Life Healthcare delivers strong financial performance
Life Healthcare Group Holdings Limited (JSE: LHC), one of South Africa’s largest private healthcare providers, today released its Financial Results for the year ended 30 September 2018. Highlights include:
- Group revenue increased from R20.8 billion to R23.5 billion (+12.9%)
- Normalised EBITDA increased from 0 billion to R5.5 billion (+10.7%)
- Cash generated by operations increased to R 5.5 billion (+ 18.0%)
- Normalised earnings per share increased to 110.2 cps (+17.4%)
- Headline earnings per share increased to 108.8 cps (+40.6%)
The Group results for the year reflect a strong overall performance with Group revenue growing by 12.9%, normalised EBITDA increasing by 10.7% and headline earnings per share up by 40.6%. Headline earnings per share EPS increased by 40.6% to 108.8 cps (2017: 77.4 cps) while earnings per share on a normalised basis increased by 17.4% to 110.2 cps (2017: 93.9 cps). The final dividend increased by 11.1% to 50 cps.
Group CEO, Dr Shrey Viranna said the strong results were achieved on the back of operational excellence underpinned by continued delivery on the Group strategy of evolving its business model such that 35% (2017: 28%) of Group revenue is now derived from outside the acute hospital business.
Life Healthcare - southern Africa
Southern African operations returned to positive paid patient day (PPD) growth of 1.1% (2017:-1.7%) and continued to benefit from the strategy of expanding the complementary lines of business and the 131 beds added to the acute hospital business during the year.
Southern African revenue increased by 8.5% to R17.2 billion (2017: R15.9 billion) and normalised EBITDA increased by 5.9% to R4.3 billion with an EBITDA margin of 24.9% for the year (2017: 25.5%). Complementary services continue to reflect good growth across its different business lines with PPDs growing by 5% and revenue increasing by 14.0%.
Healthcare services’ revenue increased by 28.8% to R1 122 million (2017: R871 million) due to the acquisition of the occupational health and wellness business (EOH Abantu Proprietary Limited) in October 2017 as well as the return of the Gauteng mental healthcare users to Life Esidimeni facilities.
Alliance Medical Group
Alliance Medical’s revenue increased by 30.8% to R5.0 billion (2017: R3.8 billion) and normalised EBITDA increased by 27.9% to R1 161 million (2017: R908 million). This is due to the continued strong growth in molecular imaging in the UK, good growth in Italy and Ireland, the acquisitions of the Italian clinics, Imed and Centro Alfa, as well as Piramal Imaging SA, the inclusion of their results for the full 12 months in 2018 (2017: 10.3 months) and the weakening of the rand against pound sterling and the euro.
Alliance Medical continued to benefit in the UK from excellent molecular imaging results on the back of a 15% growth in PET-CT scan volumes within the PET-CT contract. Alliance Medical also opened its first integrated diagnostic centre (IDC) in the UK at Colchester.
Scanmed revenue for the year increased by 15.1% to R1 260 million (2017: R1 095 million). Normalised EBITDA increased by 93.2% to R85 million (2017: R44 million) with the EBITDA margin increasing to 6.7% (2017: 4.0%). These strong results are primarily as a result of the business turnaround driven by the management team and the continued integration and efficiency initiatives.
In addition, new four-year Narodowy Fundusz Zdrowia (NFZ) contracts covering 95% of the Scanmed business have been concluded at an improved average pricing.
In September 2018 the board accepted an offer from the global investment firm Kohlberg Kravis Roberts and Co LP. (KKR) of 80 rupees per share for the Life Healthcare equity shareholding in Max Healthcare Institute Limited (Max) for approximately R4.3 billion before costs. The offer is subject to the signing of a sale agreement and regulatory approvals.
In southern Africa, the Group expects continued conservative growth in PPDs with continued good growth in complementary and healthcare services. The Group will add 80 mental health beds during the second quarter of 2019.
Alliance Medical will continue to execute on its growth strategies and in the UK good PET-CT volume growth is expected to continue. In addition, the UK business will look to further roll out the integrated diagnostic centres (IDC’s) while focusing on signing additional long-term contracts. The businesses in Italy and Ireland are expected to show good growth on the back of volume increases, the growth of the clinic business in Italy as well as introducing the clinic model to Ireland. Scanmed is also expected to grow in line with the first half of the 2018 financial year.
“Life Healthcare has once again delivered a strong overall financial performance during the period and is well positioned to grow on the back of continued operational excellence, an evolving business model covering the broader spectrum of healthcare, enhanced business analytics and unlocking value through the integration of the businesses.
“The contribution of our doctors, nurses, other healthcare professionals and employees of Life Healthcare Group has greatly enhanced the quality of our performance and I thank them for their efforts”, concludes Viranna.