Life Healthcare delivers strong performance for 2021
Life Healthcare Group Holdings Limited (JSE: LHC), one of South Africa’s largest healthcare providers, today released strong results for the financial year ending 30 September 2021.
Highlights of the financial year include:
- Strong overall performance across the Group
- Exceptional performance from Alliance Medical Group (AMG) with diagnostic imaging volumes higher than pre-COVID-19 levels in all major geographies
- Good results across the southern Africa operations
- Group revenue increase of 12.7% year-on-year for FY2021 taking revenue to R21.7 billion
- Group normalised EBITDA increased to R5.1 billion a 21.6% growth against FY2020
- Cash generation within the Group remains strong and net debt to normalised EBITDA reduced to 1.82x as at 30 September 2021 compared to 2.96x at 30 September 2020
The Group’s FY2021 performance was driven by an exceptional performance from our international operations, AMG. AMG reported imaging volume growth higher than pre-COVID-19 levels in all major geographies, owing to a rebound in demand as COVID-19 restrictions were eased, as well as specific COVID-19-related contracts undertaken. Revenue growth in British pounds for FY2021 was 21.1% higher than the prior period with normalised EBITDA in British pounds increasing by 40.7%.
Southern Africa’s solid performance was attributed to continued sequential improvement across all operations which saw elective surgical cases returning to our facilities as lockdown restrictions were eased between COVID-19 waves. Operations were impacted by the second and third COVID-19 waves, each of which was more severe and longer than prior waves. We have become more adept at managing the transition between COVID-19 waves and the related changes in case mix, when surgical and non-COVID-19 medical cases are displaced as COVID-19 cases surge and then wane.
“The southern African operations have delivered 10.3% revenue growth year-on-year for FY2021 with a 26.7% increase in revenue for the second half of our financial year (the six-month period to September 2021, H2-2021) compared to the same period in 2020 (H2-2020). The southern Africa revenue for the twelve months was RR19.0 billion. The normalised EBITDA margin for southern Africa was 17.1% compared to 16.8% for FY2020, while the normalised EBITDA margin for the H2-2021 period has improved to 17.6% compared to 8.5% for H2-2020, demonstrating the pleasing operational improvements we delivered during the year,” Group Chief Executive, Peter Wharton-Hood says.
Group revenue increased by 12.7% for FY2021 with Group normalised EBITDA increasing by 21.6%. Cash generation within the Group was strong with cash generated from operations being R5.7 billion. This cash generation and the disposal of Scanmed during the current financial year resulted in net debt to normalised EBITDA to reduce to 1.82x versus 2.96x at 30 September 2020. Given the strength of our balance sheet we have now resumed dividend distributions and the Board declared a final dividend of 25 cents per share.
Wharton-Hood says the Group’s key objectives for 2021 were to improve operations; continue delivering high quality outcomes; to enhance the partnership of AMG in the UK and Europe with the public sector and private sector; enter southern Africa’s imaging market as well as review and optimise its current portfolio.
“We delivered a strong operational and financial performance. Our Group's internal energy, commitment to caring and Making Life Better for our patients continues to reflect in our quality indicators. Our AMG business has delivered exceptional growth and margin improvement. Some of AMG’s performance came from COVID-19-related contracts which have now ended, but we have also seen good underlying demand for our services across the UK, Ireland and Italy. There has also been an impressive improvement within our southern African operations, although our hospital and complementary services are not yet back to pre-COVID-19 levels. We have made progress with our objective of entering the southern African imaging market. The Health Professionals Council of South Africa has also made a decision to allow radiographer employment, which bodes well for us in terms of entering and partnering with the local imaging market. As far as reviewing and optimising our current asset portfolio is concerned, we have completed the disposal of Scanmed and absorbed the MyLife Healthcare Centres into Life Employee Health Solutions, ” added Wharton-Hood.
Earnings per share (EPS)
The Group’s results also showed an increase in EPS from continuing and discontinued operations to 120.6 cents versus the loss of 6.4 cents reported for the prior financial year. This is primarily due to the strong operational performance across the Group, as well as the impact of the impairment of R793 million recognised in the prior period relating to Scanmed which reduced FY2020 EPS by 54.5 cents. EPS from continuing operations (excluding the impact of Scanmed) improved by 136.3% year-on-year to 114.6 cents (FY2020: 48.5 cents).
As far as vaccinations are concerned, the Group reported that the UK and Europe were making good progress with vaccinating the bulk of their populations. 90% of all AMG healthcare workers have received their first vaccine. In southern Africa, c.80% of all employees, doctors and healthcare workers as well as contractors were vaccinated. The Group is proud to continue assisting in the South African Government’s countrywide vaccination programme with:
- Life Healthcare operating 22 vaccination sites at its facilities utilising 320 staff
- Having carried out 380 000 vaccinations to date
Furthermore, the Group also reported that it will begin the rolling out of its mandatory vaccination policy from 1 December 2021.
On the Group’s future outlook, Wharton-Hood says he remains cautiously optimistic given ongoing COVID-19 uncertainty but expects continued growth and margin expansion.
“Once again, we wish to thank our employees, doctors, allied healthcare professionals and other stakeholders for their continued support, whom without our performance and successes would not be possible,” concluded Wharton-Hood.