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AIMprospector

LiDCO set for next stage of life From its headquarters in London’s Hoxton, LiDCO manufactures patient monitoring equipment for use in surgery and intensive care.

Hospitals use LiDCO’s hemodynamic (blood circulation) equipment to measure a patient’s blood flow and blood pressure in real-time during surgery. This information is used to help an anaesthetist to adjust the applied dosage by measuring the patient’s response to surgery and anaesthesia. LiDCO’s equipment provides continuous readings, all from the simple application of a cuff to the patient’s finger. This avoids the need for more intrusive measuring techniques, which frequently result in a higher infection rate and a longer period of hospitalisation for the patient. LiDCO’s equipment adds further value to a surgery team through its patent-protected user interface. The company sells through what it calls the ‘razor blade’ model. Customers pay a significant sum for the LiDCO equipment, followed by a fee each time that the kit is used. The value in LiDCO’s system comes from better patient outcomes, fewer complications and faster recovery times. Its appeal to profit-motivated healthcare providers in the USA is clear. However, it is the recent strong growth of sales to the NHS that has seen

avoids the need for more intrusive measuring techniques www.aimprospector.co.uk

LiDCO move into profit. LiDCO’s results for 2014 (LiDCO has a January year end) showed a 20% increase in group revenue to £8.6m. In this time, UK sales rose 37% to comprise almost half of group revenues.

fewer complications and faster recovery times Since then, LiDCO used its AGM statement to confirm that it expects profit growth to continue in-line with market expectations. According to the investment website Stockopedia, this would equate to EPS for the year of around 0.8p per share. The impressive sales growth is testament to the relevance and effectiveness of the LiDCO product. Furthermore, a series of clinical studies have demonstrated the contribution that LiDCO’s products can make to patient health and hospital management. Guidelines issued earlier this year by the Association of Anaesthetists of Great Britain and Ireland showed that among elderly patients in surgery, mortality rates and post-operative care costs both improved significantly when devices providing a function similar to LiDCO’s were used during surgery. This finding was supported by a later report from Duke University of North Carolina which showed that patient length of stay and readmission rates showed considerable

improvements when LiDCO’s LiDCOrapid device was used on patients undergoing colorectal surgery. Like many companies operating in and around healthcare, LiDCO has powerful trends working in its favour. First, the ageing population means that there are more elderly patients requiring surgery. These are some of the most at-risk surgery candidates for whom advanced monitoring techniques, such as those provided by LiDCO, would deliver most benefit. Also in LiDCO’s favour is the requirement for greater efficiencies within hospitals as patient demand increases.

LiDCO has some powerful trends working in its favour LiDCO is set for rapid profit growth as new sales and the stream of recurring revenues from existing customers continues. If profit forecasts for the next two years can be met, then the shares look moderately priced at this point. Like so many AIM companies however, such success could see the company swallowed up by a larger player. LiDCO Group (LON:LID) FOR Well-established in niche Benefits of product now clear AGAINST Constrained budgets may slow take-up Very dependent on one product Market cap Bid:offer P/E (forecast) Yield (forecast) 52week low:high

£34m 17p:18p 22.2 0 12p:29p

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July 2014 AIM Prospector  
July 2014 AIM Prospector  

Featuring five AIM-quoted companies: European Wealth Group, LiDCO, Tasty , Tricorn and Wynnstay Group.