Healthcare and corporate fitness services provider Totally (TLY:AIM) said it expects full year profit to 31 March 2022 to be ‘substantially ahead’ of market forecasts.
Today’s announcement follows on from a brief trading update on 14 April 2022 when the company said performance was anticipated to be ‘ahead’ of market expectations.
The shares gained 4% to 44p adding to recent momentum which has seen the value of the company increase by 24% over the last three months.
Ahead of today’s announcement market expectations for EBITDA (earnings before interest, taxes, depreciation, and amortization) excluding one-off items was £5.4 million, according to the company.
The strong wording suggests at least a 10% beat implying almost £6 million of EBITDA. Healthcare analyst Ian Jermin at Allenby increased his forecast to £6.1 million, which is 13% above market expectations.
Canaccord Genuity analyst James Wood upped his EBITDA estimate by 14% to £6 million.
PATIENT BACKLOGS DRIVE DEMAND
The company said better than expected trading was driven by ‘enhanced demand attributed to the pandemic’. This has created a significant increase in patient waiting lists.
In addition, the removal of Covid-19 restrictions and the emergence of several variants pushed demand for all services to ‘record’ levels.
With infection rates higher than ever, there has been an increase in patients calling the NHS 111 number which is managed by Totally.
James Wood believes the strong performance was likely to have been driven by demand for higher margin services such as clinical assessment as urgent care volumes normalized and increased demand for insourcing services.
The demand for insourced services is expected to see strong growth and Wood references research by Mansfield Advisors which forecasts the NHS insourcing market growing at around 46% a year out to 2024.
Totally has won several new contracts over the last year equating to around £59 million as well as contract extensions worth around £72 million.
STRATEGIC PROGRESS
In line with the group’s ‘buy to build’ strategy the two recent acquisitions were said to be integrating as planned. The company purchased Pioneer in March 2022 and once fully integrated with Totally Healthcare will position the combined business to address the current backlog of elective surgeries.
In December 2021 the company purchased EFP (Energy Fitness Professionals) which enhances the group’s services into the corporate fitness and wellness market.
EFP has a large blue-chip client base including the Royal Mail (RMG) and QinetiQ (QQ.). Since being acquired the company has mobilized two new contracts and is progressing the development of digital services.
