UK Stock Stories - Inspiration Healthcare

Always joyous and usually straightforward, bringing a new life into the world can also be fraught with dangers to both mother and baby. Globally, over fifteen million babies are born prematurely every year (more than one in ten live births)[1] and this number is rising. A typical pre-term baby cared for in the NICU (neo-natal intensive care unit) costs healthcare providers in the developed world approximately £1,500 a day[2]. According to the World Health Organisation (WHO), prematurity is the leading cause of death in children under five (sadly, equating to around a million deaths per year)[3], but the WHO believes that more than three quarters of premature babies could be saved with feasible, cost-effective care, such as during childbirth[4], and this is where Inspiration Healthcare Group comes in.

Inspiration Healthcare is a specialist medical technology company focusing on the neonatal intensive care market. The company was founded in Leicester in 2003 as a distributor of neonatal intensive care equipment such as incubators and ventilators. Over the years, the company has gradually expanded its operations, initially by licensing technology to sell under its own brand and then by developing its own product range. The company now employs over 200 staff across its five sites.

Many of Inspiration’s products are used in the vital first few minutes, hours and days of a premature or unwell baby’s life, such as helping to resuscitate a new-born or providing critical support for breathing. The company creates and distributes items such as patient warming systems for babies and adults as well as neo-natal resuscitation equipment. They sell their products into three main settings; critical care environments, operating theatres and home healthcare (supporting NHS patients in the community).

Inspiration is well-established in the UK, selling into all c.200 neonatal intensive care units. It has also been successfully exporting Inspiration-branded products for several years (now in 75 countries) and there are plenty of opportunities to grow further in both existing and new territories.

Last year, the company acquired SLE Ltd., which manufactures ventilators and neonatal respiratory disposables and has a large factory in Croydon. This has transformed the scale, profitability and geographic reach of the group.

Of course, we can’t discuss a healthcare company without mentioning Covid-19. In the early stages of the pandemic, the company was in a great position to help the government’s Ventilator Challenge UK consortium, where it operated as an approved expert adviser and supplier of ventilators for Covid patients. They were also contracted through the Cabinet Office for the provision of other services. Like numerous healthcare companies, Inspiration Healthcare did not suffer during the pandemic and the subsequent lockdowns, no employees were furloughed and most staff were probably busier than ever.

Inspiration’s quality of reporting and communication with investors is very good. Directors’ remuneration is fair, and we feel the directors act diligently as owner-operators. The current CEO is one of the original founders and he retains a significant shareholding, showing his ongoing commitment to the business. We’re delighted to be investors in Inspiration Healthcare; we were able to buy shares at an attractive valuation that, in our view, does not reflect the long-term prospects for a business destined to be a world leader in neonatology.

Written by David Gorman

[1] https://www.who.int/news-room/fact-sheets/detail/preterm-birth

[2] Global, regional, and national causes of under 5 mortality in 2000-15 Liu L et al 2016; quoted in Inspiration Healthcare company presentation

[3] Global, regional, and national causes of under 5 mortality in 2000-15 Liu L et al 2016; quoted in Inspiration Healthcare company presentation

[4] https://www.who.int/news-room/fact-sheets/detail/preterm-birth

Information is accurate as at 07.05.2021. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment capital is at risk.