Almost £7m increase takes Medequip’s turnover to just shy of £170m last year
Medequip has released its annual report for the year ended 31 December, revealing a substantial rise in turnover to £166.9m.
One of the leading outsourced community equipment services (CES) providers to local authorities and the NHS, Medequip provide procurement, storage, delivery, installation, maintenance, collection, repair, cleaning, refurbishment and recycling services nationwide.
The organisation has also expanded into telecare with its Medequip Connect service, alongside equipment retail via its Manage at Home arm.
In its annual report, the company recorded a turnover of £166.9m in 2019, a £6.9m increase on 2018’s £160m.
Despite the climb in turnover, however, Medequip saw its gross profit dip from £17.6m in 2018 to £16.9m in 2019 as a result of increased cost of sales.
The organisation also saw its operating profit decline by £1.4m from the previous year, falling from £7.1m in 2018 to £5.7m.
Addressing the fall in profits in its strategic report, Medequip’s CEO James Ibbotson highlighted that the reduction in margin was a direct result of changes experienced in operating its London consortium contract – the company’s largest contract.
According to the report, the changes led to “significant variations in the mix of activities consumed by the twenty distinct boroughs comprising the consortium.”
Ibbotson detailed that in response to the mix change, Medequip had to invest in more people to maintain service standards, resulting in higher running costs in 2019.
The impact to the company’s operating profit reinforces how tight margins are in relation to delivering CES contracts, alongside emphasising the importance of efficient operations.
Medequip’s CEO added that for 2020, the company has put measures in place to match the new mix of demand with the necessary resources to service it, while “generating a return on the company’s investment which is consistent with historic norms.”
For the year ended 31 December 2019, Medequip made a profit after taxation of £4.4m, a decrease of just over £1.1m compared against 2018’s £5.5m.
Evaluating the risks facing Medequip, the company pointed to spending levels within the NHS and local authorities in its strategic report. It noted, however, that this risk is mitigated due to the length – typically several years – of the contracts.
Considering the impact of the COVID-19 outbreak, Ibbotson described how the Medequip’s COVID-19 Emergency Planning Group has enabled the company to navigate the pandemic outbreak, meeting daily to ensure correct implementation of its Corporate Incident Plan.
“Throughout the COVID-19 period, Medequip has sought to ensure it maintains sufficient liquidity to meet its obligations as they fall due, and to continue to fulfil its role as partner to the NHS and Local Authorities as they seek to respond to the emergency,” stated Ibbotson.
“We have sought to act collaboratively with our trading partners, with a view to placing Medequip in a position where it can continue to provide an excellent service through trading conditions that change rapidly.”
During the coronavirus outbreak in the spring, Medequip, along with a number of competitors in the CES arena, worked together with the British Healthcare Trades Association to ensure vital services could continue.
Looking to the future, the strategic report signalled future opportunities within the CES space may be on the horizon as more community equipment schemes move to the outsourced market in the coming years.
In 2020, Medequip has reported several successful tenders for CES contacts, securing Birmingham and Sheffield in March, along with Medway in August. The organisation also won a new sensory equipment contract with Derbyshire County Council in January.
In addition, Medequip outlined growth opportunities in the self-funded retail space, where it already has a retail proposition, as well as with activities linked to community equipment provision, notably Planned Preventative Maintenance and Home Improvement & Minor Adaptations.
