Sigma acquires MPS, announces half-year results


Mark Hooper
Mark Hooper, NPSA Chairman

Sigma has announced its acquisition of Medications Packaging Systems for $18.5 million

The announcement came as Sigma reported its half year results and explained how certain challenges had impacted the operation.

MPS is Australia’s largest provider of dose administration services to the aged care sector and the community pharmacy sector.

“Sigma has a very clear strategy focused on delivering broader healthcare solutions, so MPS is a natural and compelling addition,” says Sigma CEO and managing director Mark Hooper.

“It is the market leader in dose administration services, a service that has an increasingly important role in health management,”

With almost 20% market share, MPS – founded in Brisbane in 1997 – provides medication management systems and individual medication sachet doses packaged at one of three TGA-approved facilities.

“The current market share of MPS is almost three times that of its nearest competitor,” Mr Hooper says.

“So we see tremendous opportunity to not only take a leading position in the dose administration market, but to achieve further growth in what remains a very fragmented market.

“MPS is well aligned with our existing business and aspirations.

“It will draw product, services and support from Sigma’s distribution centres across Australia, and provides a model that complements our Sigma Hospital Services and community pharmacy brands.”

He says that Sigma’s immediate focus will be on ensuring the integration process is “seamless,” and that it provides the support – including investment in systems upgrades and business capability – to leverage the growth platform.

The acquisition of MPS is expected to be earnings accretive from the first full year, and completion of the acquisition is expected to take place on 30 September 2017.

Meanwhile, Sigma also announced its financial summary for the first half of the financial year.

It announced a rise in reported EBIT of 14.6% for the first half of the year, with underlying EBIT down 8.7%.

Sigma said it faced “a number of challenges” during the half-year, which it expects to be contained to the full financial year.

“We have achieved a sustained period of above market growth over the past few years. So whilst the current year was influenced by some unexpected events, these are being addressed,” Mr Hooper says.

“This has intensified our focus on our strategy and business development pipeline, including today’s announcement of the acquisition of MPS.

“It also reinforces our belief that we are on the right track and can return to growth in FY19 and beyond.”

The sales revenue headline number was heavily impacted by a combination of the pull back in sales of the low-margin Hepatitis C medicines, the exit of what it called a “non-compliant branded customer group” and general softer consumer sentiment.

Adjusting for Hepatitis C, sales revenue was down 1.4%.

Sigma maintained a high dividend pay-out ratio (92% of underlying profit) with 2.5 cents per share payable on 5 October 2017.

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