Life Healthcare share price surges along with earnings

Key takeaways

1. Strong Financial Performance: Life Healthcare Group reported a 7.8% growth in group revenue for the six months ended 31 March 2024, driven by increased activity in southern Africa and significant growth in NeuraCeq® doses sold.

2. Significant Transactions and Dividends: The group concluded the disposal of Alliance Medical Group, receiving R10.2 billion in net cash proceeds. A special dividend of R8.8 billion was paid from these proceeds. Additionally, an interim cash dividend of 19.0 cents per share, marking an 11.8% increase over the prior period, has been declared.

3. Headline Earnings Improvements: Headline earnings per share (HEPS) grew by 63.0% to 65.2 cents, and normalised EPS (NEPS) increased by 8.4% to 44.1 cents.

4. Strategic Acquisitions: The group acquired imaging equipment in KwaZulu-Natal for R55 million and received approval for the acquisition of 43 Fresenius Medical Care renal dialysis clinics for approximately R705 million.

5. Board Committee Changes and NHI Act Monitoring: The Risk, Compliance, and IT Governance Committee will be dissolved, with responsibilities moved to existing subcommittees.

Life Healthcare Group Revenue and Earnings Surge

Life Healthcare Group Holdings Limited has reported a notable financial performance for the six months ending 31 March 2024. The group's revenue from continuing operations increased by 7.8% to R11.74 billion, driven by strong growth in NeuraCeq® doses sold and robust activity in southern Africa. Earnings per share (EPS) for continuing and discontinued operations surged by 540.6% to 242.8 cents, largely due to a R2.8 billion once-off gain from the disposal of Alliance Medical Group (AMG). Headline earnings per share (HEPS) also saw a significant increase of 63.0% to 65.2 cents, reflecting the company's strategic decisions and ongoing efforts to enhance profitability.

Strategic Acquisitions and Divestments Boost Financial Position

Life Healthcare concluded the disposal of AMG on 31 January 2024, receiving R10.2 billion in net cash proceeds, which strengthened the group’s financial position. A special dividend of R8.8 billion was paid to shareholders on 8 April 2024. Additionally, the group acquired imaging equipment in KwaZulu-Natal for R55 million and received approval for the acquisition of 43 Fresenius Medical Care (FMC) renal dialysis clinics, further enhancing its non-acute services footprint. The total transaction value for these acquisitions amounts to approximately R705 million, with about R280 million funded through debt. These strategic moves underscore Life Healthcare’s commitment to growth and expanding its service offerings.

Dividend Declaration and Future Outlook

The Board of Life Healthcare has declared an interim cash dividend of 19.0 cents per share, an increase of 11.8% over the prior period. Looking ahead, the group anticipates continued activity growth in its southern African operations, driven by network deals and recent acquisitions. The group expects a 6-7% revenue growth for FY2024, supported by higher occupancy levels and operational efficiency measures. Additionally, Life Molecular Imaging (LMI) is projected to see strong sales growth for NeuraCeq®.