Life Healthcare net profit drops by half

Private-hospital operator Life Healthcare Group says net profit nearly halved in the six months to end-March partly because of losses on hedging instruments.

While revenue grew 9.5% to R12.4bn, interim profit after tax fell 46.9% to R498m as the group recorded a R370m fairvalue loss on derivative financial instruments, which are used for hedging.

Life Healthcare said its results included a marketto-market loss on foreign-exchange option contracts, which were taken out to protect the proceeds of its sale of Max Healthcare Institute shares.

These option contracts resulted in a loss of R256m net of tax.

“The loss will be offset by the higher proceeds and related profit on the disposal,” it said.

The group said normalised earnings before interest, tax, depreciation and amortisation (ebitda), a metric that ignores non-trading costs and income, grew 2.2% to R2.7bn.

The group raised its interim dividend by 5.3% to 40c a share.

“Despite a challenging healthcare trading environment, our focus on operational excellence has delivered a healthy overall performance,” the company said.

“While we expect tough operating conditions to remain, we are optimistic about the group’s growth prospects both in Southern Africa and internationally.”

In SA, the company is in talks with the government “to explore ways to improve access to quality healthcare in the country”.

In other markets, the company is expanding its radiology product development business within Alliance Medical.

Life Healthcare, led by chief executive Shrey Viranna, said growth in revenue per paid patient days in the second half was expected “to be marginally positive”.

The group would add another 80 mental-health beds and organic capital expenditure for the full year was expected to be about R1.1bn.