Herald Sun

PRI­MARY STOCK OFF COLOUR

- TREVOR CHAP­PELL HEALTH

SHARES in med­i­cal cen­tre and pathol­ogy provider Pri­mary Health Care have tum­bled af­ter the com­pany cut its earn­ings forecast.

Pri­mary shares plunged more than 10 per cent in early trade be­fore re­cov­er­ing to close off 42c, or 8.1 per cent, at $4.77.

On Wed­nes­day, af­ter the share mar­ket had closed, Pri­mary down­graded its un­der­ly­ing earn­ings es­ti­mate for the fi­nan­cial year just fin­ished, to $400 mil­lion, from an ear­lier forecast of $410 mil­lion to $425 mil­lion.

Pri­mary blamed the re­duced earn­ings on a range of fac­tors, in­clud­ing ex­treme weather and a rel­a­tively mild cold and flu sea­son.

An an­a­lyst’s re­port from Mac­quarie Wealth Man­age­ment said Pri­mary’s earn­ings down­grade un­der­lined the ex­tent of the chal­lenges in­her­ent in its area of busi­ness, which was not re­flected in its share price.

Mac­quarie said the Fed­eral Gov­ern­ment’s freeze on the Medi­care Ben­e­fits Sched­ule — which sets the fees for GP vis­its and pro­ce­dures — meant that in­stead of an­nual fees ris­ing by about 2 per cent, prices would re­main flat un­til 2018.

Mac­quarie said the last time that sched­ule fees were frozen, med­i­cal cen­tre earn­ings grew only 0.8 per cent. “We be­lieve this will place more pres­sure on Pri­mary’s al­ready mod­est rates of earn­ings growth,” the Mac­quarie re­port said.

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