FY25 results: revenue steady, margins up, profitability mixed
Surgical Innovations Group plc (AIM: SUN) has posted audited final results for the year ended 31 December 2025. Headline revenue was broadly flat at £11.6m (2024: £11.9m), but the mix shifted: SI Branded products slipped, UK distribution shone, and OEM was softer after a strong prior year. Underlying gross margin improved by 262 bps to 33.73%, helped by product mix and cost-down work, yet adjusted EBITDA moved to a £0.4m loss (2024: £0.05m profit).
The company also flagged a positive Q1 2026 and confirmed a strategic review aimed at optimising shareholder value. That last point matters – it usually signals a willingness to re-cut the playbook if returns can be improved.
| Key numbers | FY25 | FY24 |
|---|---|---|
| Revenue | £11.6m | £11.9m |
| SI Branded sales | £5.9m | £6.4m |
| Distribution (Elemental) sales | £4.05m | £3.62m |
| OEM sales | £1.7m | £1.9m |
| Underlying gross margin | 33.73% | 30.65% |
| Contribution margin | 26.31% | 28.77% |
| Adjusted EBITDA | £(0.4)m | £0.05m |
| Operating loss | £(0.73)m | £(0.79)m |
| Cash from operations | £0.6m inflow | £0.1m outflow |
| Net cash/(debt) | £(0.3)m | £(0.3)m |
| Adjusted EPS | Loss of 0.08p | Loss of 0.07p |
What moved the dial in FY25
Distribution strength offsets branded softness
SI Branded sales decreased 8% to £5.9m, with tariff headwinds in the US and sales disruption in India weighing on growth. By contrast, distribution revenues – third-party products sold by Elemental Healthcare – rose 14% to £4.05m as the UK strategy to add higher-value devices paid off. OEM dipped to £1.7m after an exceptional 2024 that cleared backorders and was then hampered by a component supply issue, now resolved.
Geographically, Europe was the standout. SI Branded sales in the region grew 23% to £2.08m (2024: £1.73m), helped by the company’s sustainability-led pitch – the “Resposable” model (part reusable, part disposable) that lowers waste and cost compared with fully disposable kits.
Margins: underlying up, contribution down
Underlying gross margin climbed to 33.73% from 30.65% thanks to mix and ongoing efficiency work. However, the contribution margin slipped to 26.31% (2024: 28.77%) after accounting for the net cost of manufacturing. In plain English: the product-level economics improved, but overhead absorption and operational frictions still dragged on the overall contribution. Management says cost-down projects remain a top priority in 2026.
Profitability and EPS
Adjusted EBITDA came in at a £0.4m loss. Statutory operating loss narrowed to £0.73m (2024: £0.79m), and the loss before tax improved to £0.94m. Adjusted EPS was a 0.08p loss per share, while basic EPS was a 0.10p loss. There was a £0.15m impairment to capitalised development costs (2024: £1.16m).
Cash, working capital and balance sheet quality
Cash generation was the quiet win. Net cash inflow from operations was £0.6m, driven by tight working capital management. Inventories were trimmed to £2.19m (2024: £2.97m), receivables were stable at £1.6m, and payables rose to £1.4m.
Net cash/(debt) at year-end was reported as (£0.3m), which effectively means modest net debt. The components were cash of £0.8m, bank borrowings of £0.2m and invoice financing of £0.9m. With only £150k of bank debt shown as current and leases of £515k total, the balance sheet looks manageable if trading momentum improves as flagged.
R&D commitment held up too: research expenses were 10.9% of revenue (2024: 9.6%), and capex was £0.2m.
Regulatory certification and pipeline: a real unlock for Europe
The company secured Medical Device Regulation (MDR) certification during the year. MDR is the EU’s tougher rulebook for devices; getting it in place removes a significant gating factor for new launches and registrations. MDSAP (multi-country audit) and UKCA audits were also completed.
With the heavy lifting done, attention now shifts to launches: LogiTube Lux, Logi Grasp and Logi Dissect are scheduled to be added in H1 2026, with an extension to the Logi range planned for H2. Linked to this, targeted cost-reduction work across Resposable products is expected to lift margins without compromising performance.
Commercial momentum: partnerships doing the heavy lifting
- Microline Surgical: revised UK distribution agreement valued at an anticipated £9 million over five years.
- Aspen Surgical: more than £1 million in first-year sales with further expansion expected in 2026.
- OEM outlook: strong 2026 forecast from long-term partner AMS and two new relationships with global instrument manufacturers.
These relationships underpin the thesis that high-quality, high-margin distribution and OEM programmes can complement the core SI Branded portfolio and smooth out geography-specific headwinds.
Board refresh and strategic review: why it matters
The Board was bolstered by Chair Roy Davis, Senior Independent Director Andrew Boteler, and Non-Executive Director Duncan Soukup. The CFO, Brent Greetham, intends to step down, with a search in advanced stages. Governance aside, the key line for investors is this: the Board is reviewing strategy to identify options to optimise shareholder value and will update the market in due course.
Translation: management is prepared to adjust focus, structure or partnerships to enhance returns. While no options are listed, this kind of review can act as a catalyst if it leads to sharper portfolio priorities, improved capital allocation, or deeper commercial tie-ups.
Outlook for 2026: returning to growth, margin recovery in focus
Q1 2026 sales are in line with expectations, giving confidence in a return to growth this year. The plan hinges on three levers: continued cost-down and operational efficiencies to push margins higher, sustainability-led selling (which clearly resonated in Europe), and targeted investment in sales and marketing to improve account conversion.
If OEM demand from AMS lands as guided, and the component bottlenecks stay resolved, that should add a helpful tailwind to the H2 run-rate.
What I like, and what could bite
Positives
- Resilient top line with clear bright spots: Europe up 23% and UK distribution up 14% to £4.05m.
- MDR certification removes a key barrier to new EU launches and should accelerate the product roadmap.
- Working capital discipline delivering £0.6m operating cash inflow and a leaner inventory position.
- Partnership momentum (Microline, Aspen) and OEM rebuild into 2026 via AMS.
Watch-outs
- US tariffs and India sales structure remain headwinds for SI Branded growth.
- Contribution margin fell to 26.31% despite stronger underlying gross margin – execution on cost-down is critical.
- Customer concentration risk: one customer represented 11% of FY25 revenue.
- Modest net debt and invoice financing require continued cash discipline until profitability improves.
Bottom line
FY25 was a classic “steady the ship” year: revenue largely held, underlying margins improved, cash was looked after, and the regulatory foundation was strengthened. Profitability remains the rub, but the mix shift, pipeline, and partnerships point the right way. With a strategic review underway and a better start to 2026, the coming quarters will be about converting operational tweaks into tangible margin and cash gains.
If management executes on cost-down and lands the OEM recovery while keeping the European momentum, FY26 could justify the tagline: “Optimising for growth”. For now, it’s cautious optimism – with eyes on margin traction, OEM volumes, and any outcomes from the Board’s review.
