Daily ShareChat: Abano Healthcare

By Jenny Ruth

Friday 5th February 2010

Abano Healthcare produced a solid first-half result with earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations of $9.2 million compared with $6.8 million in the previous first-half, says John Cairns, an analyst at Forsyth Barr.

As a result he has raised his EBITDA forecast for the year ending May from $18.6 million to $19 million but left his valuation unchanged at $6.89 a share.

A key feature was the dental division's EBITDA contribution doubling to $5.2 million which provided confirmation the dental growth strategy through acquisition is gathering momentum, Cairns says.

"The dental business will provide earnings momentum as the international audiology network gains scale."

He is forecasting the Bay International audiology clinics business will be in a cash break-even position within two years. While it is still in its formative stages, it "offers considerable growth prospects in developing audiology clinic networks in Australia and Asia."

Unlike the dental strategy, the audiology growth strategy is focused largely around greenfields clinic openings involving limited upfront capital spending.

While ACC restructuring impacted on referral levels for the brain injury rehabilitation business, the alternative hospital care option is significantly more expensive and there are signs of referrals picking up again, he says.

BROKER CALL: Forsyth Barr rate Abano Healthcare as buy.

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