Ergomed - Poised for a strong FY22
Ergomed released full H122 accounts following its July 2022 trading update, the key takeaway of which was the sustained strong momentum across both business segments despite the underlying biotech market softness. The 24.8% y-o-y revenue growth was supported by geographical expansion, forex tailwinds and a £4m contribution from the ADAMAS acquisition. This in turn translated into robust margins (albeit slightly lower than H121), which should benefit further from the consolidation of the higher-margin ADAMAS business. The order book continued to be strong (24.9% y-o-y growth) indicating a solid sales pipeline for the coming quarters. With a £12m cash balance and £80m in undrawn debt facilities, the company remains well capitalised to fund future growth. Our valuation goes up slightly to £783m or 1,568p/share on a higher share count (versus £777m and 1,577p/share previously).Ergomed is engaged in the provision of specialized services to the pharmaceutical industry and the development of new drugs. Co. focuses on oncology, neurology and immunology and the development of orphan drugs. Co. is building a portfolio of co-development partnerships with pharmaceutical and biotech companies. Co. has two business segments: clinical research services, which provides clinical development services to clients ranging from pharmaceutical companies to small and mid-sized drug development companies; and drug safety and medical information services, which includes Co.'s subsidiary, PrimeVigilance Limited, a pharmacovigilance and medical information services company.
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