Viapath, the pathology provider previously known as GSTS Pathology, has reported an 8.7% increase in revenue to £114.3m for the year ended 31 December 2017 following the first full year of its contract to provide pathology services at Princess Royal University Hospital in Kent.
However, activity volumes outpaced revenue growth, increasing by 11% and leading to a continued decline in return on capital as the company provided its NHS customers with enhanced services at lower cost.
Despite a tight grip on rising expenses exerted by the new management team, cost of sales rose from £74.9m to £85m, resulting in a 19% drop in operating profit to £1.3m.
Price reductions, together with the introduction of an employee reward scheme and profit-related incentives, pushed EBITDA down 13% to £5.4m.
Nevertheless, independent chairman David Bennett said: ‘Despite continuing market challenges, Viapath has made significant advances over the last year. Following the appointment of Dougie Dryburgh as our new CEO at the end of 2016, the executive team has been restructured and new appointments made to most senior posts. This new team has led to a significant improvement in performance with underlying growth in EBITDA to £5.4m (£1.3m better than plan and compared with an adjusted £4.9m for the prior year) and a significant improvement in cash flow, leading to the scheduled repayment of members’ loans and a reduction in total debt by 44% whilst maintaining an overall positive cash balance.’
Looking ahead, Viapath said key objectives included the delivery of a double-digit increase in EBITDA and a significant increase in net profit.