Life Healthcare Group’s annual headline earnings slipped 4.5% to 106.1 cents per share even though it saw a strong recovery in surgical and medical activities in southern Africa post the pandemic that resulted in a 9.1 % increase in paid patient days (PPDs).
CEO Peter Wharton-Hood said yesterday that group revenue climbed 4.9% to R28.2 billion in the year to September 30, which consisted of a 5% increase in southern African revenue to R20bn, a 2.8% increase in international revenue to R7.7bn and R555 million revenue contribution from growth initiatives.
However, a number of one-off items impacted earnings, including a co-investment share scheme for senior management, that resulted in a R136m increase in the share scheme charge.
The ending in September 2021 of contracts to assist the UK’s National Health Service in providing Covid-19 scanning services through the mobile fleet also impacted earnings. The mobile fleet had been redeployed and was now providing services at the normal tariff.
The group also reviewed its contingent consideration liability raised related to the acquisition of Life Molecular Imaging (LMI).
“Our expectation for reimbursement has been delayed by two years in the US and three years in Europe. The group has therefore released R437m, which impacts the current period’s results.”
Earnings in the prior period were also impacted by a R87m profit from the disposal of Scanmed in Poland.
The group was also disputing the interpretation by South African Revenue Services of a contractual arrangement between Life Healthcare and its subsidiary companies related to payroll services and the resultant VAT treatment.
“Even though there is no loss to the fiscus and the group’s strong legal and tax opinions on the matter, the group has prudently provided R199m.” The balance sheet remained strong. During the year the group raised R1bn from an inaugural corporate bond programme, which was 4.5 times oversubscribed.
“We demonstrated significant progress this year in executing on our long-term strategy, and we are well-positioned for sustainable growth in 2023 and beyond. The group maintains its momentum, and we continue to demonstrate our resilience with robust cash generation and a strong balance sheet,” Wharton-Hood said in a statement.
The International business maintained delivery of underlying growth of 10%, and demand for diagnostic imaging and radio pharmacy services were expected to grow as the UK and Europe continued to promote healthcare policies that lead to earlier diagnosis of cancer and other diseases.
“Having weathered the storm, we are bullish about volume growth in the first half of 2023 and expect to see PPD (Pharmaceutical Product Development) volumes grow between 5% to 6% in southern Africa. We also anticipate growth of between 5% to 7% in our UK and European diagnostic imaging market,” he said.