Life Healthcare gets offer for Polish operation


Life Healthcare gets offer for Polish operation

Published Date: 2020-11-17 | Source: Stephen Gunnion | Author: Stephen Gunnion

Life Healthcare gets offer for Polish operation

The offer is lower than the carrying value of Scanmed, resulting in an additional impairment.

Life Healthcare has received an offer for Scanmed, the Polish private hospital business it bought in 2014. However, the offer price will result in an impairment, further impacting full-year earnings.

The private hospital group said the offer was lower than Scanmed's carrying value of about R1.5 billion at the end of September. As a result, it said it would impair its investment by R635 million to reflect the value of the offer. That takes the total impairment relating to the Polish company this year to R795 million, valuing it at about R840 million.

Scanmed operates in both the hospital and outpatient segments in Poland. It has been impacted by changing regulations, including double-digit tariff cuts in 2017. It gets 80% of its business from the government, making it vulnerable. Life Healthcare will retain a footprint in Poland through UK-based diagnostic services company Alliance Medical.

As a result of the additional impairment, Life Healthcare said it would report a loss of between 3.6c and 8.6c per share for the year. Last week, it said it expected a decline of 77% to 80% from the 176.4c previously reported. The impairment is excluded from headline and normalised earnings per share, which are still likely to be down by 43%-48% and 46%-50% respectively. The group's second-half performance was significantly impacted by Covid-19 and the resultant lockdown.

It expects to release its results on 19 November. Its shares rose 4.1% to R17.17 yesterday.

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