Slimmer Primary to revive
The Age
Wednesday February 16, 2011
STRUGGLING medical services provider Primary Health Care has clung to its earnings guidance for this financial year after deep cuts in staff and costs positioned it to benefit from an expected return to growth in the health sector.Primary said yesterday long-term volume growth for its key pathology, imaging and medical centre divisions would be supported by rising patient numbers and underlying healthcare demand.First-half net profit slumped 73.5 per cent to $20.26 million as revenue remained flat at $655.7 million. The result was in line with analysts' expectations and the profit warning handed down to shareholders late last year.Primary shocked the market in November with a second profit warning in four months, announcing that 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.Yesterday it said earnings would improve in the second half as revenue growth in pathology and imaging resumed, and its cost-reduction program enabled it to improve earnings and margins in all divisions.Primary confirmed that its guidance on earnings before interest, tax, depreciation and amortisation (EBITDA) for the full year remained in the range of $330 million to $340 million before deducting non-recurring one-off costs."Full-year 2012 [2011-12] 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," Primary 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. Below-normal patient visits continued into July last year but improved from August to November. December was below expectations but traffic at its centres picked up last month.Pathology revenue was also flat, rising only $500,000 to $364 million and EBITDA fell to $55.3 million, from $73.4 million.The floods in Queensland and cyclone Yasi led to reductions in service volumes, and revenue was 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 and hence the insurance claim will take time to finalise during the second half of full-year 2011."Imaging revenue fell slightly to $145.1 million and the health-technology business was also flat, with revenue of $24.5 million.Primary declared an interim dividend of 3 payable on April 11.AT A GLANCEHalf-year 2010-11 2009-10Revenue $655.7m $655.9mNet profit $20.26m $76.56mEPS 4.1 16.5DIvidend 3 15
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