Release Date: November 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Life Healthcare Group Holdings Ltd (LTGHY, Financial) reported a commendable revenue growth of 12.7% for the year.
- The company achieved a significant increase in normalized earnings per share by 48.5%.
- Life Molecular Imaging, a division of LTGHY, experienced a near 100% increase in neuro doses sold and a revenue growth of 181%.
- The company declared a final dividend of 31¢ per share and a special dividend of 70¢ per share, returning over 10.6 billion rand to shareholders.
- LTGHY's balance sheet is described as a 'fortress', with net debt to EBITDA at 0.45 times, indicating strong financial health.
Negative Points
- The healthcare services business in Southern Africa faced a difficult year, with challenges highlighted in the Life in Kanyisa segment.
- Occupancy rates in mental health and acute rehabilitation services declined from 73.5% to 71.7% in FY 2024.
- The company experienced a decline in occupancy for underperforming facilities, with 14% of beds having occupancies of less than 60%.
- There were increased staff incentives due to strong performance, impacting margins.
- The RM Two transaction, while contributing significantly to revenue, is considered episodic and circumstantially driven, raising concerns about its repeatability in FY 2025.
Q & A Highlights
Q: Can you provide insight into whether the strong balance sheet could lead to a sustainable higher dividend yield going forward?
A: (CEO) The returns to shareholders are based on the availability of useful funds and the level of capital commitments and growth opportunities within Southern Africa. We aim to ensure shareholder satisfaction with returns and cash distributions. A more precise view on dividend policy will be available in six months.
Q: What is the strategy behind the new hospital build in the Western Cape?
A: (CEO) The new hospital is located near the Paarl region, an area with significant population growth and currently underserved. It will include a cath lab, addressing a local need with the nearest facilities being quite distant. The hospital is expected to be completed in two years.
Q: How does the agreement with the PMO family regarding LMI work?
A: (CFO) When we acquired LMI, we agreed that our funding contribution would be repaid once management EBITDA is positive. We share profits 50/50 with the PMO family up to a maximum of $200 million, continuing until 2028.
Q: How many doses of Neuro were sold in the financial year of 2024, and what was the EBITDA margin for Neuro?
A: (CEO) We sold just short of 13,000 commercial doses and nearly 8,000 R&D doses. We prefer not to disclose the EBITDA margin for Neuro to maintain competitive advantage.
Q: What were the reasons behind the loss of contracts for Life Kanyisa?
A: (CEO) The Shilan contract was awarded to an independent ambulance provider. For other centers, we rely on the Gauteng Department of Social Development for contract renewals, which were not renewed despite the underlying need for treatment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
