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Trading update
LIFE HEALTHCARE GROUP HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2003/002733/06)
ISIN: ZAE000145892
Share Code: LHC
("the Group" or "the Company")
TRADING UPDATE
Despite the outbreak of the COVID-19 pandemic (the pandemic), the Group had a good trading
performance to 31 March 2020, growing revenue by 6.8% and normalised EBITDA, pre-IFRS 16, by
2.7%. Group results in H2 FY20 have, however, been significantly impacted by the pandemic. In this
uncertain trading environment, the Group wishes to provide an update on the performance of the
business for the period April 2020 to July 2020.
Southern Africa
Over the period April to July 2020 the Company has been through the process of:
- preparing for the pandemic and introducing COVID-19 specific plans covering facilities,
operations, employees and clinical interventions; adopting guidelines issued by the Department
of Health, the National Institute of Communicable Diseases, the World Health Organisation,
various medical societies and international best practice; ensuring adequate personal
protective equipment (PPE) for employees and doctors, developing detailed ‘surge’ plans and
setting up COVID-19 doctor committees across all of its facilities;
- responding to the COVID-19 surge and ensuring the safety of its employees and doctors and
treating c.9 000 COVID-19 patients in its facilities;
- participating in the process to establish pricing for the treatment of state patients and signed
contracts with the Western Cape and Gauteng provincial governments. To date the Company
has treated less than 10 public sector patients; and
- experiencing a significant decline in elective cases as cases were postponed due to the
pandemic. As South Africa appears to be coming out of the COVID-19 surge in August 2020
and with the introduction of the level 2 lockdown we expect to see an increased rate of return
of elective cases. Facility plans are in place to ensure the safe treatment of non-COVID-19
patients within an environment where the pandemic still exists. Life Esidimeni’s revenue is on
par with the prior period, although with an increased cost base due to underlying COVID-19
costs.
In southern Africa, the Group experienced a low acute hospital occupancy in April 2020 (39.3%)
due to lockdown level 5 and no elective cases. The occupancy levels have improved since April
2020, with occupancies currently up to approximately 61%.
Revenue for the month of April 2020 was approximately 40% below April 2019 but has since
improved on a monthly basis, with revenue for the month of July 2020 around 14% below July 2019.
Although normalised EBITDA for the month of April 2020 was slightly negative, the southern Africa
operations have since then contributed positively at a normalised EBITDA level. Despite this
continuing improvement on a monthly basis, the aggregate revenue and normalised EBITDA for
the period April 2020 to July 2020 decreased by approximately 22% and 63% respectively against
last year, for the same period.
International
- Although the impact of COVID-19 has been significant since March 2020, the strong recovery
of scan volumes, across all Alliance Medical Group (AMG) markets since the gradual easing of
lockdowns over the last few months, have been encouraging. Scan volumes in our PET-CT
centres in the United Kingdom (UK), on a year-to-date basis, are slightly ahead of the prior
period as at end July 2020, demonstrating the robustness of our molecular imaging offerings.
- AMG experienced significant reductions in volumes of 60% on average across all major
geographies as national healthcare systems have prioritised urgent and emergency cases
since the outbreak of the pandemic. Operating performance improved since April 2020 with
diagnostic imaging volumes on average at around 80%-90% of February 2020 levels (pre-
COVID-19) and molecular imaging volumes at 90%-100%.
- Within our UK business, we have delivered a 24/7 mobile CT service for up to 16 units to NHS
England to support the response to COVID-19, which at a revenue level has helped to
compensate for the reduction in scan volumes.
- Revenue for AMG, in pound sterling, for the month of April 2020 was approximately 29% below
April 2019, but has since improved on a monthly basis, with revenue for the month of July 2020
around 5% above July 2019. Although normalised EBITDA for the month of April 2020 was
slightly negative, AMG has since then contributed positively at a normalised EBITDA level. The
aggregate revenue and normalised EBITDA for the period April 2020 to July 2020 decreased
by approximately 8% and 37% respectively against last year for the same period.
- Business operations in our Polish business (Scanmed) continue to improve and are ahead of
the prior period.
- The weakening of the rand against pound sterling, euro and polish zloty had a positive impact
on the Group results during the period.
As previously communicated, the Group’s southern African business was a victim of a malicious cyber-
attack by criminals. The manual back-up processes, brought into effect as a result of the attack,
impacted the ability of the southern African operations during the month of June and part of July 2020
to:
- complete patient billing;
- submit claims to medical aids;
- process supplier invoices; and
- produce financial results.
The Group was able to substantially restore its IT systems at the beginning of July 2020 and has since
then been able to materially operate as normal.
The risk of a resurgence of the disease in all parts of the world remains. The Group remains vigilant
and continues to follow its protocols and procedures. As the environment is constantly changing, the
Group has adopted a flexible approach to manage its operations. The Group has implemented a
number of cash preservation initiatives to ensure liquidity and to strengthen the Group’s financial
position. As part of these initiatives the Group is in precautionary discussions with its lenders to relax
bank covenants for the next two measurement periods being September 2020 and March 2021. The
Group has increased its committed bank facilities and the committed undrawn facilities as at 31 July
2020 were R3 billion. The Group is also in the process to increase the facilities by a further R1.7 billion.
We expect these facilities to be in place by mid-September 2020.
The Company remains focused on its role as a leading healthcare provider in this time of crisis. The
management of this disease cannot be effectively executed, for the benefit of our patients, without the
dedication and commitment of our staff. We have unfortunately lost a number of our staff members due
to the disease and our condolences go out to their families, colleagues and other loved ones. Life
Healthcare places on record our sincere appreciation to all healthcare workers, who continue to work
courageously and tirelessly in the fight against the disease.
The Group currently expects to provide a further trading update at the end of September 2020 and a
further trading statement at the beginning of November 2020, following on from the trading statement
released on 11 May 2020.
The financial information on which this trading update is based has not been reviewed and reported on
by the Company’s external auditors.
Illovo
31 August 2020
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 31-08-2020 09:00:00
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