Caretech Hldgs reports 40.3% Net Income decline in 2018 while 11.8% Revenue growth
06 Dec 2018 • About Caretech Hldgs (
$CTH) • By InTwits
Caretech Hldgs reported FY2018 financial results today. Here are the key drivers of the company's long term financial model:
- Caretech Hldgs is a growth stock: FY2018 revenue growth was 11.8%, 5 year revenue CAGR was 10.2% at FY2018 ROIC 5.3%
- Caretech Hldgs has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.0%. At the same time it's in pair with industry average of 8.0%
- CAPEX is quite volatile: £15m in FY2018, £16m in FY2017, £11m in FY2016, £6m in FY2015, £7m in FY2014
- The company has potentially unprofitable business model: ROIC is 5.3%
- It operates with high leverage: Net Debt/EBITDA is 4.4x while industry average is -0.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 11.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 11.9 pp from -3.7% to 8.2% in FY2018. During FY2014-FY2018 EBITDA Margin topped in FY2016 at 27.7% and was declining since that time.
Gross Margin decreased slightly on 0.92 pp from 36.1% to 35.2% in FY2018. Gross Margin followed a declining trend at -0.75 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 1.9 pp from 22.4% to 24.3% in FY2018.
Net Income margin decreased on 5.0 pp from 10.8% to 5.7% in FY2018. The efficient tax rate was 27.9% in FY2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 7.8% in FY2018. The company showed CAPEX/Revenue growth of 3.0 pp from 4.8% in FY2015 to 7.8% in FY2018. It's average level of CAPEX/Revenue for the last three years was 8.2%.
Caretech Hldgs has spent £0m on M&A in FY2018 which accounts for 0.039% of revenue.
Return on investment
The company operates at low ROIC (5.3%) and ROE (5.2%). ROIC decreased slightly on 1.1 pp from 6.4% to 5.3% in FY2018. ROE decreased on 4.9 pp from 10.0% to 5.2% in FY2018.
Leverage (Debt)
Debt level is 4.4x Net Debt / EBITDA and 4.7x Debt / EBITDA. Net Debt / EBITDA jumped on 0.2x from 4.2x to 4.4x in FY2018. Debt increased slightly on 1.9% while cash surged on 47.2%. During the last 5 years Net Debt/EBITDA bottomed in FY2016 at 3.8x and was growing since that time.
Caretech Hldgs has good short term financial stability: Interest coverage ratio (ICR) is 4.2x. Caretech Hldgs has short term refinancing risk: cash is only 6.1% of short term debt.
Average interest expence paid by the company was 3.1% in FY2018.
Valuation and dividends
The company's trades at EV/EBITDA 15.3x and P/E 34.5x.
The company paid 65.7% of Net Income as dividends in FY2018.
Management team
The company has 0.82% shares owned by insiders.
The company has 5,439 employees. Average revenue per employee in FY2018 was £34,140.
Financial and operational results
FY ended 30 Sep 2018
Caretech Hldgs ($CTH) key annual financial indicators| mln. £ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 123.3 | 124.3 | 149.0 | 166.0 | 185.7 | 11.8% |
| Gross Profit | 46.6 | 47.7 | 54.3 | 59.9 | 65.3 | 9.0% |
| SG&A | 26.1 | 29.9 | 23.8 | 37.2 | 45.1 | 21.1% |
| EBITDA | 30.6 | 32.4 | 41.2 | 35.4 | 33.5 | -5.3% |
| EBIT | | | | | 20.2 | |
| Interest expence | | | | | 4.8 | |
| Tax | | | | | 4.1 | |
| Net Income | 12.4 | 8.0 | 22.9 | 17.8 | 10.6 | -40.3% |
| Stock Based Compensation | | | | | 0.2 | |
Balance Sheet
|
|---|
| Cash | 3.9 | 3.7 | 4.3 | 6.4 | 9.4 | 47.2% |
| Inventory | | | | | 0.9 | |
| Short Term Debt | 9.2 | 1.9 | 7.0 | 7.7 | 153.8 | 1,907.7% |
| Long Term Debt | 160.8 | 160.3 | 153.7 | 145.9 | 2.6 | -98.2% |
Cash flow
|
|---|
| Capex | 7.0 | 6.0 | 10.8 | 15.9 | 14.5 | -8.6% |
| Dividends | | | | | 7.0 | |
| Acquisitions | | | | | 0.1 | |
Ratios
|
|---|
| Revenue growth | 7.9% | 0.8% | 19.9% | 11.4% | 11.8% | |
| EBITDA growth | 16.2% | 6.0% | 27.1% | -14.2% | -5.3% | |
|
|---|
| Gross Margin | 37.8% | 38.4% | 36.4% | 36.1% | 35.2% | -0.9% |
| EBITDA Margin | 24.8% | 26.1% | 27.7% | 21.3% | 18.1% | -3.3% |
