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Healthscope lifts profit, dividends

Nicholas Grove  |  23 Aug 2016Text size  Decrease  Increase  |  

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The private hospital operator reports a 25.1 per cent lift in full-year profit to $194.6 million, underpinned by strong performances from its hospital and NZ pathology businesses.


Healthscope Limited (ASX: HSO) has recorded a 25.1 per cent lift in net operating profit to $194.6 million for fiscal 2016, broadly in line with Morningstar's forecast, following a "robust" performance from its hospitals and New Zealand pathology businesses.

Statutory net profit rose 18.9 per cent on the previous year to $182.8 million, while group revenue rose 6.2 per cent to $2,291 million, the company said in a statement to the ASX on Tuesday.

Operating earnings from the hospitals division was up 8.3 per cent to $354.9 million with margin expansion of 50 basis points, while New Zealand Pathology earnings rose 21.8 per cent to $50.7 million.

"Our hospitals division delivered good earnings growth and margin improvement from underlying operations and successfully renewed multi-year contracts with our largest health fund partners, Bupa, Medibank and HCF, providing funding certainty for future periods," Healthscope CEO Robert Cooke said.

"The New Zealand Pathology division delivered another very strong performance with the successful implementation of a new contract that extends services to the greater Wellington region.

"Across all our businesses, growth and continuous operational improvement is a priority and I'm pleased that we were able to make further progress this year."

Healthscope declared a final unfranked dividend of 3.9 cents a share. This took total fiscal 2016 dividends to 7.4 cents a share, up 5.7 per cent on fiscal 2015 and just shy of Morningstar's forecast for a payment of 8 cents a share.

The final dividend will be paid on 28 September 2016 to shareholders registered on 14 September 2016.

While not providing any specific earnings guidance, Cooke said fiscal 2017 will continue to be a year of significant capital investment, with the construction of 10 hospitals currently underway.

"Whilst the industry volume growth rate moderated slightly, the location of Healthscope's brownfield capital investments in catchments of growing and ageing populations continue to lay the foundation for strong growth over the medium term," he said.

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Nicholas Grove is a Morningstar journalist.

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