Friday, 25 September 2009

System C has another healthy year

(By Tola Sargeant, Friday 25th Sept. ’09, 09:30am) 2009 has been another good year for AIM-listed healthcare IT firm System C Healthcare. Its annual results reveal a 21% increase in revenues to £21.9m and a 24% improvement in PBT to £4.1m. This impressive performance was driven by organic growth in both the products division (+13% to £6.5m revenues) and services (+25% to £15.4m). Cash generation has also been strong resulting in a net cash position as at 31 May 2009 of £14.7m (2008: £12.4m).

System C’s management team has done a great job of reading the UK healthcare IT market and diversifying to meet the needs of the NHS. Indeed, CEO Ian Denley used the opportunity presented by the NHS’ National Programme for IT back in 2003 to add a services stream to the portfolio. Today services make up the bulk of revenues but it’s not all from System C’s work with the LSPs or directly with NHS CFH, the agency in charge of NPfIT. The company reports substantially increased demand for deployment and post go-live services provided directly to NHS trusts in 2008/9.

Over the last few years, System C has also quietly continued investment in its own electronic patient record software (EPR) recognising that the iSoft/Cerner duopoly created by NPfIT might not last forever. The next generation of its Medway Sigma product range, launched in 2008/9, is already proving popular with NHS Trusts, and now stands a good chance of benefiting from the upcoming NPfIT EPR procurements in the South of England.

System C continues to augment its product range through careful acquisitions. Recent additions fit extremely well with NHS priorities and bode well for future growth. These include software for out-of-hospital care, infection control software, healthcare business intelligence, information governance systems and RFID tracking systems. The Group’s latest addition, the £14.2m acquisition of social care software provider Liquidlogic, makes System C the largest provider of both health and social care systems in the UK and puts it in a great position to benefit from the move towards closer integration of health and social care.

While 2010 will undoubtedly be a more challenging market economically, System C’s range of products and services, many of which improve efficiency in hospitals, should stand it in good stead. And, with cash in the bank, it is unlikely Liquidlogic will be the group’s last acquisition. Ian Denley is still on the lookout for companies that provide new clients in related markets or strategic technologies for use within its product range.

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