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Cello Health PLC: DEEP DIVE

Cello Health off to a strong start in 2019

The healthcare-focused advisory group boasts good levels of forward bookings thanks to several new business wins at the beginning of 2019
OVERVIEW: CLL The Big Picture
Cello Health changed its name from Cello Group in 2018
  • Two divisions: Health and Signal

  • Number of new business wins already in 2019

  • Dividend has risen every year for the past 13 years

  • Expansion in US key to future growth


What it does

Cello Health PLC (LON:CLL) calls itself a healthcare-focused advisory group.

It has two arms: Health, which provides expertise, processes, intellectual property and market knowledge spanning the pharmaceutical, biotechnology, diagnostics, healthcare equipment and consumer health sectors.

And Signal, which provides “digital, social media and branding expertise” to companies.

This division used to be focused sectors such as technology and retail, but it has taken a much greater interest in health of late.

Cello’s big claim to fame is that it works with 24 of the top 25 pharmaceutical companies around the world.


How it’s doing

Cello has kicked off its new year in strong fashion, with good levels of forward bookings and a number of new business wins already secured.

Given the hot start, management recently said it was confident of a strong performance in 2019, in line with what the market expects.

As for 2018, the company reported headline profit before tax of £12.2mln, up 6.4% from the £11.4mln reported for 2017.

Statutory profit before tax rose 44.7% to £8.4mln from £5.8mln the year before, on the back of a 2.3% increase in net revenue to £104.8mln from 2017's £102.5mln.

Overall, headline operating profit growth was underpinned by a strong divisional performance from Cello Health. The firm had already flagged that Signal suffered a dip in the top-line, partially reflecting tougher trading conditions in the UK.

The group enjoyed strong cash flows in the second half of the year and ended 2018 with net funds of £6.3mln, up from £1.6mln a year earlier.

The full-year dividend was bumped up by 10% to 3.85p from 3.50p the previous year, marking the 13th year in a row that the payout has been increased.


What the boss says

“2018 marked an important moment in Cello's development as we changed our name to Cello Health plc to reflect our ongoing strategic focus and developed our Board to support that strategy,” said chief executive Mark Scott.

“It is pleasing to see strong earnings per share growth and we have accordingly increased our dividend for the thirteenth successive year.

“We now intend to build on this momentum to support Cello Health's position as a leading healthcare focused advisory group globally.”


What analysts say

“Cello has reported a good set of FY 2018 results with PBT +6%, EPS +14% (aided by lower tax), DPS +10% and net cash £6.3m up from £1.6m last year,” said finnCap analyst Guy Hewett at the time of the recent results release.

“2017 acquisitions have continued to perform well and the Health division continues to broaden and deepen the client offering.

“Looking forward, the focus will remain on growing the group’s presence in the US and leveraging Signal’s digital capability into the healthcare sector.

“We do not anticipate making any major changes to our forecasts (apart from improved net cash and higher dividend), and reiterate our view that the market backdrop for Cello’s technically based, strategic marketing services is strong and defensive, supporting good growth prospects.”

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Cello Health PLC Timeline

April 11 2019
Big Picture
March 22 2019

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