| EBIT Margin | | | | | 10.9% |
| SG&A, % of revenue | 21.2% | 24.0% | 16.0% | 22.4% | 24.3% | 1.9% |
| SBC, % of revenue | | | | | 0.1% |
| Net Income Margin | 10.1% | 6.4% | 15.4% | 10.8% | 5.7% | -5.0% |
| CAPEX, % of revenue | 5.7% | 4.8% | 7.2% | 9.6% | 7.8% | -1.8% |
|
|---|
| ROIC | 7.7% | 7.6% | 9.4% | 6.4% | 5.3% | -1.1% |
| ROE | 11.9% | 6.6% | 16.0% | 10.0% | 5.2% | -4.9% |
| Net Debt/EBITDA | 5.4x | 4.9x | 3.8x | 4.2x | 4.4x | 0.2x |
| Interest coverage ratio (ICR) | | | | | 4.2x |
| Interest expence / Average debt | | | | | 3.1% | |
People
|
|---|
| Insider ownership | | | | | 0.8% | |
| Employees | | | | | 5,439 | |
| Revenue/Employee, th. £ | | | | | 34 | |
Peers in Health Care Equipment & Services
Below you can find Caretech Hldgs benchmarking vs. other companies in Health Care Equipment & Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Abbott Laboratories ($ABT) | 3.0% | 0.8% | 2.2% | 31.3% | |
| Puricore ($PURI) | -45.5% | 36.5% | -96.3% | 29.3% | |
| Tristel ($TSTL) | | 13.8% | 11.5% | 18.5% | 9.6% |
| Md Medical Group Invest ($MDMG) | 26.9% | 32.0% | 28.1% | 12.9% | |
| Omega Diagnostics Group ($ODX) | | 4.4% | 5.3% | 11.8% | -4.9% |
| |
|---|
| Median (10 companies) | 5.3% | 5.9% | 3.7% | 11.0% | -4.9% |
|---|
| Caretech Hldgs ($CTH) | | 0.8% | 19.9% | 11.4% | 11.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tristel ($TSTL) | 69.8% | 69.5% | 73.4% | 77.3% | 77.3% |
| Smith & Nephew ($SN.) | 74.8% | 75.3% | 72.8% | 73.8% | |
| Omega Diagnostics Group ($ODX) | 63.6% | 63.4% | 63.8% | 64.7% | 60.5% |
| Immunodiagnostic Systems Hldgs ($IDH) | 68.1% | 62.5% | 58.6% | 57.4% | 47.5% |
| Ekf Diagnostics Holdings ($EKF) | 51.9% | 48.8% | 47.5% | 55.0% | |
| |
|---|
| Median (8 companies) | 54.5% | 57.1% | 58.6% | 56.2% | 60.5% |
|---|
| Caretech Hldgs ($CTH) | 37.8% | 38.4% | 36.4% | 36.1% | 35.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Md Medical Group Invest ($MDMG) | 28.9% | 27.9% | 30.1% | 31.0% | |
| Smith & Nephew ($SN.) | 25.2% | 23.1% | 26.0% | 28.8% | |
| Tristel ($TSTL) | 20.1% | 22.9% | 20.7% | 25.4% | 24.7% |
| Ekf Diagnostics Holdings ($EKF) | 18.1% | -0.5% | 12.0% | 22.5% | |
| Abbott Laboratories ($ABT) | 20.5% | 21.3% | 22.6% | 20.7% | |
| |
|---|
| Median (10 companies) | 19.1% | 19.5% | 11.5% | 19.8% | 14.7% |
|---|
| Caretech Hldgs ($CTH) | 24.8% | 26.1% | 27.7% | 21.3% | 18.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Md Medical Group Invest ($MDMG) | 43.4% | 8.2% | 14.1% | 25.0% | |
| Puricore ($PURI) | 15.4% | 7.3% | 97.5% | 18.5% | |
| Smith & Nephew ($SN.) | 8.1% | 7.7% | 8.4% | 7.9% | |
| Omega Diagnostics Group ($ODX) | 4.1% | 5.8% | 4.9% | 4.2% | 3.5% |
| Abbott Laboratories ($ABT) | 5.3% | 5.4% | 5.4% | 4.1% | |
| |
|---|
| Median (10 companies) | 5.2% | 6.3% | 4.9% | 3.9% | 3.5% |
|---|
| Caretech Hldgs ($CTH) | 5.7% | 4.8% | 7.2% | 9.6% | 7.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Tristel ($TSTL) | 15.9% | 20.1% | 17.5% | 24.9% | 23.1% |
| Md Medical Group Invest ($MDMG) | 11.0% | 11.8% | 17.6% | 18.4% | |
| Smith & Nephew ($SN.) | 14.7% | 11.1% | 14.4% | 15.8% | |
| Bioquell ($BQE) | -1.8% | 1.6% | 0.7% | 12.2% | |
| Ekf Diagnostics Holdings ($EKF) | 2.3% | -9.4% | -0.5% | 7.0% | |
| |
|---|
| Median (11 companies) | 8.7% | 6.7% | 2.0% | 5.3% | 1.7% |
|---|
| Caretech Hldgs ($CTH) | 7.7% | 7.6% | 9.4% | 6.4% | 5.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Abbott Laboratories ($ABT) | 0.9x | 0.9x | 0.7x | 3.3x | |
| Smith & Nephew ($SN.) | 1.4x | 1.3x | 1.3x | 0.9x | |
| Md Medical Group Invest ($MDMG) | 2.0x | 0.6x | 0.4x | 0.5x | |
| Omega Diagnostics Group ($ODX) | -1.8x | -1.0x | -0.7x | -0.2x | |
| Ekf Diagnostics Holdings ($EKF) | -0.3x | | -0.5x | -0.7x | |
| |
|---|
| Median (9 companies) | -0.3x | -1.0x | -0.6x | -0.7x | -3.1x |
|---|
| Caretech Hldgs ($CTH) | 5.4x | 4.9x | 3.8x | 4.2x | 4.4x |
