News blog

Instem

• BY: Andrew Hore |
• POSTED: 01/04/2013 |

Healthcare development IT supplier Instem reported flat revenues and lower profit in 2012.

The business has been skewed towards the last few weeks of the year. Instem had already stated that it had managed to sign new contracts to cover 2012 expectations, which had been downgraded earlier in the year.

In 2012, revenues edged up from £10.8m to £10.7m due to a decline in licence fee income only partly offset by SaaS (Software-as-a-Service) revenues. Customer retention rate was 95%. Revenue growth is coming from outside of Europe. Underlying profit fell from £1.6m to £1.2m.

Net cash was £2.2m at the end of 2012 and more cash came in in the first few weeks of this year on the back of the contracts signed in the last few weeks of 2012.

Instem provides technology that helps pharma companies to analyse data and narrow down the compounds most likely to be effective.

The US government has purchased the Provantis 9 preclinical software suite via SaaS to support National Toxicology Program studies. The initial value of the contract is $870,000 in the first year. The contract can be extended to up to 10 years and that would mean it will be valued at between $6.2m-$7.6m.

House broker N+1 Singer forecasts a small fall in profit to £1.2m in 2013, recovering to £1.3m next year. More the company’s revenues are coming from SaaS contracts, thereby giving greater visibility to earnings. Greater growth in revenues should fall through to profit due to the fixed cost base.

At 117.5p a share, Instem is valued at £13.8m. The shares are trading on 17 times 2013 prospective earnings.

Instem is still keen to make add-on acquisitions and partnerships.

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