The share price of private hospital operator Life Healthcare surged on Wednesday following the news that it has appointed Barclays and Goldman Sachs to evaluate unsolicited offers to buy its diagnostic imaging services subsidiary Alliance Medical Group (AMG).
At 11.59am, the share price of the company, valued at R24.89bn on the JSE, jumped 12.15% to R19.02, making it its second best day, beaten only by the 22.63% gain on November 5 2020.
But the company, valued at R24.89bn on the JSE, said that it is confident in the wholly owned subsidiary, adding it is “strategically important” to the group.
“Notwithstanding that AMG remains core to the group, the board is of the view that it has an obligation to evaluate the proposals received and assess the implications thereof in the context of the group’s strategy,” it said in a trading statement on Tuesday for the four months end-January.
“No decisions have been taken, other than to undertake this initial assessment,” the group added.
Life Healthcare acquired AMG in 2016, which generated more than one-quarter of total group revenue in its 2022 financial year.
Operating at 236 sites in the UK and 12 European countries, it also manufactures and distributes radioisotopes, atoms with an unstable nucleus that emit radiation as they decay, which are used in medical imaging.
Life Healthcare comprises two segments: the Southern Africa one, which focuses on acute hospital and complementary services, and the International segment, consisting of AMG and Life Molecular Imaging (LMI).
In terms of the group’s overall performance, the Southern African segment benefited from greater patient numbers as admissions rose 14% year on year, paid patient days (PPDs) 13% and theatre minutes 11%.
However, a slowdown is expected in February and March following the strong recent performance.
Revenue advanced 11% year on year as spending on diesel for generators to combat load-shedding surged fivefold to R25m.
“Due to the company’s investment in generators and solar plants in prior financial years, the operational impact of the continued Eskom power outages has been minimal, other than the increased cost,” the company said.
The revenue of the international segment was up close to one tenth as it benefited from stronger diagnostic imaging volumes, but warned high inflation worldwide is driving up its costs.
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