UDG takes a breather after €105m takeover
UDG Healthcare will spend time bedding down what was its largest acquisition before eyeing any more big deals, chief financial officer Alan Ralph said yesterday.
He was speaking to the Irish Independent as the company reported a solid performance in the first half of its financial year and raised its earnings outlook for the full year that ends in September.
Shares in the company were up about 3pc in early trading in London, before easing back later in the morning.
UDG Healthcare said that revenue in the first half rose 2.3pc to €1.04bn, while operating profit was 1.8pc higher at €45m. On a constant currency basis, the increase for both figures was higher.
In the first half of its financial year, UDG Healthcare generated 41pc of its profits in the UK, 33pc in the US and the remainder in the rest of Europe, primarily in Ireland, where it is the biggest drug wholesaler on the island.
In March, the company completed its €105m purchase of UK-based KnowledgePoint360 (KP360), a medical communications business that operates in Britain, the US and Germany.
KP360 is now part of UDG Healthcare's Ashfield unit, which offers a broad range of services to clients, including contract sales outsourcing to pharmaceutical manufacturers. Ashfield also provides sales teams, telesales, nurse educators, medical information and event management in 22 countries.
The unit's revenue rose 14pc in the first half to €218m, with operating profits rising 36pc to €16.7m.
In the US, the Ashfield business is ranked number four or five in terms of size among competitors, according to Mr Ralph, while globally it's ranked number two behind Quintiles.
UDG Healthcare chief executive Liam FitzGerald said he expects the Ashfield division to become the group's largest operating profit contributor in its 2015 financial year. But Alan Ralph said it's likely to do so even sooner, becoming the biggest contributor in the current second half of its 2014 financial year.
Following the acquisition of KP360, UDG Healthcare has raised the group full-year constant currency earnings per share guidance from a growth range of between 2pc and 5pc, to between 5pc and 9pc.
UDG Healthcare's net debt stood at €338m at the end of the first half, making for a debt-EBITDA ratio of 2.6 times. Mr Ralph said management would be comfortable with that being as high as 3.5 times. But any acquisitions in the remainder of the year will be small.
"If we do anything this year it will be small bolt-ons," he said.