Healthscope's NZ pathology outperforms on Wellington lab deal

Tuesday 23rd February 2016

ASX-listed Healthscope's New Zealand pathology business outperformed the rest of the group after its successful bid to provide lab services across the Wellington region drove a 21 percent gain in revenue.

The New Zealand unit increased operating earnings before interest, tax, depreciation and amortisation 17 percent to A$23.2 million in the six months ended Dec. 31, as revenue climbed to A$106 million from A$88 million a year earlier, the Melbourne-based company said in a statement. That outperformed the Australian private healthcare provider's group earnings, which rose 9 percent to A$159.8 million on a 5.5 percent increase in revenue to A$1.15 billion.

"In New Zealand it was also pleasing to see the integration of the new Wellington contract result in a strong uplift in earnings," chief executive Robert Cooke said. "This was a great contract win for us and we hope to benefit further as we increase penetration of the local community pathology market and deliver additional operational efficiencies."

Healthscope won the tender merging pathology lab testing for the Capital & Coast, Hutt Valley and Wairarapa district health boards after a rival, Aotea Pathology, quit over the proposed terms of the contract. NZX-listed Abano later decided to sell its 55 percent stake in Aotea to Healthscope.

Last week, Health Minister Jonathan Coleman officially opened the purpose-built lab run by Healthscope's Wellington SCL brand, which he said will help deliver the DHBs annual savings of $10 million.

When Healthscope listed on the ASX in 2014, it said it would it said would contest new DHB contracts when they came up and considered itself to be well-positioned to win them.

The company today said it would focus on providing "high quality service and greater operational efficiencies" to New Zealand's DHBs, which have been tasked to deliver more savings to a cost-conscious government.

Healthscope lifted net profit 64 percent to A$95.9 million, in a period when it sold its Australian pathology operations and six skin clinics to Crescent Capital Partners for A$105 million. The board declared an unfranked interim dividend of 3.5 Australian cents, payable on March 24.

The ASX-listed shares rose 3.8 percent to A$2.335, having dropped 14 percent so far this year.

BusinessDesk.co.nz

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