London, UK, 1 August 2022

Ergomed (ERGO): Sustained growth momentum in H122

Ergomed’s H122 trading update re-emphasised its robust business model and resilient growth despite the challenging macro environment. Revenues grew 24.8% y-o-y to £69.9m, underpinned by strong and sustained demand for both the clinical research services (and pharmacovigilance segments. In February 2022, Ergomed acquired ADAMAS, which added supplementary quality assurance services to its portfolio, and we expect this to further enhance group margins in the forthcoming quarters. Importantly, the order book continues to be strong, recording 18.7% growth since end-December 2021, indicating robust contractual revenues into H222. With a £12m cash balance and £80m in debt facilities, the balance sheet remains robust. Management expects FY22 revenue and adjusted EBITDA to be ‘in line with market expectations’. We maintain our estimates and valuation for the company.

Management expects full year revenue and EBITDA to be in line with current market expectations. Our forecasts and consensus estimates for FY22 revenue and adjusted EBITDA are £140.3m/£28.1m and £141m/£28.1m, respectively. Ergomed remains well capitalised to fund further expansion plans with a period-end cash balance of £12m (following its £24.2m net cash purchase of ADAMAS) and an undrawn revolving credit facility worth £80m (increased from £30m in H221). Our estimates and valuation are unchanged. 

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