Advanced Health’s headline loss from continuing operations widened to R20.8 million in the six months to December 31, as it moves to exit the Australian market with the sale of its operations there for R522m.
The company’s Australian majority owned Presmed Australia (PMA) owns or co-owns 10 operating facilities, including day hospitals and consultation clinics in partnership with the practising doctors in those facilities in and around Sydney, Australia’s Central Coast, and Tasmania.
“In order to focus more strategically on developing and expanding its South African operations, Advanced Health has resolved to exit the Australian market and dispose of its equity interest within PMA,” the group said in its interim results released yesterday.
PresMed BidCo on December 23 entered into a binding agreement to buy 100% of PMA shares from Advanced Health and other PMA shareholders.
PresMed BidCo is owned by ICG Asia Pacific Fund IV– a $1.1 billion (R19.6bn) fund managed by London Stock Exchange-listed Intermediate Capital Group, and a consortium of management and medical shareholders.
Advanced Health will dispose of 635 274 issued PMA shares, representing its entire equity interest of 56.44%. The disposal was approved by Advanced Health shareholders at a meeting on March 28, 2023.
“The directors will focus on turning the South African operations into a profitable business through a number of strategies, including a strategic partnership with medical specialists by selling shares in the South African operating hospitals,” the group said yesterday.
Other strategies included engaging funders during tariff negotiations to ensure reasonable tariff increases were achieved. The Day Hospital Association of SA had been authorised to negotiate tariffs on behalf of its day hospital members with the medical aids to help channel more volumes to the Advanced Health Group.
There would also be a focus on marketing strategies, which included engagement with doctors, recruiting new specialists, and an emphasis on service delivery differentiation that included excellent nursing care.
“A key focus is competitive pricing in both the private market as well as low-income medical schemes. The fee structure within Advanced Health is attractive to both the funders and private patients,” Advanced Health’s directors said.
Demand for day hospitals continued to grow, they said. Medical schemes had started channelling same-day procedures to day hospitals, as members who choose to undergo day surgical procedures in traditional hospitals were having to pay additional co-payments.
“There has been a downgrade of members into lower medical-aid options due to the unaffordability of private healthcare, and Advanced Health is aligned to accept the majority of the low-cost medical options,” the group said.
In the six months, the Advanced Health Group reported a profit of R400 000 from continuing operations, versus a profit of R1m at the same time last year.
Its Australian operations which have been classified as “a discontinued operation”, reported a profit of R23.6m (2021: R22.7m).
The losses reported by the South African operations increased by R1.2m to R23.1m in December, 2022. Revenue (from continued operations) increased by 22% to R126.6m. Cash generated from operations decreased by 5% to R76.8m.
Advanced Health’s share price increased 2.2% to 46c yesterday morning, slightly higher than the 41 cents at the same time a year ago.
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