Acurity lifts half year profits

Acurity Health Group chairman Alan Isaac. Photo / Mark Mitchell

Acurity Health Group, the hospital operator set to be taken private by its three biggest shareholders, lifted first-half by profit 22 per cent after increasing revenue from district health board work, and continued to clamp down on costs.

Net profit rose to $4.9 million, or 29 cents per share, in the six months ended September 30, from $4.1 million, or 24 cents, a year earlier, the Wellington-based company said in a statement. Stripping out unrealised fair value movements in interest swaps, adjusted earnings climbed 37 per cent to $5 million. Revenue gained 14 per cent to $56.5 million.

"There has been a good increased in revenue volumes driven in part by pre-election DHB outsourcing and encouragingly some early signs of an increase in private patient demand," chairman Alan Isaac said. "Overall we report results in line with the recent forecast contained in the market update provided as part of the statutory process in dealing with the takeover offer from Connor Healthcare Ltd."

Acurity is set to be taken private by Connor Healthcare, which last week passed the 90 per cent threshold needed to mop up the remaining shares.

The vehicle is owned by Sydney-based Evolution Healthcare, which took an 11 per cent stake in Acurity last year at $5.50 a share and also owns Boulcott hospital in Hutt City. It has a takeover implementation deed with Acurity's majority shareholder, Austron, under which Austron will become the 75 per cent shareholder and Evolution the 25 per cent shareholder in Connor if the offer is successful.

They tweaked the takeover earlier this month, seeking a two-for-11 fully imputed taxable bonus share issue to let shareholders gain access to the $2 million in imputation tax credits. The deal meant Connor would cut its price per share to $6.13 from the $7.25 offer, leaving the total consideration paid to investors intact.

The takeover still needs sign-off from the Commerce Commission, which is expected to make a decision at the end of this week. Acurity anticipates to continue growing revenue over the next 12 months as the Wellington market improves with more DHB outsourcing and growth in insured and ACC-covered patients.

The company affirmed its guidance for a small lift in annual earnings before interest, tax, depreciation and amortisation from a year earlier, when it reported Ebitda of $20.2 million.

The board didn't declare an interim dividend due to the takeover.The shares were unchanged at $7, and have gained 29 per cent this year.