ACS – profiting from an ageing population

Advanced Computer Software, the AIM-quoted healthcare software specialist, is planning to grow its market share over the coming years.

The company is led by Vin Murria, who joined the company in 2008 as CEO. Winner of the Businesswoman of the Year award at the Asian Women of Achievement awards in 2009, Murria also works as a partner at VCT firm Elderstreet Investments.

Supplying a variety of solutions to the sector, the company operates a number of divisions, including Advanced Business Solutions, which provides a range of services for managers, including business intelligence – to help with the monitoring of the effectiveness of services – in addition to a variety of software for various HR and accounting roles.

Another division is Advanced Health and Care. This provides software including Adastra, which manages care for out-of-hours and walk-in clinic services. As Murria insists, the forthcoming cuts to government spending are likely to benefit the company, which works with both the NHS and private healthcare companies.

She says, ‘As the government is looking to make efficiency savings, we think we are likely to benefit from them as our technology ultimately saves our customers both money and time.’

ACS is also substantially larger since acquiring software venture COA Solutions – which supplies software to the healthcare and emergency services sector – for £100 million in what was one of the biggest deals of 2010.
Furthermore, she notes that with a declining birth rate and a population likely to live much longer than previous generations, ‘Our biggest opportunity is in the area of chronic care, providing our services for organisations such as care homes and hospices.’

However, perhaps aware of investor nerves concerning the sector following the near-collapse of healthcare provider Southern Cross, she is keen to add that the company is ‘mainly focused on SMEs (small to medium-sized enterprises) rather than big companies like Southern Cross’.

In its most recent results, for the year to February 2011, ACS reported a fall in pre-tax profits from £4.2 million to £3.2 million. However, after removing a number of restructuring costs and share-based payments, adjusted pre-tax profits actually increased from £6.8 million to £21 million on turnover that rose from £30.2 million to £95.4 million for the year. Furthermore, net debt fell from £41 million to £31.2 million.

Analysts at house broker finnCap are forecasting adjusted pre-tax profits of £22.5 million on sales of £99.1 million for the year to February 2012. In 2013 it sees profits climbing to £24.6 million on revenue of £104 million. EPS of 4.2p and 4.6p are forecast for 2012 and 2013 respectively.

Regarding the future of ACS, Murria sees particular potential in its iNurse technology, a hand-held device carried by nurses that enables them to monitor different patients while travelling through a hospital ‘The rest of the world has moved to smartphones,’ she argues, adding that the technology is accessible on BlackBerry phones.

Operating in a niche area of the software market, the company is led by a woman with a strong reputation. Despite the impending austerity measures, we think that long-term growth prospects remain. Buy.