Optima Health’s HY26: double‑digit revenue growth, bolt‑on deals and a huge Armed Forces contract taking shape
Optima Health has posted a busy first half. Revenue rose 17% to £59.5 million, helped by two acquisitions and steady demand for occupational health and wellbeing services. Profitability was mixed: statutory results swung to profit, but adjusted margins eased as employer National Insurance and plc costs bit.
Management is leaning into scale – expanding into Ireland, bulking up in mental health, and mobilising a c.£210 million contract with Serco to support the UK Armed Forces recruitment service. A transformation programme is now underway to lift margins as the business grows.
Key numbers investors should know
| Metric (HY26) | HY26 | HY25 | Change |
|---|---|---|---|
| Revenue | £59.5m | £50.8m | +17% |
| Adjusted EBITDA | £8.3m | £8.7m | -5% |
| Adjusted EBITDA margin | 13.9% | 17.1% | -320 bps |
| Adjusted operating profit | £6.1m | £6.7m | -9% |
| Adjusted PBT | £5.4m | £6.6m | -18% |
| Statutory EBITDA | £7.6m | £4.8m | +58% |
| Statutory PBT | £1.3m | (£0.5m) | Turnaround |
| Net debt (excl. leases) | £4.7m | £0.6m | Higher |
| Operating cash flow | £6.5m | (£0.6m) | Improved |
Notes: EBITDA is earnings before interest, tax, depreciation and amortisation. Basis points (bps) are hundredths of a percent. Adjusted measures exclude items such as restructuring, acquisition and listing costs and non-cash charges as disclosed by the company.
Revenue growth: acquisitions plus steady underlying demand
Revenue increased to £59.5 million, helped by three deals completed after HY25 and by upselling to existing customers. In the period, new contract wins had an annualised value of £1.9 million, with a further £8.3 million signed or at preferred bidder stage after the period end. The near-term pipeline stands at £11.5 million annualised revenue (defined as identified tenders being actively pursued).
Two notable acquisitions landed in H1. Cognate Health in Ireland was bought for £6.5 million and rebranded as Optima Health Ireland, contributing £3.4 million revenue and £0.4 million profit before tax in the period. Care first, an Employee Assistance Programme (EAP) provider, was acquired for a net £15,000 and is expected to add about £3.7 million per annum; it contributed £1.45 million revenue and £0.29 million profit before tax post completion.
Profitability: statutory bounce, adjusted margin squeeze
Adjusted EBITDA fell to £8.3 million and margin to 13.9% as higher employer National Insurance and the additional costs of being a listed plc weighed on the period. That’s the principal negative in the set. Management expects the transformation programme to drive margin improvement over the medium term.
On a statutory basis the picture brightens: EBITDA rose 58% to £7.6 million, with operating profit of £2.0 million and profit before tax of £1.3 million versus a loss last year. The year-ago comparatives included £2.8 million of demerger and listing costs, which no longer recur.
There was also £2.3 million of other operating income recognised relating to a successful Court of Appeal procurement case with the Department for Work and Pensions. The cash has not yet been received, and the final settlement amount remains under negotiation.
Cash and balance sheet: better conversion, more leases
Cash generated from operations improved to £6.5 million, a marked turnaround from the small outflow in HY25. Working capital saw a £1.0 million outflow, partly due to receivables linked to the other operating income that has not yet been collected.
Net debt including leases rose to £11.1 million, or £4.7 million excluding leases. The increase reflects a new lease for a central London clinical facility and the cash element of the Cognate acquisition. At the half-year, Optima held £8.3 million of cash and £13.0 million of drawn debt on a £20 million revolving credit facility (with an uncommitted £15 million accordion). £4.0 million of the bank loan was repaid during the period.
Strategic progress: Ireland entry, EAP scale-up, and a transformation agenda
International expansion is underway via the acquisition of Cognate Health, giving Optima a platform in the Republic of Ireland with c.30 clinic sites and a 35-physician network. That helps serve multinationals across the UK and Ireland, a useful differentiator in bidding for bigger frameworks.
Care first deepens Optima’s mental health and EAP capabilities and adds over 1,000 customers, creating cross-sell potential into occupational health, wellbeing and clinical services.
The new transformation programme targets scalable technology, better clinical and operational delivery, and lower operating costs. Management expects operating expenditure improvements to start coming through from H2 FY27.
Armed Forces medical assessment contract: big prize, later start
The c.£210 million contract with Serco to deliver medical assessment services to the UK Armed Forces recruitment service is being mobilised. Service revenues are planned to start from H1 2027. The contract is expected to add, on average, upwards of £20 million revenue per annum once live. It will not boost FY26 or FY27 materially, but it does improve medium-term visibility and scale.
Guidance and targets: line of sight to scale
Management reiterates medium-term ambitions of £200 million revenue and £40 million adjusted EBITDA, underpinned by organic growth, ongoing M&A, and margin uplift from the transformation programme. Post period, £8.3 million of annualised new business has been secured or is at preferred bidder stage, supporting the FY27 outlook.
The sector backdrop remains supportive, with policy focus on workplace health noted in the recent Keep Britain Working report. Optima’s positioning across occupational health, mental health and technology-enabled delivery should benefit from that tailwind.
My take: what’s good, what to watch, and key catalysts
Positives
- Top-line momentum: 17% revenue growth and contributions from recent acquisitions.
- Statutory swing to profit as demerger costs roll off, improving reported quality.
- Cash generation: £6.5 million from operations and ongoing repayment of bank debt.
- Strategic pipeline: £8.3 million annualised wins signed or preferred post period and a strong tender pipeline of £11.5 million.
- Major future contract: Armed Forces deal should add upwards of £20 million per year once live.
Watch items
- Margins: adjusted EBITDA margin fell 320 bps due to cost pressures; execution of the transformation programme is key.
- Debt and leases: higher lease liabilities from the new London facility and post‑deal net debt require continued cash discipline.
- Other operating income: £2.3 million recognised from a legal matter is not yet cash; final settlement amount is not disclosed.
- New business in-period was £1.9 million annualised, below HY25, though momentum improved after the half-year.
Upcoming catalysts
- Conversion of the £8.3 million annualised wins into revenue and potential further tender successes.
- Cash receipt and finalisation of the DWP legal settlement.
- Integration milestones for Optima Health Ireland and Care first, and early savings from the transformation programme.
- Further bolt-on M&A, given the healthy balance of opportunities in the market.
Bottom line
This is a solid strategic half for Optima Health: revenue up, footprint larger, and a sizeable long-term contract being built. Margin pressure is the main blemish, but management has a clear plan to address it and the cash performance is encouraging. If integration and the transformation programme deliver as flagged, the medium-term targets of £200 million revenue and £40 million adjusted EBITDA look achievable.
