A Life Healthcare hospital in KZN. The hospital operator said that the number of beds in operation had increased from 8 557 as at March 31, 2016, to 8 702 as at March 31, 2017. Photo: Terry Haywood
Durban - Private hospital operator Life Healthcare said it expected its revenue to increase between 20 percent and 25 percent for the six months to end March, primarily due to the inclusion of the results of Alliance Medical which was acquired in November.

The company said it expected its normalised earnings before interest, tax, depreciation and amortisation (Ebitda) to increase between 11 percent and 15 percent compared to the period in 2016.

The group, however, said the Alliance acquisition could have a negative impact on its earnings. “Earnings per share and headline earnings per share are expected to be below the comparative period last year, primarily due to the impact of the acquisition of Alliance Medical and once-off items related to the investment in Poland,” the group said.

It said the revenue from Southern Africa was expected to grow marginally between 3.5 percent and 5.5 percent over the comparable period in 2016.

“Revenue was negatively impacted by the lower volumes in the hospital division in paid patient days (PPDs) of between 0.9 percent and 1.2 percent below last year,” the group said.

Life Healthcare said the numbers of PPDs as of the end of February showed an improvement as a result of better trading in March as well as Easter being in April in 2017 as opposed to March in 2016.

No growth

“Overall lower volumes have been due to limited or no growth in the private healthcare market, a greater than expected slowdown in the South African economy, an increase in active case management by medical aids away from hospital admissions and doctors going on holiday for longer periods and more frequently than anticipated,” the group added.

The group said lower PPD volumes caused occupancy levels to reduce from 69.9 percent in the comparable period to an estimated level of between 68 percent and 69 percent. The number of beds in operation had, however, increased from 8557 as at March 31, 2016, to 8702 as at March 31, 2017.

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Despite the lower trading in the Southern African Hospitals division, the Healthcare Services division continued to show good growth with revenue increasing by between 20 percent and 24 percent.

The group said it expected the normalised Ebitda for the Southern African operations to be between 2.5 percent and 3.5 percent below the similar period last year. It attributed this to lower trading in the Southern African operations and the impact of the loss of the Gauteng Mental Health contract in the Healthcare Services division in July 2016.

The Polish operations performed to expectations, but normalised Ebitda will be significantly below last year as a result of the impact of the reduction in tariffs as promulgated in Poland effective from July 1, 2016, and further cardiology tariff reductions from January 1, 2017.

Life Healthcare shares dropped 4.34 percent on the JSE to close at R26.20.