Life Healthcare Group Holdings Ltd has announced a robust operating performance for the first half of its financial year. The company showcased significant growth driven by strong patient activity. Also, the benefits reaped from strategic acquisitions completed in the latter half of 2024 contributed.
For the six months ended March, the diversified healthcare provider reported an 8.1% increase in revenue, reaching R12.1 billion. This healthy top-line growth translated into a 9% rise in normalised earnings per share (EPS) from continuing operations. It settled at 49 cents.
Strategic Divestment and Shareholder Returns
In a significant move earlier this year, Life Healthcare signed a R13.9 billion deal to divest its Life Molecular Imaging (LMI) business to Lantheus Radiopharmaceuticals UK. The proceeds from this sale, expected to conclude in the second half of the financial year, are earmarked to be returned directly to shareholders.
Comprehensive Continuing Operations
Life Healthcare's continuing operations encompass a broad spectrum of healthcare services, including:
- Hospitals segment: Focused on acute hospitals.
- Complementary services segment: Incorporating mental health, acute rehabilitation, renal dialysis, oncology, and diagnostics.
- Healthcare services segment: Comprising Life Nkanyisa and Life Health Solutions.
- Solid Profitability and Increased Dividend
The group also reported a solid 5.9% year-on-year increase in normalised earnings before interest, tax, depreciation, and amortisation (EBITDA), reaching R1.86 billion. Reflecting its confidence in the company's performance, Life Healthcare declared an interim dividend of 21 cents per share. This marks a 10.5% increase.
Patient Activity and Network Benefits
A key driver of the strong performance was robust activity growth. It benefited from network arrangements established in previous years and a heightened demand for services. Paid patient days (PPDs) saw a 2% increase on a like-for-like basis. This surge in activity contributed to a higher weighted average occupancy rate of 68.6%, up from 66.6% in the prior period.
Future Expansion and Capital Investment
Looking ahead, Life Healthcare's Southern African business is poised for continued expansion of its underlying asset base. The group plans to add:
- 58 acute hospital beds.
- 24 acute rehabilitation beds.
- Commence construction of the new 140-bed Life Paarl Valley Hospital in the Western Cape.
Furthermore, the acute business will see the addition of a new cath lab and a new vascular lab.
The diagnostics business is also set for further growth. Additional transactions are anticipated in the second half of the year, alongside the establishment of two new PET-CT sites.
Life Healthcare aims to drive occupancies in its Southern African business to 70%, with PPD growth projected to be around 1.5%. The group anticipates a full-year capital expenditure of approximately R2.3 billion to support these growth initiatives.