One Health Group plc (AQSE:OHGR) Chief Executive Officer Adam Binns caught up with DirectorsTalk for an exclusive interview to discuss the tremendous amount of progress made since last year, future outlook, five-year NHS contracts, the impact of a political leadership change, andtheir investment case.
Q1: Adam, your trading update highlights a tremendous amount of progress. Could you just summarise the year at this point compared to last year and your future outlook?
A1: Obviously, I’m now in closed period so I’ll be careful what I say, we’re releasing our full year results on Monday 24th of June.
What I can confirm is we’ve delivered another really strong year. The entire team’s worked really hard and it’s in fact our third consecutive year of double digit growth in terms of NHS patients choosing One Health Group. Those increased patient numbers over the year generated just over £23 million of revenue, that’s around 14% above last year, £20.5 million and ahead of market forecast. So I think, yes, we are pleased.
It’s also important to recognise that our business is 100% NHS so there’s no allowance on self-pay or insured or private work and all that growth is from NHS patients choosing the Group.
I think over the year it’s worth highlighting that we’ve really extended our support to the NHS, not only in new geographies but also taking work from local trusts. There are five local trusts which have internal waiting lists and increasingly over the last year that’s just finished, we’ve taken more patients from their lists, treated them and discharged them to take pressure for internal waiting lists. This is in addition to our traditional route which is through GP referrals where patients choose the Group when they visit the GP for a consultation.
So yes, it’s been a very successful year in that respect and the momentum generated is looking very good into the new financial year. Clearly, we’re now well into it at the start of May, but yes, we’re very pleased, very pleased.
Q2: Your update also refers to your recently announced five-year NHS contracts, are these unusual?
A2: Very much so. We have been trading for 20 years this year, so certainly not new to it, and over that period we’ve traded with various NHS commissions in shape and form on either spot contracts, which is a contract for a specific number of procedures in a specific area, and then latterly one-year contracts that renew every year in April.
So, to progress to the point where we’ve got five-year contracts is really positive.
It’s also worth highlighting we’ve never not renewed a contract. In fact that’s fuelled most of our growth over the years whereby we’ll open a new piece of business in an area, develop some activity and that will lead to a new contract with a new commissioner. That’s how we’ve grown organically over the past 20 years.
I think the really rewarding thing about the five-year contracts, it’s a strong demonstration of the value we bring to the NHS and also their confidence in us to deliver and their commitment to us being around for a long time as a long-term provider. More importantly from our perspective, that commitment, the long-term commitment, gives us the confidence to explore investing in wider infrastructure to support more patient volume, be that owned capacity, more outreach clinics, more consultants.
So it’s very rewarding and satisfying to get five-year contracts on the majority of the business of those two contracts, both very large contracts, which supports our investment in the long term.
Q3: Now, obviously there’s much talk about the local and national elections this year. Could a potential change in the national political leadership affect the Group as an NHS provider?
A3: That’s a good question. So this is a subject we used to talk about a lot at Board. Clearly, if we look back to 2019, when Jeremy Corbyn was aiming for the top job, he was very clear on his view towards the NHS and the independent sector, and I think it’s worth contrasting now the changes since pre-pandemic.
So, if we look at February 2024 in isolation, and compared to February 2019, the last month before lockdown, the independent sector is doing 38% more activity than it was over that period of time. And that 38% is equipped to around 11% of all NHS elective activity. So you can see it’s a step change in terms of the amount of work we’re now doing.
I think more reassuringly, if you look at the likes of West Streeting and Victoria Atkins, the opposing health secretaries, there’s one theme they agree on, and it’s the use of the independent sector going forward. The cold hard facts are with 7.5 million people on the waiting list, it’s just too large a problem to manage without support and the independent sector is a very good place to do that.
I think it’s also worth highlighting the whole team are entirely focused on the patient, and we take great pride in the service we deliver every day. What we do makes a fundamental difference to people’s lives, and the feedback we receive as a business gives us tremendous job satisfaction.
I think in realistic terms, politics doesn’t mean a great deal to a patient’s waited months on a waiting list for a replacement hip or knee, potentially in significant pain, and potentially unable to work.
Q4: Finally then, just before we finish, could you summarise the investment case for One Health Group for anyone that’s considering investing in the business?
A4: The company is and always has been highly cash generative, there’s no external funding requirements to maintain the core business all cash generated. A good example of that, you’ll see in the trading updates, at the end of the year, we closed with £4.7 million in the bank earning interest, one of the few benefits of high interest rates at the moment and these growing reserves provide substantial resources for future investment and growth. That can take many forms, as I’ve touched on already, including owned capacity, which is a key part of our long term strategy, but also quite important from an investor perspective, it fuels future dividends.
It’s notable, and worth highlighting that when we listed the business in November 2022, a number of our subcontracted NHS consultants bought shares, many of which have already benefited from share options we should exercise and held. So, within that population of shareholders today are a number of our subcontractors that support the business. I think it’s a really strong demonstration of their faith in what we do and their belief in what we do as a long term investment and have been for 20 years.
I think fast forwarding now at the end of June, so 24th of June, when we released our results, we’re keen to meet our existing shareholders. Many have been there since the start of our listing in November 2022 but also a number of new investors who’ve maintained an interest and we’ve been in contact with about what investment might look like and the rewards that might generate in the future.
So, yes, we obviously clearly believe it’s a good investment and that’s demonstrated by what we’ve seen so far since we listed.
