Acurity lifts 1H earnings 22% on increased DHB work, cost cuts

Monday 24th November 2014

Acurity Health Group, the hospital operator set to be taken private by its three biggest shareholders, lifted first half by profit 22 percent after increasing revenue from district health board work, and continued to clamp down on costs.

Net profit rose to $4.9 million, or 29 cents per share, in the six months ended Sept. 30, from $4.1 million, or 24 cents, a year earlier, the Wellington based company said in a statement. Stripping out unrealised fair value movements in interest swaps, adjusted earnings climbed 37 percent to $5 million. Revenue gained 14 percent to $56.5 million.

"There has been a good increase in revenue volumes driven in part by pre-election DHB outsourcing and encouragingly some early signs of an increase in private patient demand," chairman Alan Isaac said. "Overall we report results in line with the recent forecast contained in the market update provided as part of the statutory process in dealing with the takeover offer from Connor Healthcare Ltd."

Acurity is set to be taken private by Connor Healthcare, which last week passed the 90 percent threshold needed to mop up the remaining shares. The vehicle is owned by Sydney based Evolution Healthcare, which took an 11 percent stake in Acurity last year at $5.50 a share and also owns Boulcott hospital in Hutt City. It has a takeover implementation deed with Acurity's majority shareholder, Austron, under which Austron will become the 75 percent shareholder and Evolution the 25 percent shareholder in Connor if the offer is successful.

They tweaked the takeover earlier this month, seeking a two for 11 fully imputed taxable bonus share issue to let shareholders gain access to the $2 million in imputation tax credits. The deal meant Connor would cut its price per share to $6.13 from the $7.25 offer, leaving the total consideration paid to investors intact.

The takeover still needs sign off from the Commerce Commission, which is expected to make a decision at the end of this week.

Acurity anticipates to continue growing revenue over the next 12 months as the Wellington market improves with more DHB outsourcing and growth in insured and Accident Compensation Corp covered patients.

The company affirmed its guidance for a small lift in annual earnings before interest, tax, depreciation and amortisation from a year earlier, when it reported Ebitda of $20.2 million.

The board didn't declare an interim dividend due to the takeover.

The shares were unchanged at $7, and have gained 29 percent this year.

BusinessDesk.co.nz

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