Deltex Medical Group plc (LON:DEMG) Chief Executive Officer Andy Mears caught up with DirectorsTalk for an exclusive interview to discuss their latest interim results.
Q1: This morning, you published your interim results, can you talk us through the highlights of those results?
A1: Yes, of course. So, as the market is aware, Deltex Medical has a disappointing first half, that became clear in mid-June and subsequently, the Board adopted a new strategy. As you will see, the interims contain a fair amount of detail setting out the key rationale behind the new strategy for the company.
It’s fair to say that Deltex has been investing ahead of the curve to grow market share and our topline number, unfortunately, although we did win some new customers and new users and established a base, the uptake in sales were much lower than expected. So, bluntly, we had a disappointing first half in terms of revenue.
So, rather than dwell on the H1 revenues, I’d rather focus on the highlights since appointed in mid-June. So, my primary objectives after becoming CEO was to get the business on a stable financial form and implement the new company strategy which primarily is focussing our sales team on generating revenues from existing customer base rather than chasing new ones.
Deltex had already started a cost cutting programme at the back end of last year and prior to my appointment, overheads had been reduced to approximately £0.75 million. Since my appointment, I’ve rapidly accelerated and expanded the cost cutting programme and the cost base has been reduced by a further £1.25 million of annualised rate. So, this gives us annualised cost savings in the region of £2 million per year and you get a glimpse of this if you look at the employee numbers, as of 31st December Deltex had 84 employees and as of the 31st August, there were 56 so a 33% reduction. The strategy isn’t just about cost cutting, with the right focus and strategy, the business will return to growth.
So, to summarise, we are very well now positioned, we successfully raised £2 million in February and have £1.1 million cash on the balance sheet at 30th June. We reduced our costs substantially, we’ve got a smaller, more focussed sales team and we’re really seeing some interest in our core technology, the oesophageal doppler, following the publication of the FEDORA study which once again showed significant reduction in avoidable post-op complications when the oesophageal doppler is used.
Q2: You’ve just mentioned there your appointment of as a new CEO in June, how have you settled into your new role?
A2: It’s certainly been a whirlwind 3 months and obviously a little bit stressful at times. Before my appointment I had more hair than Boris Johnson and look at me now!
I kind of take it in my stride, I’ve been at Deltex for more than 30 years, I started here originally as an engineer and moved into sales, so I know the company, the people, the customer base really well. This in-depth knowledge is really really essential to me in helping to define the new strategy and I am very excited and happy to say that 100% of the team at Deltex Medical are fully behind this. Having significantly reduced the cost base, I am very confident of our future and excited for our prospects going forward, especially for 2019.
Why am I encouraged? When you look at the future, there’s a really good example, Clinical Service Journal published in September an article commissioned by them highlighting that patient safety can be improved through patient monitoring and they used the oesophageal doppler, the FEDORA study results to reinforce this.
When you look around the world, you can see more and more healthcare providers are being penalised for hospital-associated complications, so this would undoubtedly have a positive impact on the business going forward.
Q3: You just mentioned a bit there about the business of moving forward, what are your plans for Deltex Medical Group operationally for the short and long-term?
A3: Strategically, we are now prioritising profitability over growing market share so working primarily with our existing customers to generate incremental revenues from both our existing and the new products available on the TruVue system. So, we want to take control of our destiny by starting to generate profits and using the resulting cash to fund future developments of Deltex’s technology. I want to do this rather than relying on further cause for investment from the company shareholders.
So, my short-term objective is that Deltex moves into profitability and in the longer-term, I want the next generation of TruVue system to provide clinicians with a complete haemodynamic solution that can be used right across the patient pathway. I want to have delivered it to the market by the profits that Deltex has generated.
