Business Overview
Integrated Diagnostics Holdings Plc (LON: IDHC) is a woman-led consumer healthcare company in the African and Middle East region with operations in Nigeria, Sudan, Jordan and Egypt. The company has internationally recognised accreditations for more than 1,400 diagnostics tests. Presently, the company is having more than 400 branches and is looking to expand its portfolio through its Spike, Spoke and Hub business model.

Financial Highlights – Q3 Financial Year 2019 (30th September 2019, Egyptian Pound, million)

(Source: Quarterly Report, Company Website)

For the nine months period ending 30th September 2019, driven by strong growth in patients served, tests performed and improvement in pricing for the period, the company’s revenue surged by 20 per cent to EGP 1,649 million as against EGP 1,377 million for nine months of the financial year 2018. The gross profit stood at EGP 793 million for 9M FY2019 versus EGP 680 million for 9M FY2018, reflecting an increase of 17 per cent for the period. The gross profit margin stood at 48 per cent for the period. Driven by strong revenues and adoption of IFRS 16 resulted in an increase in the EBITDA by 27 per cent versus last year data. The company’s EBITDA stood at EGP 686 million for the nine months of the financial year 2019 versus an EBITDA of EGP 540 million for 9M FY2018. EBITDA margin increased to 42 per cent for 9M FY2019 from 39 per cent for 9M FY2018. The company’s operating profit was up by 18 per cent to EGP 573 million for 9M FY2019 from EGP 486 million for 9M FY2018. The company’s net profit went up by 2 per cent to EGP 361 million for 9M FY2019 from EGP 355 million for 9M FY2018. The company’s cash flow (net) from operations was reported at EGP 442 million for 9M FY2019 versus cash flow (net) from operations of EGP 365 million for 9M FY2018. 

Share Price Performance

Daily Chart as at 19th December 2019, before the market close (Source: Thomson Reuters)

On 19th December 2019, Integrated Diagnostics Holdings Plc shares were trading at USD 4.10 at the time of writing before the market close (at 2:16 PM GMT), up by 0.99 per cent against the previous day closing price. Stock's 52 weeks High and Low are USD 5.20/USD 3.75.

Conclusion
The company has shown solid performance in the Q3 of the financial year 2019. Both the top-line and the bottom-line performance have improved for the period. The company also witnessed an increase in the number of patients from Contract business and Walk-in business for the period.

The company is opening new branches in Sudan and is renovating the existing branches in Nigeria as a part of the expansion program. The company’s radiology unit has witnessed a strong momentum and the company would be launching a new branch in the coming months. With the new subsidiary, the company will be offering healthcare services using data analytics to a base of 13 million patients.

The company’s operations are impacted by the political and security risks as it primarily operates in Egypt, which is prone to occasional civil disorder and Nigeria, which is facing security challenges. The company’s operations are also impacted negatively by fluctuations in the forex rates as the majority of supplies are acquired in EGP (Egyptian pounds).

Over the course of 4 years (FY14 - FY18), the company’s net income surged from EGP 860.2 million in FY14 to EGP 1,921.5 million in FY18. Compounded annual growth rate (CAGR) stood at 22.25 per cent.

Based on the above rationale, we have given a “Hold” recommendation at the current price of USD 4.11 (as on 19th December 2019, before the market close at 1:00 PM GMT).

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