NHS supplier Kainos reports revenue drop after lower public investment

London-listed software provider Kainos has reported a drop in revenue amid a tough trading environment and delays to public investment after the general election.

Kainos, which is a key supplier to the NHS, reported revenue of £183.1m in the first half of the year, down five per cent year on year.

Profit before tax rose 11 per cent to £34.2m, while adjusted diluted earnings per share rose two per cent to 22.5p.

Shares in the company rose more than five per cent after the announcement.

“Our services businesses faced a tougher environment in the first half of the year in a generally soft market, and we remain cautious about our prospects for the remainder of the year,” chief executive Russell Sloan said.

In April, it warned of cooler demand from commercial clients and slow recovery from healthcare sales following a peak during the Covid-19 pandemic.

Kainos said the hiatus following the UK General Election delayed project mobilisations, with public sector revenue falling by 15 per cent to £62.0m in the first half of the year.

It added that commercial sector revenue “continued to be affected by the lacklustre economy”, with investment 27 per cent lower year on year, at £11.6m.

However, Sloan said that Kainos “continues to generate robust levels of profitability and looking to the medium term and beyond, we continue to see substantial growth opportunities across all our core markets.”

Kainos also expressed its support for the NHS’ digital transformation programme.

Last month, health secretary Wes Streeting announced plans for digital patient records, which will make health data available to all NHS hospitals, GPs and ambulance services in England. He also launched a major consultation on the government’s plans to transform the NHS from “analogue to digital”.

“The new UK Government is determined to improve public services and healthcare provision, while delivering efficiencies and leveraging the potential of AI. Digital transformation will have a key part to play in achieving these goals,” Sloan said.

However, he added that Kainos was “cautious about the timing of future growth” as it awaited the Government “moving out of the delayed decision-making phase”.