Battered Primary says it is in recovery ward
Sydney Morning Herald
Wednesday February 16, 2011
THE struggling medical provider Primary Health Care has clung to its earnings guidance for the 2010-11 financial year after a profit warning in November and a deep cut to staff and costs set up the group to benefit from an expected return to growth for the health sector.Primary said yesterday the continuing background for healthcare delivery was one of increasing patient numbers and need with underlying demand to deliver long-term volume growth for its key pathology, imaging and medical centre divisions.The company posted a 73.5 per cent fall in first-half net profit to $20.26 million as revenue remained flat at $655.7 million. The result was in line with analyst expectations and the profit warning handed down to shareholders last year.In November Primary shocked the market with its second profit warning in four months. It said a fall in pathology services and new government funding arrangements would slash its profitability and force it to book $34.7 million in non-recurring items against its accounts. But yesterday it said earnings would improve in the second half as revenue growth resumed in pathology and imaging, and its cost cuts meant it could improve earnings and margins across all divisions.It confirmed EBITDA guidance for full-year 2011 remained $330 million to $340 million before deducting non-recurring one-off costs."Full year 2012 will benefit from a full year of both the benefits of the cost reduction program being implemented, in addition to the improving revenue growth profile," it said.Revenue at its medical centres rose slightly to $137.5 million while EBITDA was $74.5 million against $73.8 million in the previous corresponding period. Subdued patient visits continued into July last year but improved from August to November. While December was below expectations, visits picked up in January.Pathology revenue was also flat, rising only $500,000 to $364 million and EBITDA fell to $55.3 million from $73.4 million.Floods in Queensland and cyclone Yasi led to reductions in service volumes and revenues were affected from December."The financial impact incurred by Primary will, in part, be covered by its insurance policies," the company said. "Given the nature of these insurance claims, a clear view of the total size of the financial impact ... will take time to finalise during the second half of full year 2011."Imaging revenue fell to $145.1 million and health technology was flat with revenue of $24.5 million.Primary declared an interim dividend of 3 a share payable on April 11.
© 2011 Sydney Morning Herald