Synergy Health, the UK’s market leader in outsourced decontamination and sterilisation, posted a 14 per cent rise in underlying operating profits as it announced its fifth acquisition in just over a year.
The group, which specialises in sterilising equipment for hospitals and medical device manufacturers, bought four businesses in the year to April 1: one in Malaysia, one in Switzerland and two in the US for a total of £84m.
Yesterday it announced the purchase of SRI/Surgical Express, a Nasdaq-listed group that rents out surgical instruments and hospital gowns, for £24.9m. It is paying £16.2m in cash for SRI and taking on £8.7m in debt.
That, combined with the purchase of MSI in the US earlier this year underlines the group’s drive to shift away from the increasingly competitive market in Europe and move into Asia and America.
Richard Steeves, Synergy’s chief executive who founded the group two decades ago, pointed out that the US is the world’s biggest healthcare market but the market in outsourced hospital sterilisation is in its infancy.
“The post-operative rate of infection in the US is higher than it is in the UK” he said, adding that his strategy for Synergy, formulated four years ago after a sharp drop in the share price over concerns about start up costs and glitches in its UK contracts, was on track.
The company is improving efficiency, cutting costs and expanding in China, which is the world’s fastest-growing healthcare market, and in areas where the barriers to entry are high and it has established its leadership.
Close to a tenth of the group’s sales are now generated in Asia and the Americas. Total revenues rose 9 per cent in the year to £312m.
However, one-off costs of £3.5m linked to Synergy’s acquisitions this year and the closure of two facilities caused pre-tax profits to dip 12 per cent to £32.5m. This compared with £36.7m to April 2011, following the recovery of an insurance claim on a fire at Synergy’s Dunstable linen cleaning operation in 2007.
The group’s net debt rose £61m to £173.5m.
Earnings per share fell 15 per cent to 43.7p but Synergy is proposing a total dividend of 18p, up from 15.84p last year.
The shares rose 5 per cent to 864.5p.