Tuesday 9th May 2017
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Abano Healthcare, the Australasian radiology and dental centre operator, expects to deliver a second consecutive annual profit this year as it benefits from growing its dental chain.
The healthcare investor forecast profit of between $9.7 million and $10.5 million in the year ending May 31, compared with a $28.4 million profit in 2016, which was boosted by a $20.2 million gain on the sale of its half share in audiology business Bay International. It had a $1.3 million loss in 2015, including one-time losses of $8.1 million on the sale of Aotea Pathology and $900,000 on the sale of Orthotic Centre. In December, Abano forecast 2017 after-tax profit of $10.2 million, or $10.7 million before one-time items and non-controlling interests.
Abano is growing its chain of dental businesses in a fragmented market across Australia and New Zealand where it sees increasing demand, with the aim of capturing 10 percent of an estimated $11 billion of revenue. It acquired 25 practices in the financial year to the end of March, taking its total to 204, and said 18 practices had been merged into nine locations as part of its strategy to improve efficiency, which is boosting margins.
"FY17 continues to be a positive year for Abano as we invest into the growth and development of our businesses, particularly our trans-Tasman dental group which is benefiting from economies of scale and increasing market share," chair Trevor Janes said in a statement. "The benefits of belonging to a corporate dental group are becoming more widely understood and, with Abano’s positive reputation and workplace culture, we are seeing an increase in our acquisition pipeline.”
Abano forecast annual revenue of between $231 million to $235 million, up from $213.7 million last year. That compares with its forecast in December for 2017 net revenue of $236.2 million.
The company said its Maven Dental Group practices in Australia continued to experience challenging market conditions, although its same-store revenue trend had improved in the second half. In New Zealand, the company said its Lumino The Dentists chain continued to perform well, although it noted same-store sales in the second half had experienced a short-term impact due to an above average amount of leave taken, coinciding with higher than usual replacement of retiring senior dentists.
"Despite this, Lumino has still grown margins strongly as it benefits from its increasing economies of scale and is expected to return to normal long-term trends of positive same-store sales growth," it said.
It expects to pay a final dividend at least equal to the 20 cents per share paid at the same time last year.
Its latest forecasts exclude about $600,000 of costs associated with a failed takeover attempt by Healthcare Partners, which the company said is recoverable under the Takeovers Code.
Excluding one-time items, Abano forecast annual profit for its continuing businesses of between $10.7 million and $11.5 million.
Abano noted its Ascot Radiology unit continues to deliver an improved performance as it benefits from investment made in new technologies.
The shares rose 1.7 percent to $9.25 and have gained 22 percent over the past year.
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