This article is from the Australian Property Journal archive
HEALTHSCOPE has posted a 6.7% drop in its interim net operating profit, as it heads towards a mid-year reckoning with shareholders that will determine whether it is taken over by Canadian giant Brookfield.
The net operating profit declined to $66.9 million from $71.7 million. Including gains from the sale Asian Pathology, net profit was up 199% to $236.6 million.
Group revenue was up 3.0% to $1.225 nearly billion, with hospitals revenue also increasing by 3.0% to nearly $1.102 billion. Operating EBITDA lifted 7.7% to $198.1 million as hospital operating EBITDA increased 8.8% to $185.7 million. Earnings per security was down 7.3% to 3.8 cps, and interim dividend came in at 3.5 cps.
Healthscope managing director and chief executive officer, Gordon Ballantyne said ongoing private hospital market pressures and variability in patient case mix continued to impact growth and margins, although operating EBITDA improved in all regions.
“In FY19 Healthscope has returned to earnings growth on the back of decisive actions taken in FY18 to turn around operating performance, reset the business portfolio and align the entire Healthscope team to consistently deliver market leading clinical outcomes and patient care,” he added. “We saw a significant turnaround in hospitals first half earnings, with EBITDA growth of 8.8% in contrast to a decline of 8.7% in the prior period. We continue to see growth from our brownfield investments and to reap the benefit of operational efficiencies realised across the portfolio.”
Its $600 million public-private Northern Beaches Hospital opened late last year but faced difficulties that included understaffing and shortages in drugs and supplies, which ultimately led to Dr Louise Messara stepping down as director of medical services within a fortnight of the hospital’s opening.
Meanwhile, Healthscope is expecting a scheme meeting to approve Brookfield’s takeover to take place in either May or June, following shareholders receiving scheme of arrangement documents.
The agreed terms include a $2.50 per share scheme consideration, including an interim dividend of 3.5 cents per share, and a takeover bid of $2.40 per share, which in total values Healthscope at $5.712 billion, with an equity value of $4.375 billion.
The agreement will see Healthscope’s 22 properties forwarded on to Medical Properties Trust and NorthWest – each will take 11 assets – for $2.5 billion, and lease them back.
Healthscope had weighed up the prospect of spinning off its hospitals into a new $1 billion unlisted property trust after rejecting takeover bids throughout last year from BGH-AustralianSuper Consortium of $4.11 billion, and from Brookfield initially of $4.35 billion.
Brookfield came back later in the year with muscled-up deal that knocked out its rival and prompted Healthscope to grant it exclusive due diligence, while Healthscope continued considering its property trust spin-off.
Australian Property Journal
