Advanced Health wraps up rights issue


Advanced Health wraps up rights issue


Published Date: 2021-04-07 | Source: Stephen Gunnion | Author: Stephen Gunnion

Advanced Health wraps up rights issue

The day hospital group raised capital to help relieve cash flow pressure exacerbated by Covid-19.

Advanced Health says just over two-thirds of its shareholders took up last week's rights issue aimed at relieving cash flow pressures.

The day hospital group offered 97 rights offer share for every 100 Advanced Health shares held at a subscription price of 24c each. That was an 8.6% discount to the 30-day average price of its shares on 28 January. it aimed to raise a maximum of R67.1-million through the capital raise.

Advanced Health said its facilities were long-term investments with settling-in periods of two to three periods before becoming profitable. It established and opened 11 day hospital facilities over a relatively short period of time which resulted in it remaining in a loss making position in the past. This continued into its 2020 financial year, mainly due to Covid-19, the derecognition of a portion of a deferred tax asset and the first time adoption of the new IFRS 16 accounting methodology, which has very high interest and depreciation charges.

The historic losses within the SA operations resulted in immense cash flow pressures. These were further increased by Covid-19 after it lost about 95% of its revenue during last April's hard lockdown.

Even though the pandemic had a negative impact on its results for the year to end-June 2020, in the following six months it said there was a slow but steady increase in revenue when compared to the same period of the previous year. Group revenue increased by 30%, with SA revenue increasing by 19%. It said some of the SA facilities that were previously loss making were already showing signs of being cash flow positive.

In a voluntary update last month, the group said turnover at its SA and Australian operations increased by 19% in January and February from a year earlier, benefitting from the uncertainty surrounding Covid-19. With no long-stay medical cases or critically ill patients, and all patients undergoing a PCR test prior to surgery, it said its facilities provided safe and infection-free environments.

The company's shares closed 3.7% down at 26c in thin trade yesterday.


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