Contract mobilisation costs dampen Medvivo profits

Out-of-hours care provider Medvivo has reported a 20% rise in revenue to £17m for the year ended 30 June 2018 following the mobilisation of a major integrated care contract across Bath and North East Somerset, Wiltshire and Swindon.

The service, which launched in May and includes NHS 111 and integrated clinical assessment, is one of the first integrated urgent care contracts to go live in the UK and will run for five years with the option of a five-year extension.

The directors said the contract would provide a stable platform for future growth but in the short-term, start-up costs impacted on 2018 earnings. 

Cost of sales rose from £8.6m to £11m while administrative expenses were up 2% on 2017 at £5.4m.  However, exceptional costs of £382,000 (2016: £169,000) relating to consultancy services, contract mobilisation and legal fees pushed operating profit down 78% to £104,000. Excluding these items, the group generated EBITDA of £955,000 against £800,000 in 2017.

Looking ahead, the group said it expected to continue expanding its activities and that while future levels of growth are largely dependent on market strength, it anticipates further growth as the Five-Year Forward View is implemented.