After a couple of tough years, Venture Life (VLG) is back and fighting fit. Today, this niche over-the-counter consumer healthcare products group posted better-than-expected results and an in-line outlook, with F22 EBITDA up 35.8% to £9.0m - from £6.6m last year - on like-for-like sales 17% higher at £44.0m.

This impressive top and bottom line performance was driven by progress on several fronts. Not only did revenues rise on the back of its own brands such as Balance Activ, Lift and Proctoeze, which  delivered a 2% like-for-like sales increase and now account for 57% of enlarged group) . Third-party products delivered strong growth of 41% to £20.8m, which improved both product mix and economies of scale, in turn lifting adjusted EBITDA margins from 20.1%  to 20.4% and PBT by a fifth to £5.5m.

That lifted underlying cash generation to £6.1m – representing a 12% operating cash flow yield - despite deciding to strategically hold higher inventory to meet customer orders during a period of significant supply chain disruption and input cost inflation. Net debt closed the year to December 2022 at £16.6m (or 1.4x EBITDA), but so far this year this has already dropped to 1.3x, and is set to fall further to 1.0x or lower by the year end.

Elsewhere, December’s £13m earnings enhancing acquisition of HL Healthcare Ltd is bedding down well. And trading in the year to date is consistent with FY23 expectations - underpinned by an opening order book some 114% larger than last year.

CEO Jerry Randall commented: ”I am delighted that Venture Life has delivered strong growth in both revenue and adjusted EBITDA, ahead of market expectations. This has been achieved in very challenging trading conditions and, in particular, our Italian procurement team has managed the extremely difficult supply chain issues ensuring that our production facilities continued to run unhindered. Whilst these challenges have not disappeared, they have begun to reduce and we remain confident in our ability to manage these going forward. With the momentum also continuing into 2023, we remain cautiously optimistic about the outlook for the year.”

Broker Singer Capital Markets has a 84p a share target price, and is forecasting FY23 turnover, EBITDA and EPS to increase to £50.5m, £11.8m and 3.8p respectively. At the current 40p share price, that puts the stock on attractive valuation multiples of 5.7x EV/EBITDA and 10.8x PER, alongside producing an equity free cashflow yield of 14%.

These estimates appear readily achievable on a run-rate basis, especially since Venture Life delivered H2 2022 revenues and EBITDA of £25.1m and £5.6m. Even if simply doubled (which ignores seasonality and a potential rebalancing of distributor order sizes and a 12M contribution from HL, which generated 2022 revenues of £5m and £2m of EBITDA), that suggests 2023 consensus looks safe.