Medical group launches £121m acquisition on back of ‘pleasing’ annual results

Advanced Medical Solutions, the Winsford-based tissue-healing technology group, announced their preliminary results for the year today, and a proposed £121m acquisition.

Revenues for the year to December 31, 2023, were £126.2m, up from £124.3m, while pre-tax profits of £21.2m were 18% down on the previous year’s £25.9m mark.

Net cash stood at £60.2m, down from £82.3m the previous year, but the full year dividend has been recommended at 2.36p per share, an improvement on the prior year’s 2.15p payout.

AMS said it was pleased to report results in line with updated guidance and significant commercial, regulatory and clinical progress as it continues to build its platform for growth and invest in its portfolio of next-generation products.

CEO, Chris Meredith, said: “I am very pleased with the progress we made in 2023 with a number of key initiatives setting a strong foundation for growth for the next five years.

“The recently signed US distribution agreements are already having a positive impact on the LiquiBand franchise. Also, market feedback through our new US partner for LIQUIFIXTM validates the confidence we have in the commercial potential for this unique product.

“Outside the US, we continue to make excellent progress as we strengthen our position in established markets and drive growth through geographic expansion.”

AMS has also announced the proposed acquisition of French business Peters Surgical, a global provider of specialty surgical sutures, mechanical haemostasis and internal cyanoacrylate devices, for a total of £120.8m.

It follows the acquisition of Syntacoll GmbH for €1m on March 1, 2024, and Connexicon, on February 1, 2023.

AMS said the Peters Surgical deal strengthens its position as a leading global specialist in tissue repair and skin closure, with a complementary product portfolio, and brings significant long term cost and commercial synergies, including increased direct sales capabilities, geographic expansion and cross-selling opportunities.

The deal is expected to be completed by the end of June 2024.

AMS has arranged new debt facilities to fund part of the cash consideration of the acquisition which comprise a £60m amortising term loan facility, and a £30m revolving credit facility.

CEO Chris Meredith said: “The acquisition of Peters Surgical is a transformational step in the history of AMS.

“The expansion of our portfolio while leveraging the direct sales, distribution network, R&D capability and manufacturing base of both businesses will transform the group into a major player in the field of tissue-healing.

“The group has never been in such a strong position given the quality of our products and breadth of our portfolio. As a result, we are also increasing our dividend, demonstrating our commitment to drive shareholder value.

“I am extremely proud of the AMS employees who have worked so hard to get us to this point and I look forward to working closely with our new colleagues at Peters Surgical and Syntacoll and our other partners as we embark on this exciting new phase of the business.”

Liz Shanahan, Chair of AMS, said: “AMS has successfully delivered organic and M&A growth via strategic bolt-on deals over the past few years. Today sees us deliver a much larger transformative acquisition according to plan and this significantly expands and strengthens the group’s product offering and global reach. This deal puts us on a very strong footing and the board is extremely confident in the group’s future outlook.”

Thierry Herbreteau, Chief Executive of Peters Surgical, said: “Peters Surgical has grown into one of the leading European providers of speciality surgical products thanks to the hard efforts of all the team and the support of Eurazeo.

“We are excited about the opportunities that this combination with AMS, a world leading specialist in tissue-healing technologies, and the benefits that the transaction can bring to physicians, patients and employees.”

Investment bank, Panmure Gordon, upgraded its call on AMS shares to ‘Buy’ following today’s announcements.

Analysts, Dr Mike Mitchell and Dr Julie Simmonds, said: “AMS’s prelims today follow the mid-January trading update which saw an ‘in line’ commentary allow a small upgrade on our part on the revenue line.

“Today’s FY23 numbers see the company having performed directionally ahead of updated view, and with a further positive note struck by the outperformance of the Surgical Business Unit vs our expectations, in spite of a turbulent year.

“Meanwhile, the separately announced acquisition of Peters Surgical (cash consideration €141.4m or £120.8m, funded circa £90m new facilities and existing cash) looks like a great fit for the existing AMS business.

“Given the immediate view of a materially repositioned business with a global footprint – in addition to the reassurance of the FY23 reported performance – we upgrade our recommendation to Buy and will update our investment thesis fully in due course.”