confirmed

Flash note | Technology | 28 Mar 2018

EMIS has confirmed that the current GPSoC contract has been extended until 31 December 2019. Its GP business in England can therefore continue to supply software on the same basis until the new IT Futures framework is announced. This supports our forecasts for FY18 and FY19.


Strengthening the core

Update | Technology | 19 Mar 2018

EMIS Group’s recent restructuring enabled it to report FY17 adjusted profits in line with forecasts, despite revenues below our expectations. The company’s immediate focus is on strengthening its core business, both in the wake of the recent customer support issue, but also to ensure it can maintain its market-leading position in the UK primary care market. Lower revenue growth and increased costs to support near-term projects reduce our earnings forecasts for FY18 and FY19. Management is working on detailed plans for growth, which it expects to share later this year.


Loss of Welsh GP business

Update | Technology | 30 Jan 2018

EMIS 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 GBP 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.


Internal review uncovers support issue

Update | Technology | 18 Jan 2018

In an otherwise in-line trading statement, EMIS announced an issue within its customer and product support processes for EMIS Web where it has not been fully meeting the service level and reporting requirements set by NHS Digital in England. This will result in an exceptional charge (our estimate GBP 9m) and potentially higher ongoing costs in the Primary Care business. A 5% reduction in EPS in FY18e and FY19e is more than discounted in the current share price. Further clarity that the scale and cost of this issue are contained should provide support to the share price.


Maintaining profitability

Update | Technology | 05 Sep 2017

EMIS reported a solid H117 despite pressure on revenues and profitability in several business areas. With management expectations maintained, our adjusted operating profit forecasts are substantially unchanged. Over the medium term, we expect the new CEO to make investment/divestment decisions to ensure the group is able to maintain growth and profitability despite the challenging NHS funding backdrop.


Steady progress

Update | Technology | 19 Jul 2017

In H117 EMIS traded in line with expectations. Primary Care, Community Care and Community Pharmacy are progressing well whereas Acute is still seeing budgetary pressure. The development of the Patient business is underway and likely to cost less than originally expected. Cash generation is on track and management expectations for the full year are unchanged. We make no change to our underlying forecasts; interim results are due on 1 September.