Healthscope Edges Up On AGM Address

  • Oct 31, 2018 AEDT
  • Team Kalkine
Healthscope Edges Up On AGM Address

Healthscope Ltd (ASX:HSO) had its annual general meeting organized as on October 31, 2018. Financial health check-up along with FY19 guidance were presented in this AGM.

3.7% rise in the group revenue up to $ 2.3 billion was posted in FY18 as compared to the prior year. 4.3% revenue growth was posted by the hospital division with all major completed projects posting a growth of 10.2% which is well above the growth booked by the private hospital market.

Private hospital market conditions have faced strong challenges during the last year. Company has revised their guidance for the hospital operating EBITDA. Hospital operating EBITDA is reported to be down by 4.1% to $344.7 million on FY17. 

Company has taken decisive action towards the improvement of operating performance. Three of the four hospital portfolios have new leaders to operate and guide. Company has closed the two underperforming hospitals and working on developing cost-effective business model for them. Effect of such actions undertaken by the company was moderately seen on the performance. Significant improvement in the hospital business was noticed during the period. 8.6% fall in the operating EBITDA in the first half was reported. Second half delivered 0.8% year-on-year growth.

Company is focusing on improving its operational efficiency and achieving cost reductions of $6 million in FY18 and over $10 million in FY19. Earnings from the pathology division in New Zealand remained well in line with the prior year. Company has faced a period of consolidation after recording organic growth period from last so many years. Company has also launched several new initiatives in FY18. One such initiative was “Back to Bedside” program. The program helps to prioritize the demands on the time through the enhanced systems and processes.

Company with its growth plan well intact has invested in the development of the five new hospitals. The addition of 75 beds and 13 operating theatres with this development has been inidcated. Projects like Northern Beaches hospital are expected to add on their contribution towards earnings growth from FY19 onwards. Group’s gearing ratio measured as net debt to EBITDA was reported at 4.5 times at the end of the FY18. The ratio is expected to reduce up to 3.0 times once the completion of the Northern Beaches hospital is done and the payment of $400 million is received in the early part of the year 2019. Sound growth in the financial performance during the year was also contributed by the sale of the Asian pathology business for approximately $279 million.

With the release of the future capital from the proposed establishment of the unlisted property trust in progress significant benefit will be received by the company. Management has presented its operating and financial outlook for the Company for the FY19. Company is taking strong actions in respect of reshaping the portfolio and achieving promising operation efficiencies. Financial performance guidance for the first quarter for the year FY19 remained strong with a growth of 10.4% reported under the hospital operating EBITDA as compared to 6.8% reported during FY18. Company has maintained its guidance at 10% for the hospital operating EBITDA for FY19. Company expects an increase in the number of public and private patient volumes over the period of next four to five years.

With the hospital ramping up to its full capacity along with Northern Beaches hospital expecting to contribute over $300 million of revenue and EBITDA margin of at least 15%, management has strong growth set up in line. With the release of report on AGM, the scrip was trading at the levels of $2.11, up 0.5% on October 31, 2018.


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