LIFE HEALTHCARE GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2003/002733/06)
Share Code: LHC
("Life Healthcare" or "the Group" or "the Company")
VOLUNTARY TRADING UPDATE FOR THE SIX-MONTH PERIOD TO 30 SEPTEMBER
Life Healthcare is pleased to provide shareholders with a voluntary trading update covering
the six-month period from 1 April 2021 to 30 September 2021 (the current period or H2-2021).
Reference is also made to the six-month period from 1 April 2020 to 30 September 2020 (the
prior period or H2-2020), the 12-month period from 1 October 2020 to 30 September 2021
(FY2021) and the 12-month period from 1 October 2019 to 30 September 2020 (FY2020).
Group trading highlights include:
? Continued strong volume growth within Alliance Medical Group (AMG) with volumes
higher than pre-COVID-19 levels in all major geographies, with revenue growth for
FY2021 20-22% higher (in British pounds) than FY2020
? Continued sequential improvement across all the southern African operations
notwithstanding a significantly larger third COVID-19 wave impacting operations within
the current period. The southern African operations have delivered 9-11% revenue
growth year-on-year for FY2021 with a 25-27% increase in revenue for the H2-2021
period compared to H2-2020. The normalised EBITDA margin for the H2-2021 period
has improved to c.17% compared to 16.6% for the H1-2021 period
? Group revenue has increased by 11-13% year-on-year for FY2021 while the Group
normalised EBITDA margin was c.19% versus 17.1% in FY2020
? Cash generation within the Group remains strong and net debt to normalised EBITDA
has reduced to c.1.9x as at 30 September 2021 versus 2.96x at 30 September 2020
International revenue includes revenue from AMG only.
As previously reported in our H1-2021 results, AMG delivered stronger results than those for
H2-2020. This trend has continued for the current period with all 3 major geographies (the
United Kingdom (UK), Italy and Ireland) delivering higher scan volumes than was the case
prior to COVID-19.
In the UK, Diagnostic Imaging (DI) volumes have returned to pre-COVID-19 levels. This was
partly attributable to the COVID-19-related CT contracts entered into with the NHS as well as
increased demand following the easing of COVID-19 restrictions in the UK. The COVID-19-
related CT contracts initially ended on 31 March 2021 but were then extended for a further 6
months until 30 September 2021, albeit at reduced revenue per day compared with the initial
contracts in the H1-2021 period. These contracts have now come to an end. For the FY2021
period, UK DI volume growth was 15-17% year-on-year. H2-2021 volumes were 43-45%
higher than H2-2020 and 3-5% higher than H1-2020.
PET-CT volumes have continued to grow strongly in H2-2021 and were 32-34% higher than
H2-2020 volumes and 8-10% above H1-2021. For the FY2021 period PET-CT volume growth
was 17-19% year-on-year.
In Italy DI and PET-CT volumes for the H2-2021 period were lower than H1-2021 but this
represents typical pre-COVID seasonality. For the FY2021 period Italian DI volumes were
higher than pre-COVID levels with growth 8-10% higher year-on-year. H2-2021 volumes were
9-11% higher than the H2-2020 period but down 6-8% on H1-2021 volumes.
The Irish business continued to benefit from a rebound in activity and increased public sector
contracting. For the FY2021 period Irish volumes also exceeded pre-COVID levels and growth
was 33-35% higher year-on-year. H2-2021 volumes were 50-52% higher than the H2-2020
period and 15-17% higher than the H1-2021 period.
These operational results have driven AMG, as a whole, to deliver 20-22% revenue growth
year-on-year, in British pounds, for the FY2021 period. H2-2021 revenue was 24-26% higher
than the H2-2020 period. The normalised EBITDA margin for AMG has moderated compared
with the 25.6% we reported at H1-2021, given the reduced revenue from COVID-19-related
contracts, and was between 24-25% for the FY2021 period.
Southern Africa overview
Southern Africa includes acute hospitals, complementary services, healthcare services and
the corporate office.
For the H2-2021 period the southern African operations were impacted by the severe third
COVID-19 wave with over 215,000 COVID-19 PPDs in the current period versus c150,000 in
H1-2021 and c130,000 in H2-2020. Despite this large third COVID-19 wave, the business
delivered a robust performance with good revenue growth of 25-27% when compared with the
H2-2020 period. This revenue growth was driven by H2-2021 acute and complementary paid
patient day (PPD) growth of c.20% versus H2-2020 resulting in average occupancies for the
H2-2021 period increasing to c.60%. This compares to H1-2021 average occupancy of 57%
and 50% for the H2-2020 period. In addition, revenue per PPD growth year-on-year for the
H2-2021 period remained high at c.10% due to the continued change in case mix. Underlying
margins improved on the back of the higher occupancies as well as tighter management of
costs as lessons from the two previous COVID-19 waves were applied.
FY2021 revenue grew by 9-11% versus FY2020. The normalised EBITDA margin continued
to improve compared with the 16.6% we reported at H1-2021 and was c.17% for both the H2-
2021 period and the FY2021 period.
Life Molecular Imaging (LMI) is our primary international growth initiative. Following the
approval of Biogen?s Alzheimer?s disease modifying drug (DMD) Aduhelm, in June 2021, we
have begun to invest in building up a commercial team within the US to drive Neuraceq sales.
We have also signed agreements with our major US manufacturing partner, which will bolster
our production capability in the US. At present, in the absence of Aduhelm reimbursement
agreements with payors, and diagnostic and treatment pathways for physicians and service
providers, we have yet to see a ramp-up in commercial sales of Neuraceq. However, we have
seen increased sales of Neuraceq for other DMD drug trials as other pharmaceutical
companies increase the pace of their clinical trials.
For the FY2021 period LMI?s revenue was c.30% higher (in British pounds) than in FY2020
and the business remained breakeven at EBITDA level.
Within the southern African business good progress has been made on our growth within the
renal dialysis and oncology businesses. We continue to pursue acquisition opportunities within
the SA imaging market and hope to provide more detail on our progress at the time of our
Life Healthcare would like to thank its employees and doctors for their unwavering support
and courage, for their tireless work and for the care they delivered under difficult
circumstances. The Company extends its sincere condolences to those that have lost family,
loved ones, friends and colleagues to the pandemic.
2021 financial results
Life Healthcare expects to release its full year results for the twelve months to 30 September
2021 on or about 18 November 2021.
Life Healthcare defines normalised EBITDA as operating profit before depreciation on
property, plant and equipment, amortisation of intangible assets and non-trading related costs
The financial information on which this voluntary trading update is based has not been
reviewed and reported on by the Group's external auditors.
For further information, please contact:
Mark Wadley, Head of Investor Relations
13 October 2021
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 13-10-2021 04:36:00
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