Keyhole surgery firm says recovery is ahead of expectations

The Leeds-based group said trading in July, August and September picked up and revenues in the current quarter have improved to more than 70 per cent of the prior year comparative.

Revenue fell 49 per cent to £2.6m in the six months to June 30 and the firm said the lowest point of trading was in May. The group said earnings fell to a loss of £460,000, down from a profit of £650,000 in the first half of 2019.

Surgical Innovations (SI) said it is also well positioned to benefit from the increased backlog in elective surgery cases in all markets.

David Marsh, SI’s chief executive, said: “Initially, virtually every type of operation was postponed. Then gradually there were some small incidents of cancer surgery being done and emergency surgery being done, but elective surgery was very much on the back burner until the end of June.”

He referred to University of Birmingham research which showed that in the UK, half a million elective surgery operations were cancelled.

“That gives you a flavour of how drastic the downturn was in activity, but the flip side of that is we are seeing the bounce back continuing to grow on a daily basis,” he said.

He estimated that operations will soon be back up to 75 per cent to 85 per cent of their former levels.

Chairman of SI, Nigel Rogers, said: “The company has shown great resilience, proactively navigating a very challenging period resulting from the Covid-19 pandemic.”

He said there are good indications that the improvement seen since the end of June can be built on going into the final quarter.

Many of SI’s products are based on a “resposable” concept, where the products are part re-usable, part disposable, offering a high-quality, low cost solution which significantly reduces clinical waste.

The firm said that its environmentally sustainable product ranges are gaining market traction in the UK and overseas. It added that the sustainability agenda is driving product evaluations at five major NHS Trusts in the UK.

Mr Marsh said: “The head of NHS England said the NHS has a duty to turn the tide against plastic waste in the NHS. About 30 per cent of plastic waste in a hospital occurs in the operating room.

“It’s no longer just us saying healthcare has to be sustainable. It’s the clinicians saying it, the heads of healthcare providers are saying it and all of the association bodies like the Royal College of Surgeons are saying it. They are all now banging the drum about the sustainable agenda.

“Our concern going into lockdown was it would get lost when we came out the other side, but we are now seeing a significant number of hospitals that are beginning evaluation of our product.”

Many Yorkshire hospitals already use SI products, including Leeds General Infirmary, St James’s Hospital in Leeds, Hull Royal Infirmary and Castle Hill in Hull.

Analyst Chris Glasper at N+1 Singer said: “First half revenues took an inevitable hit from the reduction in elective surgeries globally, but SI is showing agility in navigating the challenges.

“It is well capitalised and has made a number of internal improvements which should stand it in good stead as volumes recover. This recovery looks to be playing out ahead of expectations.

“We keep our forecasts under review for now, but the direction of travel looks encouraging and the medium term outlook positive given the fully upgraded product suite, pipeline of new products and scope for market share gains given SI’s sustainability and cost advantage over single use devices.”