The nation’s second largest private hospitals operator Healthscope has joined its sector peers in the shape of Sonic and Primary Health Care in a less than spectacular performance in 2016-17.
Since saw a 5% fall in profit, Primary a bigger fall after impairments and Healthscope joined with the latter in writing down the value of some of its assets and reporting a 39% plunge in profit for the year to June.
Primary Health Care last Friday reported a full-year loss of $517 million, after writing-down the value of its medical centres business.The company made a non-cash impairment charge of $587 million in relation to its Medical Centres unit and underperforming sites.
Healthscope was hit by a smaller impairment loss of $54.7 million in relation to the sale of its medical centres announced last week and non-operating expenses after tax of more than $17 million.
The market responded by selling off the shares rather violently – at one stage they were down more than 16% and ended with a loss of 15.3%, or more than 33 cents to close at $1.855.
That’s the lowest the shares have been since the company re-listed back in July, 2014 after four years in the clutches of private equity.
Dividend has been trimmed as a result – a final unfranked dividend of 3.5 cents a share was declared, taking the full year dividend to 7 cents per share compared with 7.4 cents per share a year ago.
Apart from the impairment, the company blamed weakness at its key hospitals division where earnings where dragged lower by softer market conditions and subsequent margin pressure thanks to costs increasing more than health fund price increases. Despite that the division managed a small improvement, but it was less than budget.
Full year 2017 group revenue climbed 3.8% to $2.318 billion while group operating earnings before interest, tax, depreciation and amortisation (EBITDA) rose 3.5% to $411.4 million.
Statutory net profit for the period fell 38.8% to $110.9 million with the bottom line impacted by the impairment loss of $54.7 million. Operating after tax profit fell 5.6% to $180.0 million.
New CEO Gordon Ballantyne expects 2017-18 full year operating EBITDA for the company’s hospitals division to be broadly inline to that of 2016.17, which means no real gains of any note.
