| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 26.80 | 65 |
| Intrinsic value (DCF) | 9.66 | -40 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 3.20 | -80 |
CompuGroup Medical SE & Co. KGaA (CGM) is a leading global provider of healthcare IT solutions, headquartered in Koblenz, Germany. The company specializes in developing and selling software and IT solutions tailored for the healthcare sector, operating across four key segments: Ambulatory Information Systems (AIS), Pharmacy Information Systems (PCS), Hospital Information Systems (HIS), and Consumer & Health Management Information Systems (CHS). CGM's AIS segment offers practice management software and electronic medical records for physicians and medical centers, while its PCS segment provides pharmacy-focused administrative and billing solutions. The HIS segment delivers clinical and administrative software for hospitals and rehabilitation centers, and the CHS segment focuses on IT security, data-based products, and consumer-facing digital health solutions. With a strong presence in Europe and expanding global reach, CGM serves a diverse clientele, including healthcare providers, pharmacies, pharmaceutical companies, and insurers. Founded in 1987, the company has established itself as a critical enabler of digital transformation in healthcare, leveraging its deep industry expertise and comprehensive product portfolio to improve efficiency and patient outcomes.
CompuGroup Medical presents a compelling investment case due to its strong position in the growing healthcare IT sector, diversified revenue streams, and recurring software revenue model. The company's €1.15 billion revenue and €34.6 million net income in the latest fiscal year reflect steady performance, supported by €128.9 million in operating cash flow. However, investors should note the high total debt of €880 million, which could pose risks in a rising interest rate environment. The company's beta of 0.824 suggests lower volatility compared to the broader market, making it a relatively stable healthcare IT play. With a dividend yield supported by a €1 per share payout, CGM offers income potential alongside growth opportunities in digital healthcare transformation. The main risks include intense competition in healthcare IT and potential regulatory changes affecting healthcare providers' IT spending.
CompuGroup Medical competes in the highly fragmented healthcare IT market, where it differentiates itself through its comprehensive, end-to-end solutions spanning ambulatory, pharmacy, hospital, and consumer health segments. The company's competitive advantage lies in its deep domain expertise, established customer relationships in the DACH region (Germany, Austria, Switzerland), and integrated software ecosystem that creates switching costs for clients. CGM's focus on interoperability and data security addresses critical needs in healthcare IT, positioning it well for regulatory-driven demand. However, the company faces challenges from larger global players with greater R&D resources and regional specialists with deeper local market knowledge. CGM's mid-market focus in hospital IT leaves it vulnerable to competition from both enterprise-scale vendors and nimble startups. The company's growth strategy relies heavily on acquisitions (evidenced by its debt levels), which carries integration risks but has successfully expanded its geographic and product footprint. In pharmacy IT, CGM benefits from first-mover advantage in some markets but faces pressure from cloud-native competitors. The ambulatory segment remains a strength due to high market penetration in German-speaking countries, though international expansion here is challenging against entrenched local competitors.