Our opinion on the current state of LIFEHC(LHC)
Life Healthcare (LHC) is a major player in the healthcare sector, listed on the JSE, operating private hospitals, day clinics, and healthcare services across South Africa, the UK, and Western Europe. The company is strategically shifting from traditional hospitals to day-clinics and non-acute services, and broadening its customer base beyond those covered by medical aids to include out-of-pocket payers. This pivot includes initiatives like MyLife Clinic, offering affordable medical consultations.
For the fiscal year ending September 30, 2023, Life Healthcare reported a 10.3% increase in revenue, though headline earnings per share (HEPS) fell by 16.9%. This was attributed to robust demand within its South African operations and preferred provider status with medical aids, boosting hospital utilization and services.
A recent trading update for the first half of fiscal 2024 indicated a projected EPS increase of over 20% following the sale of Alliance Medical Group. However, this transaction will not impact HEPS. Operational updates for the same period showed revenue growth of 7-8% and a 2.3% rise in paid patient days (PPD) for acute services, though normalized EBITDA from continuing operations was expected to drop by 2.3%-3.3%.
From a technical perspective, Life Healthcare's share price has been in a long-term decline since peaking at R47 in September 2014, currently trading around 1004c with a P/E ratio of 15.83. This valuation reflects anticipated improvements in performance, the defensive nature of the healthcare sector, and the company's international diversification, which offers some protection against rand volatility.
The company is also looking to expand its footprint significantly by acquiring 51 clinics in South Africa, Eswatini, and Namibia within the next year, signaling continued growth and diversification efforts. Despite a sideways trend in its share price, Life Healthcare appears to be a reasonable value proposition, especially with the resumption of dividend payments.
For the fiscal year ending September 30, 2023, Life Healthcare reported a 10.3% increase in revenue, though headline earnings per share (HEPS) fell by 16.9%. This was attributed to robust demand within its South African operations and preferred provider status with medical aids, boosting hospital utilization and services.
A recent trading update for the first half of fiscal 2024 indicated a projected EPS increase of over 20% following the sale of Alliance Medical Group. However, this transaction will not impact HEPS. Operational updates for the same period showed revenue growth of 7-8% and a 2.3% rise in paid patient days (PPD) for acute services, though normalized EBITDA from continuing operations was expected to drop by 2.3%-3.3%.
From a technical perspective, Life Healthcare's share price has been in a long-term decline since peaking at R47 in September 2014, currently trading around 1004c with a P/E ratio of 15.83. This valuation reflects anticipated improvements in performance, the defensive nature of the healthcare sector, and the company's international diversification, which offers some protection against rand volatility.
The company is also looking to expand its footprint significantly by acquiring 51 clinics in South Africa, Eswatini, and Namibia within the next year, signaling continued growth and diversification efforts. Despite a sideways trend in its share price, Life Healthcare appears to be a reasonable value proposition, especially with the resumption of dividend payments.
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