One Health Group plc (LON:OHGR) is an independent provider of elective NHS-funded medical procedures, achieving significant milestones in FY 2024. With a record of 13.3k new referrals, the Group’s revenue surged by 13% to £23.5m, surpassing the forecasted £21.5m. The Group has been pivotal in meeting the escalating demand for additional healthcare capacity, maintaining excellent service quality. The following is an in-depth analysis of OHGR’s performance, growth strategy, and future prospects based on the research conducted by Oberon Capital, with insights from Analyst Emma Ulker.
Financial Performance
FY 2024 witnessed a 14% increase in turnover, reaching £23.3m, primarily driven by the rise in surgical procedures to 6,169 from 5,790 in the previous year. The Group’s operating profit rose by 6% to £1.6m, with a stable gross margin of 17%. However, adjusted earnings per share (EPS) dipped to 10.2p from 11.3p due to an increased corporation tax rate and higher share issuance. OHGR’s year-end cash position was robust at £4.7m, comfortably above the £4.1m forecast, enabling continued investment in growth and supporting the Group’s progressive dividend policy.
Strategic Growth Initiatives
The Group’s growth strategy remains focused on responding to rising demand and expanding capacity. OHGR has firm plans to invest cash flow generated by its underlying business into its first owned Surgical Hub. This hub is projected to have a transformational impact on profitability from its inception, with near-term margin accretion expected from FY 2026.
Emma Ulker highlights, “The growth strategy hinges on continuing to respond to demand coupled with near-term capacity expansion. This is set to be executed by continuing to grow and fill spare third-party capacity and investing in owned Surgical Hubs, which will significantly enhance Group profitability.”
Positive Growth Outlook
OHGR continues to attract new surgical consultants, increasing its roster by five to 63, with a further 18 potential consultants in the pipeline. The Group has benefited from additional revenue streams through local NHS Trust waiting list transfers, aiding the NHS in its elective recovery plan post-COVID-19. The new 5-year contracts with the two largest commissioners from April 2024 further solidify OHGR’s market position, replacing annual renewals and providing better visibility on service and sales.
Transformational Prospects of Surgical Hubs
The first Surgical Hub is expected to cost approximately £5.7m to build and is capable of generating a gross margin of around 30%, compared to the current 17% margin from third-party facilities. This hub will enhance Group operating margin by employing theatre support staff and nurses, significantly boosting profitability from its launch. The hub will initially focus on high-tariff orthopaedic and spinal procedures, with full capacity anticipated to be reached within the first months of operation.
Ulker notes, “The first surgical hub will deliver additional ‘owned’ operating capacity, reducing bottlenecks and enabling OHGR to treat a higher volume of patients at a higher margin.”
Forecasts and Valuation
Oberon Capital’s forecasts for FY24-28 indicate a 14% revenue compound annual growth rate (CAGR) and a 24% EBITDA CAGR, illustrating an accelerated profitability profile that supports OHGR’s progressive dividend policy. The valuation of OHGR stands at £26m, equivalent to 249p per share, based on a combination of discounted cash flow (DCF) and peer multiples.
Table 1: Summary of Financial Forecasts
| Year End | 2023A | 2024A | 2025E | 2026E | 2027E | 2028E |
| Revenue (£’000) | 20,502 | 23,306 | 25,830 | 29,926 | 35,950 | 38,400 |
| EBITDA (£’000) | 1,532 | 1,624 | 1,914 | 2,423 | 3,534 | 3,936 |
| EPS (p) | 11.3 | 10.2 | 13.2 | 17.2 | 25.3 | 28.4 |
| Dividend per Share (p) | 6.0 | 6.1 | 6.2 | 6.3 | 6.4 | 6.5 |
Final Thoughts
One Health Group plc has demonstrated resilience and strategic foresight in sustaining profits and generating cash amidst rising demand for healthcare services. With robust financial performance, strategic investments in owned capacity, and a strong growth outlook, OHGR is well-positioned to continue delivering high-quality medical procedures and expanding its market presence. As highlighted by Emma Ulker, “OHGR’s investment in Surgical Hubs is set to transform its profitability and capacity, making it a crucial player in the independent healthcare sector.”
