Thursday 26 April 2018

Healthcare specialist UDG lifts guidance after acquisitions

UDG Healthcare chief executive Brendan McAtamney
UDG Healthcare chief executive Brendan McAtamney
John Mulligan

John Mulligan

Irish healthcare services provider UDG has raised its full-year guidance on the back of acquisitions it made this year.

In a third-quarter trading update yesterday, the Dublin company, whose shares are listed in London, said that its group trading performance during the three months to the end of June had been good, with revenue and adjusted pre-tax profit ahead compared to the corresponding period last year.

UDG Healthcare's activities span sales, marketing and medical communications outsourcing, and drug packaging.

Its largest division - Ashfield - provides outsourced services including sales, marketing and patient engagement to drug companies.

In the nine months to the end of June, UDG said that group revenue and adjusted pre-tax profit are in line with expectations and "well ahead" of the corresponding period in 2016.

"Growth has been driven by a combination of underlying growth and the benefit of acquisitions, moderated by a foreign exchange headwind on the translation of non-US profits," it noted.

Since the start of its financial year, UDG has agreed to pay $200m for a number of acquisitions, including STEM, Sellxpert, Vynamic, Cambridge Biomarketing, and a US packaging facility.

Based on the acquisitions of Vynamic and Cambridge BioMarketing, UDG said that it is increasing its full-year diluted earnings per share growth forecast on a constant currency basis, from a range of 15pc to 18pc previously, to be between 17pc and 19pc.

UDG announced the acquisition of Vynamic, a healthcare consultancy firm, and Cambridge BioMarketing, a US healthcare communications business, last month.

"The group's strong balance sheet leaves it well positioned to continue executing strategic acquisition opportunities to complement its existing growth platforms and generate good returns," it added.

Releasing interim results in May, UDG CEO Brendan McAtamney told the Irish Independent that the company remains on the hunt for large-scale acquisitions but he conceded a transformational deal looks unlikely given the fragmentation afflicting its key markets.

"Following recent M&A, we now believe that UDG could, in theory, deploy up to $850m mid-term," said Davy Stockbrokers. "In a blue-sky scenario, earnings could potentially double in 2017-2019."

In the third quarter, UDG's Sharp packaging unit performed in line with the previous financial year's third quarter, partially attributable to the US Food and Drug Administration's delay in enforcing serialisation legislation for drug packaging.

Irish Independent

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