TIDMERGO
RNS Number : 4695I
Ergomed plc
14 December 2020
PRESS RELEASE
Ergomed acquires MedSource, a US-based specialist oncology and
rare disease CRO
-- Further expansion of Ergomed's presence in the strategically important US market
-- MedSource's complementary capabilities in oncology and rare
disease build on Ergomed's internationally recognised specialist
expertise
-- Addition of over 20 new clients to the CRO business with over
$41 million order book of future contracted revenue
-- MedSource recorded $19.3 million service fee revenue and $1.3
million adjusted EBITDA in 2019
-- Acquisition expected to be immediately accretive and earnings enhancing
Guildford, UK - 14 December 2020 : Ergomed plc (LSE: ERGO)
("Ergomed" or the "Company"), a company focused on providing
specialised services to the pharmaceutical industry, today
announces the acquisition of MS Clinical Services, LLC
("MedSource"), a specialised clinical research organisation (CRO)
based in Houston, Texas, USA.
Dr Miroslav Reljanović, Executive Chairman of Ergomed, said :
"We are delighted to have delivered on our strategic goals in 2020
with the expansion of our US footprint in both the CRO and PV
businesses. The addition of MedSource and its complementary
expertise in oncology and rare disease will further establish
Ergomed as a specialised services provider in the strategically
important US market, building on the successful acquisition and
integration of Ashfield Pharmacovigilance (now PrimeVigilance USA)
earlier this year. We look forward to developing the potential of
this new business to offer truly global clinical research services
to our international customer base. We are excited to welcome the
MedSource team to Ergomed and are eager to work alongside our new
colleagues to leverage our combined expertise in complex
therapeutic areas for the benefit of our clients and patients
worldwide. Looking ahead to 2021 we expect to see continued
momentum across the business as we look to increase our footprint
in key geographies, and firmly establish Ergomed as a leading
global provider of specialist services to the pharmaceutical
industry."
Eric Lund, founder of MedSource, who will continue in his
current role as President of MedSource after the acquisition, said
: "I am delighted to be joining the Ergomed Group and continuing my
current role. We are confident that this is an important strategic
step and natural fit for MedSource, as Ergomed is an exciting,
fast-growing global company with a strong reputation in the CRO
industry. Our own extensive experience in oncology and rare disease
drug development and across product types, clinical trial phases
and study designs will complement the services already offered to
Ergomed's international client base. The combined business will be
of great benefit to our US clients and employees, providing a
seamless service offering into Europe and globally."
Acquisition benefits
MedSource is a full-service CRO with a focus on complex diseases
and study designs. MedSource delivers high-quality clinical trials
specialising in oncology and rare disease. With over 20 years'
experience, MedSource has participated in more than 200 oncology
and rare disease clinical trials.
The acquisition aligns with Ergomed's strategy to grow its
existing profitable services business both organically and through
acquisition and advances a number of important strategic objectives
for Ergomed, including:
Complementary specialism in oncology and rare disease. The two
businesses have core expertise in complex disease areas. The
combined business will enable an even greater degree of specialist
expertise in high growth sectors of the overall pharmaceutical
services market in which Ergomed specialises.
Expanded US presence . The acquisition will further accelerate
Ergomed's growth in the North American market, with additional
offices in Houston, Raleigh and Boston in the USA, and Newcastle
upon Tyne in the UK. The increased US presence, with the addition
of over 110 US-based employees, is expected to drive substantial
new awards in the region and increase Ergomed's pipeline in both
the CRO and PV businesses.
Significantly increases Ergomed's order book. MedSource joins
Ergomed with an existing order book of over $41 million, adding to
Ergomed's GBP151.4 million order book as reported in September 2020
in its H1 2020 interim results, providing high forward visibility
of contracted future revenue.
Acquisition terms and MedSource trading history
Under the terms of the equity purchase agreement (the "EPA"),
Ergomed has acquired MedSource for an initial consideration
comprising $16.2 million in cash paid at the closing of the
transaction, up to $1.8 million in Ergomed shares to be issued at a
price based on the average daily closing price for 30 days
preceding the acquisition and within 15 months of the closing of
the transaction, subject to reduction for breaches of
representations and warranties, and up to a further $7.0 million
payable 90% in cash and 10% in shares depending on MedSource's
financial results in the year to 31 December 2021. The EPA includes
customary provisions relating to normalised working capital and
representations, warranties and indemnities.
The acquisition will be funded using the Company's existing cash
resources without significant depletion of cash available to fund
future organic and inorganic growth.
In its financial year ended 31 December 2019, MedSource recorded
total revenues of $31.3 million, comprising service fee revenue of
$19.3 million and pass-through revenue of $12.0 million. In 2019
adjusted EBITDA was $1.3 million and net assets were $2.6
million.
The transaction is expected to be immediately accretive and
earnings enhancing, with further growth and strategic benefits
expected in future years.
Webcast and conference call for analysts:
A webcast and conference call for analysts will be held at 1pm
GMT on Monday 14th December.
Webcast link : https://edge.media-server.com/mmc/p/a9nxy8n4
Conference call details
UK Participant Local Dial-In: 0800 279 6619
US Participant International Dial-In: +1 6467 413167
International Dial-In: +44 (0) 2071 928338
Event Plus Passcode: 3755635
A copy of the presentation will be made available on the Ergomed
website before the webcast, under Reports and Presentations, here:
https://www.ergomedplc.com/investor-relations/reports-and-presentations/
ENDS
Enquiries:
Ergomed plc Tel: +44 (0) 1483 402
975
Miroslav Reljanović (Executive Chairman)
Richard Barfield (Chief Financial Officer)
Numis Securities Limited Tel: +44 (0) 20 7260 1000
Freddie Barnfield / Huw Jeremy (Nominated
Adviser)
James Black (Broker)
Consilium Strategic Communications - for Tel: +44 (0) 20 3709 5700
UK enquiries
Chris Gardner / Sue Stuart ergomed@consilium-comms.com
Matthew Neal / Olivia Manser
About Ergomed plc
Ergomed provides specialist services to the pharmaceutical
industry spanning all phases of clinical development, post-approval
pharmacovigilance and medical information. Ergomed's fast-growing
services business includes an industry-leading suite of specialist
pharmacovigilance (PV) solutions, integrated under the
PrimeVigilance brand, a full range of high-quality clinical
research and trial management services under the Ergomed brand
(CRO), and an internationally recognised specialist expertise in
orphan drug development, under PSR. For further information, visit:
http://ergomedplc.com . For further information on MedSource,
visit: https://medsource.com/ .
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