Life Healthcare will report a drop of up to 26% in headline earnings per share (HEPS) even as revenue grew and it saw increased patient stays in its hospitals and mental health clinics, and a rise in sales of its diagnostic drug used in the US for Alzheimer’s patients.
The group said HEPS would be 10%-26% lower as it faced rising costs including salaries, higher interest on debt, load-shedding and increased expenditure on IT.
HEPS is estimated to be 78.1-95.6c, from 106.1c previously.
After falling as much as 4.7% earlier, by 1.30pm the company’s share price was down 4.1% to R18.70.
The hospital group with more than 6,500 beds in SA issued a detailed trading update for its year to end-September on Wednesday.
Most of its divisions are growing with the number of patient days in its hospitals up by 10.2%.
Renal dialysis treatments grew 10.8% during the financial year “demonstrating the resilience of this service” and early evidence of uptake of its integrated renal product. Life bought 51 dialysis clinics in 2023, as it expands into kidney treatment.
It is also buying up radiography practices from private doctors.
It said the diagnostic imaging business in SA had strong underlying activity and revenue growth.
Scan volume growth came in at 92% year on year but this was not an exact comparison as it was comparing a full 12 months of activity in the year compared to a shorter period in 2022, when it bought two radiography practices.
The group has excluded its UK imaging business Alliance Medical from results as it is up for sale to iCON Infrastructure Partners.
Group revenue growth from continuing operations is expected to be 7%-13%. It is seeing growth in the division that houses a drug used in diagnosis of Alzheimer’s disease in the US.
Neuraceq is a radioactive tracer. It is designed to stick to beta amyloid plaques in the brain, which are present in patients with the disease.
In the middle of the year, the US Food and Drug Administration (FDA) approved a new drug to treat early stage Alzheimer’s patients, thus driving demand for Life’s diagnostic tracer, with some US health insurers have also approved payment for its use.
Sales of patients paying for the diagnostic drug privately grew 30% and the use of Neuraceq by 8%.
In SA, Life hospital mix of surgical patients and medical patients were split by about half for both illness and surgery, a ratio very similar to 2019 levels. This shows how hospital patients and treatment have normalised since the pandemic when non-emergency surgeries were cancelled.
Patient days in mental health clinics grew by 8.4%.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.