The market is in an unforgiving mood. Input and wage inflation, stressed supply chains, and staff shortages concerning business leaders and investors alike. But some companies are better able to handle these pressures than others. Namely, companies with business models that characterised by:

  • high operating margins,
  • high margin stability and scope for operational leverage, and
  • high levels of R&D as a proportion of sales.

One such candidate is EMIS (LON:EMIS) , a provider of software to the NHS. Growth has been slow in recent years but its relatively stable mix of strong market positions, technology investment, and multi-year revenue visibility remains highly coveted.


Its operating margin stands at around 21% and the group aspires to increasing profitability. From its most recent annual report:

The Group’s target continues to be increasing operating margins towards 30%, which implies a faster rate of growth in profit than in revenue, to be delivered by operational leverage and greater efficiency in the Group’s systems.

The shares are not cheap at 22.1x forecast earnings and many expensive stocks have derated over the past couple of weeks. But could Emis buck that trend and provide private investors with safe harbour?



What are the company's principal business activities, how does it generate its revenues?

EMIS is listed on the AIM market with a market cap of c£813m, operating in the Healthcare sector. Liquidity is very good, with a 46bps spread and an EMS of 1,500 meaning around £20k can be reliably bought or sold at market prices.

The group supplies clinical software to the UK healthcare market and was originally established to serve the GP market, where it has a leading position with a market share of 57% of UK GP practices. It has broadened its range of products over the years and now serves the community healthcare market, the acute sector, and community pharmacies (where it has c 37% share).

It has main operating segments, each occupying a dominant market positions built up over 35 years providing front line technology to the healthcare sector.

EMIS Health focuses on delivering core software and ancillary services to NHS organisations. It generated 64% of group revenue in FY21.

EMIS Enterprise is mainly private sector and generated 34% of group revenue in FY21. The company is aiming to move towards a 50:50…

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