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Company derives nearly all of its revenue from the health service
Thursday 23 Mar 2017 Author: Lisa-Marie Janes

Teleradiology business Medica (MGP) is making a strong start to life as a public company. The shares rallied more than 30% after its £121m IPO on Tuesday (21 Mar) but investors should do their research before riding this momentum.

Medica uses consultant radiologists to interpret computerised tomography (CT) and magnetic resonance imaging (MRI) scans and help provide early diagnosis of various diseases.

It already offers services to more than 100 NHS trusts, as well as private hospitals and diagnostic imaging companies and hopes to expand into new areas.

This is necessary because the company is almost entirely dependent on the UK’s cash-strapped health service for its work.

Medica will use the money raised through the flotation to pay down borrowings, although it still has £10m of debt after admission.

Private equity firm CBPE and management have both used the opportunity to sell down their holdings in the businesses and are left with respective stakes of 11.1% and 7.9%.

Management are upbeat, arguing its operating profit growth of 28.6% in the nine months to September 2016 provides a strong base from which to grow. (LMJ)

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