Picture: ISTOCK
Picture: ISTOCK

Life Healthcare’s enlarged international business accounted for nearly a quarter of group revenue in the year to end-September, from just 7% previously, chief financial officer and acting CEO Pieter van der Westhuizen said on Tuesday.

The private-hospital operator bought 94% of UK-based Alliance Medical Group in November 2016 and increased its shareholding in India’s Max Healthcare Institute in August 2017 to 49.7%. These deals helped the group to grow revenue by 27% to R20.8bn in its 2017 financial year.

However, normalised earnings per share fell 45%, partly due to one-off items related to the Alliance Medical acquisition and the further impairment of the group’s investment in Polish company Scanmed.

Life Healthcare shares closed 6.8% up at R26 on Tuesday.

The firm said while its UK business continued to benefit from a growth in scan volumes, it was "experiencing increased competition on the mobile diagnostic business as more capacity is added to the market".

However, it had been less affected by the National Health Service’s (NHS’s) funding constraints than other private hospital groups, said Adam Pyle, Life Healthcare’s group strategy and investor relations executive.

Pyle said the group would monitor the NHS’s funding commitments, as a reduction in nonurgent medical treatment would ultimately weigh on demand for scans.

Aslam Dalvi, associate portfolio manager at Kagiso Asset Management, said while there had been concern that greater competition and NHS funding constraints could squeeze Life Healthcare’s margins in the UK, the near-term outlook for Alliance Medical remained "broadly positive as the business continues to benefit from relatively robust volume growth".

Alliance Medical, with an enterprise value of R13.9bn and half its turnover in the UK, grew revenue 12% to R4.4bn.

On Monday, Netcare CEO Richard Friedland said the NHS’s "deferral" of nonurgent medical treatments was weighing on BMI Healthcare, Netcare’s majority-owned UK business.

BMI Healthcare made an operating loss of £20.6m in the year to September, from a profit of £28.7m in 2016.

"The NHS is running very hot at the moment, it’s almost at 90% occupancy and the waiting list has risen to 4.1-million as of the end of August – the highest in a decade," he said. "If it continues to 2019 with this trend, it will reach 5-million, or 10% of the British population."

Life Healthcare’s revenue from Southern African operations rose 4.3% to R15.9bn. Revenue growth was held back by lower activity, with paid patient days declining 1.7%, van der Westhuizen said.

The board appointed Dr Shrey Viranna as group CEO, from February 2018.


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