MIDAS SHARE TIPS: Help to save at risk babies - and grow profits - by investing in AIM-listed firm Inspiration Healthcare

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Coronavirus is on the rampage. Hospital beds are filling up. Lockdowns are tightening across the country. It is all an unwelcome reminder of Covid19 round one, back in March. 

Then the NHS was desperate for ventilators to help the critically ill and Ventilator Challenge UK was launched to help solve the crisis. Companies from a range of sectors clubbed together to produce what was needed. Many were large, household names, such as RollsRoyce, Ford and McLaren. 

Inspiration Healthcare was on the list as well. A small, AIM-traded firm, Inspiration was drafted in by the Cabinet Office as an expert adviser to the consortium, providing 24/7 frontline support to doctors and nurses, in case they ran into trouble with the kit.

© Provided by This Is Money Lifeline: Inspiration Healthcare ventilators help premature babies

Along the way, the group secured 500 ventilators from overseas, using its network of contacts to import gold-standard, reasonably priced equipment from Germany, Israel and the US. Inspiration’s contract with the Government is still in place but its involvement in the Challenge underlines how far the group has come since it was founded in 2003 by chief executive Neil Campbell and three close colleagues. 

From the beginning, there was a focus on neonatal care, particularly equipment and devices, such as ventilators, that would help premature babies to survive. Initially, the firm, based in Crawley, Sussex, distributed other companies’ kit and by 2014, Campbell and his crew had built up a sizeable private business. But they wanted to go further. In 2015, they floated on AIM and moved into own-brand sales, creating and designing their own products for customers, while continuing to distribute third-party goods. 

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Today, the company is at the forefront of its field, with a global reputation for neonatal care and customers in 75 countries, including America, China, Japan and several Gulf states. Inspiration is an established player in the UK too – virtually every hospital in the country uses at least one of its products. 

In July, Inspiration acquired SLE, a Croydon-based family business. The deal should prove transformative. Both firms are highly regarded at home and abroad and both firms have cutting-edge kit.

SLE makes advanced ventilators, for example, that automatically regulate oxygen levels to a baby’s changing needs. Older models rely on nurses to adjust these levels but automating the process reduces the chance of human error and increases accuracy. 

Inspiration is also behind a resuscitation tool, LifeStart, that allows babies to be kept at their mother’s bedside, if there is a risk of suffocation at birth. Other kit helps babies to breathe more easily, keep warm and stay safe. The group even produces a gadget to cool babies down, used to reduce the risk of brain damage when newborns have cerebral palsy. 

Looking ahead, Campbell is ambitious. Earlier this month, he declared a maiden interim dividend of 0.2p as the group announced soaring sales and profits. Full year figures to January 2021 are expected to show a doubling in revenues to around £35million, profits of £1.4 million and a total dividend of around 0.6p. 

Over the next five to seven years, Campbell is keen to triple sales to at least £100million, drive profits forward and increase dividends. He is resolutely focused on patient care too, doing everything possible to improve the lives of newborn babies and their families. 

The company is exploring new products and expects sales to grow rapidly, following the SLE acquisition. Efficiency should be improved too, through economies of scale.

Midas verdict: Campbell has a simple philosophy – that good businesses should be growing, profitable and generating cash. They should then reward the shareholders who took the risk of investing in them. Inspiration ticks all these boxes. It also helps some of the most vulnerable children in the world and has played a key role in combating Covid-19. At 66p, the shares are a buy. 

Traded on: AIM Ticker: IHC Contact: inspiration-healthcare.com or 01455 840555