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Advanced Medical Solutions Group plc (LSE:AMS), a global leader in tissue-healing technologies, has released its unaudited interim results for the six months ending 30 June 2024. The company reported an 8% increase in revenue, reaching £68.0 million, with growth accelerating to 10% at constant currency (H1 2023: £63.1 million). This impressive performance was primarily fueled by significant growth in the Surgical Business Unit, while the Woundcare Business Unit faced challenges that tempered overall gains.
Surgical Business Delivers Double-Digit Growth
Surgical revenues surged by 23% to £48.4 million (H1 2023: £39.4 million), marking a 27% increase at constant currency. All product categories within this unit saw robust double-digit growth, underscoring the strong demand in the market. A standout performer was AMS’s US LiquiBand® product, which grew by 54% at constant currency. This success was driven by key distribution agreement renegotiations with partners in 2023, combined with stock rebuilding by partners and a weak prior-year comparison.
The company also achieved a milestone with the launch of LIQUIFIX™, receiving significant US orders during the period. However, the approval process by Group Purchasing Organisations (GPOs) took longer than expected, with repeat orders anticipated in H1 2025.
Woundcare Segment Under Pressure
While the Surgical Business Unit thrived, the Woundcare Business Unit experienced a 17% drop in revenues, down to £19.5 million from £23.7 million in H1 2023. This decline is primarily attributed to reduced royalties from Organogenesis and weak demand in the exudate management segment, exacerbated by the cessation of certain low-margin business lines. These headwinds continue to present challenges for AMS's Woundcare division.
Profit Margins and Earnings Impacted
Despite the revenue growth, gross margins contracted slightly to 54.3% (H1 2023: 56.5%), reflecting the reduced Organogenesis royalty income, weakness in the Woundcare Business Unit, and the addition of Syntacoll GmbH, which currently operates at lower margins.
Adjusted profit before tax increased by 8% to £14.8 million (H1 2023: £13.8 million), maintaining a steady margin of 21.8%. However, reported profit before tax declined to £5.7 million (H1 2023: £11.8 million), primarily due to significant acquisition-related exceptional items during the period.
Operational Milestones and Strategic Acquisitions
AMS has made significant strides in strengthening its market position, including the completion of the transformative acquisition of Peters Surgical on 1 July 2024. Peters Surgical, a global provider of specialty surgical sutures and haemostasis devices, will substantially boost AMS's capabilities in the surgical sector. The integration of Peters Surgical into the AMS fold is progressing well.
Additionally, the acquisition of Syntacoll GmbH, a specialist in drug-eluting collagen products, completed in March 2024, enhances AMS’s Biosurgical business and positions the company for further growth in this space.
Strategic Review of Woundcare Business Unit
In response to the ongoing difficulties in the Woundcare segment, AMS’s Board has conducted a strategic review and determined that profitability can be improved by focusing on higher-margin opportunities while scaling back investment in lower-margin areas. This strategic shift is aimed at restoring growth and profitability in the Woundcare Business Unit moving forward.
