Life Healthcare passes on dividend due to Covid


Life Healthcare passes on dividend due to Covid

Published Date: 2020-11-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Life Healthcare passes on dividend due to Covid

The private hospital group has reported a loss but says activity is picking up at its hospitals.

Life Healthcare has reported a full-year loss due to the impact of Covid-19 on its hospitals and after it impaired its investment in Polish business Scanmed. It hasn't declared a final dividend for the year so it can preserve cash due to current trading conditions.

After a strong first half, the private hospital operator said its performance over the second six months was significantly impacted by the pandemic, including additional costs and lower activity levels. It lost an estimated R2.3 billion in revenue and R1.8 billion in normalised earnings before interest, tax, depreciation and amortisation (EBITDA) from its Southern African operations as a result of the pandemic. In the UK, Covid-19 cost its Alliance Medical business about R437 million in revenue and R291 million in normalised EBITDA.

Earlier this week, the group said it had received an offer for Scanmed that was below the carrying value of the business at the end of September, resulting in an increased impairment of R793 million. On top of that, its attributable loss included a deferred tax charge on the unrecognised exchange gain on a loan with Scanmed of R133 million and a R186 million provision for additional expected credit losses. These were offset by efficiency programmes that contributed R125 million.

Revenue fell 1.1% to R25.4 billion for the year ended September as a decline at its Southern African operations was balanced by higher revenue from its international diagnostic and healthcare services. Normalised EBITDA declined by 24% to R4.35 billion. It reported a loss per share of 6.4c, down from earnings of 176.4c last year. Headline earnings per share (HEPS), which exclude the Scanmed impairment, dropped 45% to 48.7c. Normalised HEPS were 48% lower at 61c.

Life Healthcare said while it was preparing for a potential second wave of Covid-19 at its Southern African hospital the lessons learned during the first outbreak would help it to respond effectively to future challenges. It also expected underlying activities to continue to improve, resulting in higher occupancies. In Europe, diagnostic services would continue to drive efficiencies in the "new normal" of lower scanner utilisation due to Covid-19 protocols.

The company's shares fell 0.9% to R17.46 yesterday.

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