ICS Global: An undiscovered gem

ICS is an ASX-listed medtech company that owns MBC, the largest medical billings and collections provider in the UK market. MBC has recorded 24 consecutive years of growth and has a market share of between 5-10% in the UK. The company is now focusing on acquiring larger private medical clinic clients after winning its first clinic in January 2015. 

ICS takes a clip equating to about 4% of billings collected through its software. It offers clients a discount in the first year to get them on board, and clients have proven to be very sticky for the company. 

The value proposition for users of MBC’s product is strong. The software aims to maximise billing revenue and can increase client net income by some 25%. Offering a more efficient collections solution, MBC has helped to reduce clients’ bad debt to less than 0.5%. By automating this process, consultants have more time to focus on growing clinic revenues, which in turn means more billings going through MBC’s software. 

Yesterday ICS provided a strong trading update, with revenue up 40% and profit up more than 50% for the first four months of FY16. Although still very small, with a market cap just shy of $11m, the company is growing rapidly. 

With plans to penetrate the clinic market and invest in its software capabilities, not to mention more than $20m of available tax losses in Australia, we think ICS is a screaming buy. As such, we have recently increased our position and now own a significant chunk of the company.