Life Healthcare hospital group in good shape after Indian sale

PRIVATE hospital group Life Healthcare said yesterday that the disposal of its Max Healthcare in India had led to a hedging loss of R406 million in the year to end September.

The group made a profit of R1.5 billion on the disposal of Max Healthcare, but the windfall was reduced by the impact of the mark-to-market loss on the foreign exchange option contracts taken out to protect the proceeds.

“These option contracts resulted in a loss of R406m before tax of R114m,” the group said.

The group said in a trading guidance that the disposal was concluded during the second half of the financial year and funds were received in June.

In January, Life Healthcare said that it had entered into an agreement with Radiant Life Care to dispose of its 49.7 percent stake in Max Healthcare for 80 rupees a share (R16.45 a share), equalling R3.8bn at hedged exchange rates before costs and taxes.

“The net cash proceeds of R3.8bn, after withholding taxes, the hedge costs and transaction costs was utilised to repay debt,” the group said.

The group said it expected its revenue to increase between 7.9 and 10.3 percent, to R25.35bn and R25.90bn from last year’s R23.49bn.

It said normalised earnings before interest, tax, depreciation and amortisation (Ebitda) would rise between 0.4 and 5.4 percent, to be between R5.56bn and R5.84bn compared to last year’s normalised Ebitda of R5.54bn.

However, its Southern Africa normalised Ebitda was projected to increase by between 4.3 and 8.2 percent, while international normalised Ebitda is expected to increase by 0.7 and 8.4 percent.

Life Healthcare said International revenue would increase between 10 and 13.2 percent, driven by growth in PET-CT scan volumes in the UK, the full-year impact of the acquisition of the Italian clinics during the second half of financial year 2018, an acquisition of scanning facilities in the UK and a solid performance in Ireland.

It said the Southern Africa operations were expected to deliver revenue growth of between 6.1 and 7.9 percent. The group said revenue per paid patient day (PPD) increased by 5.9 percent while PPDs for the full year increased by 0.8 percent.

“The Southern Africa business had an excellent second half with PPDs growing by 1.8 percent, resulting in strong revenue growth with improved operating margins,” the group said.

Life Healthcare shares rose 0.04 percent on the JSE yesterday to close at R24.67.