Totally Hot Right Now

Earlier this week Totally (LON:TLY), the frontline healthcare services provider, announced that its Pioneer Healthcare division had been lined up to deliver insourcing services to NHS Wales.

The Framework Agreement runs for four years from April 2023 with an option to extend for up to a further four years, subject to Welsh Government approval, creating significant opportunities to support in the reduction of waiting lists.

At the end of last year, waiting lists in Wales stood at a record 735,000 open patient pathways, which was 59% higher than in February 2020.

Patients are waiting on average 22 weeks for an appointment, more than double the pre-COVID waiting time.

CEO Wendy Lawrence stated that:

“We are delighted to have been awarded a position on this significant Framework Agreement for NHS Wales.

In April last year, the Welsh Government stated that by the end of 2022, it wanted no one in Wales to be waiting more than a year for a first appointment, yet the figure currently stands at around 75,000. 

In the last year, we have helped the NHS in England reduce waiting lists for procedures by approximately 40,000 and we are eager to start working with NHS Wales to help patients access the care they need.

This is the first time that Totally has secured the potential to support with waiting list reduction in Wales and this new framework creates significant new opportunities to grow our insourcing services.”

The Business

Totally is a leading provider of healthcare and wellbeing services across the UK and Ireland, working in partnership with the NHS, other healthcare providers and corporate customers to help address the challenges of increased demand for healthcare services.

The £39m Derby-based group helps healthcare commissioners and hospitals ensure patients can access the most appropriate care quickly and efficiently by delivering quality urgent care services, such as NHS 111 and urgent treatment centres and elective care services, such as community dermatology clinics.

Its services also act as first contact practitioner, providing a range of physiotherapy services across different settings, prison health, which works within a number of prison services to provide physiotherapy, podiatry and occupational therapy services to residents, and corporate wellbeing, which include design and management, wellbeing services, physiotherapy services and occupational health services, and also supplement its existing services with drop-in services as needed.

The company also delivers additional clinical capacity through insourcing and outsourcing arrangements to trusts and hospitals tackling growing waiting lists. Its corporate customer services also play a role in reducing reliance on healthcare by promoting healthy lifestyles and physical and mental health.

Sales Per Region And Business

In the group’s 2022 trading year it turned over £127.37m in revenues in the UK.

On a sales per business split: Urgent Care accounted for £109.17m (£105.40m), representing some 85.7% of group sales; Insourcing was £10.34m (£3.07m), 8.1%), Planned Care was £7.53m (£5.24m), about 5.9%, while newcome Corporate Wellness was £0.33m, only 0.3% of the group’s turnover.

The Equity – Good Institutional Backing

There are 196,096,800 shares in issue.

Directors hold just under 5% of the group’s equity.

Private holders include Richard Sneller with 18.93m shares (9.65%) and David Newlands with 8.73m shares (4.45%).

Other large holders include Stonehage Fleming Investment Management (11.0%), Threadneedle Asset Management (6.92%), Liontrust Investment Partners (4.88%), Canaccord Genuity Wealth (4.44%), Premier Fund Managers (4.35%), Unicorn Asset Management (2.94%), Harwood Capital (2.61%) and Octopus Investments (1.58%).

Shares fell back in early March

Recently the group informed investors that it had been impacted by inflation, national strikes, and clinical workforce shortages which helped to lower its guidance for its end March trading year results.

Brokers’ View – Price Objective 40p

Canaccord Genuity Capital Markets analyst James Wood rates the shares as a Buy, looking for 40p as his Target.

For the last year his estimates are for revenues to have increased from £127.4m to £140.8m, while adjusted pre-tax profits could have eased fractionally on the hassles from £4.0m to £3.8m, but with better earnings of 2.2p (2.1p) and an unchanged 1.0p dividend per share.

The year now underway, says Wood, could see £144.2m sales, profits of £6.3m, earnings of 3.5p and again a 1.0p dividend.

My View – For Buying Not Selling

Even though they have risen impressively over the last few days, from just 15.5p, the shares of Totally, now at 19.5p, still look to be very undervalued and capable of an early price rise back over 25p and then heading even higher.

In July last year they were trading quite healthily just above the 49p level.

We have previously enjoyed significant success in profiling this company and despite the recent profit warning I do believe that its shares are for buying and not for selling.

On the back of Canaccord Genuity’s estimates, the group’s shares are currently trading at only 8.8 times its 2023 historic earnings, while yielding a healthy 5.13%.

For the current year that drops to a 5.6 times price-to-earnings ratio and maintains the yield at 5.13%.

Accordingly, I now set a new Target Price of 25p.

(Profile 12.03.20 @ 12p set a Target Price at 18p*)

(Asterisks * denote that Target Prices have been achieved since Profile publication)