UPDATE: Green Cross Health operating profits stall despite revenue gain

Monday 28th November 2016

Green Cross Health, the listed medical services provider, saw its first-half operating profit stall despite a large one-off gain which boosted its statutory net profit 24 percent.

The company, which was formerly known as PharmacyBrands, saw net profit rise to $12.8 million in the six months to the end of September 2016, from $10.3 million a year earlier, on an 11.5 percent increase in revenue to $237 million. However, that profit includes a one-off gain of $2.3 million that is marked in the accounts as a 'gain on settlement of vendor put option'.

CFO Steve Browning told BusinessDesk this related to Green Cross Healthcare's purchase of Peak Primary in 2014 which involved Green Cross taking the liability for a put option over 17.5 percent of Radius Medical, with an exercise date in 2017. Browning said the $2.3 million one-off benefit recognised a gain on the price. It was valued as a $6.3 million liability in Green Cross's 2015 full year accounts.

If this one off is excluded, operating profit before interest and tax was $14.8 million compared to $14.6 million in the same period a year earlier, a rise of just 1.3 percent.

Operating profit at its largest division, pharmacy, fell to $12.3 million from $12.5 million, despite revenues rising 13.7 percent to $157.8 million. Chairman Peter Merton said this reflected the company's "investment in new greenfield sites and the closure of Auckland's Downtown mall."

"The group has achieved good growth, particularly from our community health division," Merton said. "This solid performance is despite New Zealand experiencing its lowest cold and flu season in 26 years."

The community health division, which provides services to support independent living in the community, saw revenue rise 6.8 percent to $55.1 million, while operating profit in the division jumped to $1.1 million from $247,000.

A 3.5 cents a share dividend is to be paid on Dec 23, to those on the register at 5pm on Dec 13.

Shares in Green Cross Health rose 3 cents, or 1.2 percent, to $2.58, and have risen 0.4 percent since the start of the year.

BusinessDesk.co.nz

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