Life Healthcare’s growth is short-term pain for shareholders
Life Healthcare’s R14bn acquisition of UK-based Alliance Medical Group boosted its revenue by 27% to R20.8bn. But finance costs of R1.3bn dragged the group’s after-tax profit down 43% to R1.1bn for the year to end-September, the private hospital operator reported on Tuesday morning. Besides its acquisition of 94% of diagnostic firm Alliance Medical in November 2016, Life Healthcare invested R428m in raising its holding in India’s Max Healthcare to 49.7%. A rights issue to fund these acquisitions saw its shares in issue grow 17%, and this dilution contributed to headline earnings per share declining 57% to 77.4c. Life Healthcare’s southern African subsidiaries include Life Esidimeni, the private psychiatric hospital group from which more than 3,000 patients were transferred by the government to unlicensed operators, resulting in 140 deaths. Revenue from its southern African operations grew 4.3% to R16bn despite paid patient days at its hospitals declining by 1.7%. "Overall lower acti...
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