Life Healthcare Group Holdings’ share price was a top performer on the JSE yesterday, rising as much as 13.2% after it reported solid trading in the four months to January 31 and that it has received offers for its UK-based AMG business.
The private healthcare and hospital group said it had received “several unsolicited proposals” from third parties to acquire AMG. The share price traded at R19.21 yesterday afternoon, still well off the R24.15 that the share traded at a year ago.
AMG is one of the largest independent diagnostic and molecular imaging providers in the UK and Europe, and also owns five cyclotrons in the UK and six cyclotrons across Europe. It operates 236 sites across the UK and 12 other European countries and is a partner to the National Health Service (UK and Northern Ireland), Azienda Sanitaria Locale (Italy) and Health Service Executive (Ireland).
For the year to September 30, 2022, AMG added R7.7 billion to the group’s R28.2bn revenue, and earnings before interest tax depreciation and amortisation (Ebitda) of R1.6bn to the group’s R5bn Ebitda.
Life Healthcare’s board said yesterday AMG was strategically important to the group and the executives and AMG management were confident in AMG’s prospects and the potential of its strategy.
However, “the board is obliged to evaluate the proposals received and assess the implications in the context of the group's strategy,” it said. Barclays and Goldman Sachs had been appointed as advisers to assist in evaluating the proposals.
Meanwhile, in the four-month period, Life Healthcare’s southern African business experienced “a sound recovery” in activity with admissions for the review period up by 14% on the prior period.
Paid patient days (PPDs) increased 13% resulting in overall occupancies increasing from 55% in prior year to 62%.
Acute hospital PPDs grew by 13.5% on the prior period with a slightly lower length of stay as the normalisation of our case mix continues. Theatre minutes saw good growth, with minutes increasing by 11%.
“Our expectations are that the growth in activities will slow down during the months of February and March due to the strong activity growth experienced in those months during the prior period.”
The Healthcare Services segment had a solid first four months with a good performance from Life Nkanyisa. The recovery of the Life Health Solutions business continued.
Revenue for the first four months was up 11%. Earnings before interest tax depreciation and amortisation (Ebitda) margins continued to improve with Ebitda increasing by 16%.
Overall costs related to load shedding were not significant, but the increase versus the prior period was substantial, with diesel costs rising to R25 million in the first four months compared to R5m in the prior period.
Network deals with the Government Employee Medical Scheme and Medscheme were concluded late last year and the group was now the foremost designated services provider.
Diagnostic imaging volumes across all markets had increased by 2.4% and ahead of pre-Covid numbers. UK PET-CT scans had grown by 8.9% and record daily volumes were achieved in PET-CT in the UK and diagnostic imaging in Ireland in January 2023.
Diagnostic imaging volumes have grown by 6.4% and PET-CT scans by 11.8% compound annual growth, since the acquisition of AMG in 2016.
The international business grew revenue by.9.2% over the four months.
BUSINESS REPORT