Profit Track 100

This Welsh maker of medical devices had a landmark year in 2020. It almost trebled sales, made four acquisitions, and in the first stages of the pandemic secured five months’ worth of orders in just two weeks, supplying the new NHS Nightingale hospitals.

The company operates a 100,000 sq ft factory in Caerphilly and smaller facilities in Halifax and Romsey, Hampshire. Its six brands produce equipment and devices to aid patient mobility, such as pressure-relieving mattresses, cushions and lifting aids.

The products help to prevent pressure ulcers and falls, which in turn enables NHS trust hospitals and private care providers such as Bupa to offer better care, cut patient discharge times and alleviate demand for beds.

Jon Lewis, 55, founded the business in 2009 with three colleagues after their employer – a foam mattress manufacturer – was bought by US medical equipment giant Invacare. Two years later chief executive Graham Ewart, 44, joined from Stryker, a New York-listed medical technology provider, to bolster the management team.

In 2016, private equity firm NorthEdge backed Ewart in a management buyout, with Lewis remaining as research and development director. A period of rapid expansion followed as the company acquired six businesses in three years.

French investor ArchiMed then bought out NorthEdge in December 2019 and provided the ammunition for last year’s four acquisitions. Of these, three were overseas: Swedish rehabilitation aids provider Gate Rehab Development, the patient-handling division of Swedish group Handicare, and Finnish manufacturer Carital Group.

The group has a direct presence in a further five European countries – the Netherlands, Sweden, Denmark, Norway and Finland – and distributes to 45 countries from its office in Perth, Australia. Global expansion has been key to its overall growth: exports rocketed to an annualised £27.6 million to December 2020, up from £3.1 million in 2019, and total sales hit an annualised £61.7 million. This helped profits rise to £7.1 million, having grown by an average of 133 per cent a year since 2017.

Ewart, a graduate of Harvard University’s advanced management programme, has built a strong senior management team that has successfully maintained profit margins while responding to budgetary pressures in public health systems. They have invested heavily in research and development, with the result that 45 per cent of revenue now comes from products it has patented. A soon-to-be-launched device allows mattresses to be adjusted remotely via an app, potentially saving nurses hours of heavy work.

With such innovations, Direct Healthcare is looking beyond the pandemic. It expects sales to reach £89.4 million this year, with profits of £18.5 million. It acquired Hampshire-based Talley and United Care in Holland last month, and is looking to enter the American market.

Ewart says he can envisage the business achieving a £1 billion valuation over the longer term. Given his track record in the sector, few would bet against him.

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Company details
CompanyDirect Healthcare Group
ActivityMedical device supplier
Annual profit growth133.11%
Latest profits £000s†*7,116
Latest sales £000s†*61,733

If applicable:

* supplied by company † annualised figure ‡ profits = ebitda