Ergomed plc (LSE: ERGO) (“Ergomed” or the “Company”), a company focused on providing specialised services to the pharmaceutical industry, announces a trading update for the year ended 31 December 2019.
The Company will provide further details of its performance for 2019 in its preliminary results announcement expected in March 2020.
Summary – EBITDA ahead of expectations
Following the positive results for the first half of the year reported in September 2019, Ergomed continued to deliver strong year on year top-line growth and financial performance across the business and expects revenue for the year ended 31 December 2019 to be in line with current market expectations and EBITDA for the year ended 31 December 2019 to be ahead of current market expectations.
Strong trading and forward-looking order book
The positive trading performance seen in both Ergomed’s Clinical Research Organisation (“CRO”) and its Pharmacovigilance (“PV”) businesses during the first six months of the year has continued through to the year end and resulted in a strong order book at the start of 2020.
Revenues for 2019 are expected to be in line with expectations at approximately £68 million, an increase of 26% over prior year (2018: £54.1 million), with CRO revenues increasing 23% from £26.6 million to £32.6 million and PV revenues increasing 29% from £27.5 million to £35.4 million.
The strong revenues and continued focus on profitability in 2019 are expected to result in adjusted EBITDA ahead of current market expectations.
The combined CRO and PV order book at the end of 2019 is expected to be approximately £125 million, up by 15% over prior year (2018: £109 million).
The Company continued to be debt-free at the year end with cash and equivalent balances over £14 million (2018: £5.2 million).
Current year outlook
The Company’s outlook for 2020 is positive, bolstered by the strong order book and the acquisition of Ashfield Pharmacovigilance (“APV”) which closed on 10 January 2020, thereby providing almost a full year of additional revenues with scope for increased penetration in the enlarged client base with extended geographies and services. In 2019 Ergomed benefited from a one-off revenue and EBITDA uplift arising from change orders and project completions, announced on 16 May 2019, which is not expected to recur in 2020. In the longer term, the acquisition of APV will strengthen Ergomed’s presence globally, benefitting both the CRO and PV businesses.
Continued strengthening of the Board
Ergomed has continued to bolster its executive team and Board of Directors with the recent appointment of Lewis Cameron as Chief Operating Officer and to the Board. Lewis was formerly Head of Global Clinical Development at Covance, the CRO division of Laboratory Corporation Holdings of America and was previously instrumental in driving growth and the integration of acquired businesses at Chiltern International.
Dr Miroslav Reljanović, Executive Chairman of Ergomed, said: “2019 has been a transformational year for Ergomed. The momentum seen in the first half has continued and the business has performed ahead of market expectations for the full year. Our recent acquisition of Ashfield Pharmacovigilance marks a further major step in our strategy, establishing a broader platform in the US and a substantially enlarged client base. With a robust financial position, strong order book and strengthened leadership team, we are firmly positioned to deliver on the promise of becoming a leading mid-tier pharmaceutical services specialist with a global presence.”
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