Deltex Medical Group plc (LON:DEMG) Chief Executive Officer Ewan Phillips caught up with DirectorsTalk for an exclusive interview to discuss the £200,000 monitor order, the US being a key market, his thoughts on the UK NHS healthcare and how the company is doing in 2017
Q1: You announced monitor orders worth over £200,000, Ewan, how has this come about?
A1: As we said in the announcement, these are orders which we were expecting last year but slipped a bit into this year so it’s really encouraging they’ve come in and of course, it’s good for the cash, it’s good for this years’ numbers to get good amounts of orders in early. Two main parts to it, one was UK, two thirds of it was a replacement of old equipment and the other third was four extra monitors to expand in a little cluster of hospitals so that’s nice to have and we should be able to get a few more probes out of that. The far more significant one is in the States where a hospital system which we did the valuation 18 months ago, they were supposed to start last April, they’ve had various procurement delays but they’ve got through those now and the hospital insists on owning all its equipment, so had to wait for that to happen, that’s now come through. That puts 6 monitors into a system, there’s 7 hospitals, they’re going to be starting in 3 of them, and we’ll be there to support that and future expansion of monitors would be a lot easier now and the probes, the contracts there, it’s pretty much open-ended.
Q2: You’ve just mentioned one of your customers is a US hospital group in the Great Lakes territory, does the US remain a key market for you?
A2: Yes, it’s the most important market for us now and for the foreseeable future. It is the world’s largest market for medical technologies, it’s where we can command the highest prices and the best margins but also where, to some degree, the healthcare system has really established the Obamacare reforms that I think will survive Trump, the link between high quality care and profit. If you look after patients better, you make more money in both the short-term and the long run so that’s very much what we enable people to do so the whole thing is set up nicely for us to go and build our business.
Q3: With another order coming from the NHS, are you seeing any recovery of the UK healthcare market?
A3: I think the UK healthcare market, as a whole, is going to be horrible for the next few years, as anyone who has vaguely followed you can’t really avoid it. The NHS is in a mess financially and they’ve moved away from a generation that were trying to do the right things which was to give the right care to patients, to drive the money, and it’s back to rationing. That’s all very sad and sorry, however, for us who’ve had our own local circumstances where we’ve gone backwards three years, circumstances of that, none of them good for patients, none of them good for the whole system but they’ve done it. Last year, we’ve done a lot of things there to stabilise the business, I think we’ve now done that, I think we’ve got a platform from which we can grow, we’re pretty nervous about the next 2 or 3 months with the NHS financial year with no money but beyond that we think the will is there and that will return to be in a good business, we do make money, quite a bit of money in the UK. So, cautiously optimistic I think would be the best way to put it, in a market that’s going to be very horrible for the foreseeable future.
Q4: Now, Deltex Medical Group have had a strong of positive announcements since the beginning of January, how would you consider the start of 2017?
A4: We’re off to a good start, obviously landing £200,000 plus monitor orders is very helpful. What we’re seeing is a lot of the investments we’ve made over the last few years are starting to tick off, moving into returns for those. So, from a year ago, we’ve done an awful lot of the difficult things we had to do and we’re now in a position and as that’s come through that moves us ever so rapidly past our key goal which is the operating cash breakeven and then onwards from there. So, pretty excited about this year and we’ve had some good things happening so far which bode well.
