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UPDATE - Deltex Medical's UK sales get shot in the arm

Published: 00:46 11 Sep 2013 AEST

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Oesophageal Doppler monitoring (ODM) specialist Deltex Medical’s (LON:DEMG) saw sales of surgical probes to the NHS and US hospitals pick up smartly in the first half of 2013.

The UK health service recently recommended ODM, which monitors blood flow during and after surgery, as one of its key cost-saving innovations going forward.

Following that initiative, UK sales of Deltex’s CardioQ-ODM surgical probes rose 14% across the half to June with a 30% rise in the second quarter.

Growth has also been strong in the traditionally quiet months of July and August, said the company, and year-to-date UK surgical probe sales were 13% ahead of 2012 by the end of August. September has also started strongly, it added.

Revenues for the half-year to June were £2.9mln, against £3.2mln, with the decline attributed to a timing delay on monitor barter sales.

Probe revenues rose by 9% to £2.7mln and Deltex said it is focused on increasing the installed monitor base as rapidly as possible to boost probe sales.

The number of CardioQ-ODM monitors, to which the probes are attached, has passed 1,000 in the UK in for the first time including an 11% rise in the installed UK surgical monitor base to 681.

US probe sales, meanwhile, rose by 17% with sales to its French distributor even stronger.

“At a worst case, we feel confident we’ve got several more years of decent growth to come in the UK, from a business that makes high margins and already generates a lot of cash. It’s hard not to see it being significantly bigger in each of two, four, six, eight, ten years’ time,” chief executive (CEO) Ewan Phillips told Proactive Investors.

Interim losses were £1.44mln (£1.27mln), which included £293,000 for an investment in Premier in the US.

Premier is the US company with which Deltex is collaborating to create a mass market for Deltex’s products. The collaboration is evidently going well because CEO Philips told Proactive that when the partnership started, the company thought it might have 35 to 50 hospitals on its dedicated trainer programme circa the end of 2015, which would represent around 1% of all US hospitals; Phillips now thinks penetration could get up to three or four per cent over that time frame.

Nigel Keen, Deltex’s chairman, said: "Deltex Medical has entered the second half of the year with confidence.

“We have growing traction and strong market positions in a number of potentially very large markets for our products just as acceptance of the need for optimal intra-operative fluid management is broadening.

“We generate strong and increasing cash returns from our UK business and are also seeing growing cash generation from our larger International distribution businesses and our dedicated trainer accounts in the US”.

Shares in Deltex rose 0.8% to 16p on the figures.

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