Life Healthcare says earnings were largely driven by the strong trading performance across the whole group. Photo: Supplied.
Life Healthcare says earnings were largely driven by the strong trading performance across the whole group. Photo: Supplied.

Life Healthcare’s diverse income sources help it recover from Covid -19 impact

By Edward West Time of article published Nov 19, 2021

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LIFE Healthcare Group performed well in the 12 months to September 30 following a robust performance from the international business, Alliance Medical Group (AMG) and in southern Africa, group chief executive Peter Wharton-Hood said yesterday.

Revenue from continuing operations grew by 12.7 percent to R26.9 billion, with R17.57bn being derived from hospitals in southern Africa, R1.46bn from healthcare services in the region, R7.47bn from international diagnostic services and R388m from growth initiatives.

The business was benefiting from its strategy of diversifying geographically and across business lines, he said in an online presentation.

Normalised earnings before interest tax depreciation and amortisation (EBITDA) from continuing operations increased by 21.6 percent, and the normalised EBITDA margin improved to 18.8 percent from 17.4 percent.

Overall AMG imaging activities were above pre-Covid-19 levels and revenue grew by 18.9 percent to R7.5bn.

Southern African operations grew revenue 10.3 percent to R19bn and the normalised Ebitda margin improved. A final cash dividend of 25 cents was declared.

During the year the sale of Scanmed was completed with R681m in net proceeds.

Normalised earnings per share rose 84.8 percent to 112.7 cents.

The impact of two Covid-19 waves were experienced by the group through the year, whereas in the 12 months to September 30, 2020, it experienced only one wave, although the associated lock-downs were more severe in the prior period.

Wharton-Hood said they had seen an improvement in financial results for each successive six month period since March 2020.

Earnings were largely driven by the strong trading performance across the whole group, but 2021 earnings were also positively impacted by the profit from discontinued operations of R87m.

The 2020 results were negatively impacted by Covid-19, and the impairment of Poland-based Scanmed, which reduced earnings by 54.5 cents in that period.

Net debt to normalised Ebitda improved due to the Scanmed disposal, improved trading, curtailed capital expenditure and good working capital management that was driven in part by debt collection in southern Africa.

Given the ongoing uncertainty around Covid-19, Life Healthcare had kept additional banking facilities that were created during 2020 - these available undrawn facilities amounted to R6.6bn as at September 30, 2021.

Some R1.9bn (R2bn) was invested in the past year, comprised mainly of maintenance capital expenditure of R1.5bn and growth capital expenditure of R357m.

In the southern African, Wharton-Hood said they were “cautiously confident” the group would continue to grow paid patient days, improve occupancy and expand the normalised Ebitda A margin, but negative impacts may be felt from potential fourth and fifth Covid-19 waves.

AMG anticipated to see continued good demand for its scanning services in the UK and Ireland, although the ending of some Covid-19-related contracts would provide a headwind.

Reimbursement arrangements for Aduhelm were expected to be confirmed in early 2022, which should be positive for NeuraCeq sales in the US, with similar approvals likely in Europe towards the end of 2022.

Aduhelm is the first new drug approved in the US for Alzheimer’s disease since 2003. NeuraCeq is a solution used in Positron Emission Tomography brain scan for patients.

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