Private healthcare group Healius has done what it was expected to do after selling off its GP business and revealed plans for a large share buyback.
The day hospital and pathology operator last month confirmed it had finalised the sale of its medical centres business to BGH Capital for $483 million.
It will now concentrate on pathology and daycare hospitals – a strategy it explained in greater detail in an investor day function yesterday.
The company intends to launch its on-market share buy-back program later this month, will pause ahead of its half-year results blackout period in February, and then resume it through the remainder of 2021 until the money is exhausted.
Investors liked the news and Healius shares were up more than 7% at $3.90 as the illusion of ‘free money’ money in buybacks always grabs the attention of punters especially.
Healius unveiled a $200 million share buy-back plan and provided further details of its $80 million in cost savings up to 2023.
A big part of its future will be COVID test processing and the business is still doing 7,000-10,000 tests each working day across the country.
The testing and eventually other work will continue to be a big business for the company looking out a year or two.
The investor day event was told the company’s pathology business continued its strong revenue growth in October and November which was driven by a mix of COVID-19 testing volumes and the on-going recovery of non-COVID-19 revenues.
Non-COVID revenues are trending up to be flat year-on-year.
The company said on Wednesday that it plans to improve returns to investors through cost-cutting rather than revenue growth.
It will now focus is on investing up to $90 million to digitise its systems, which could save as much as $20 million a year from 2024.
“With the large capital envelope and cash generation expectations, we can return funds to shareholders,” the business said in a statement to the ASX.
Its major Chinese shareholder Jangho offloaded its $331 million stake in the company last week.
Healius also revised its dividend payout ratio to a target of 50% to 70% of reported net profit after tax. It didn’t pay a final dividend for the year to June 30. It did pay a delayed interim of 2.6 cents a share in October.
The company said the “sustainable dividend policy (will) provide certainty to shareholders and flexibility to the business.”
