Life Healthcare appoints Barclays and Goldman Sachs to evaluate an offer for overseas business

SOUTH AFRICA – Life Healthcare Group Holdings has appointed Barclays and Goldman Sachs to evaluating a proposal it has received for its UK-based Alliance Medical Group (AMG business).

AMG is one of the largest independent diagnostic and molecular imaging providers in the UK and Europe, and also owns five cyclotrons in the UK and six cyclotrons across Europe.

It operates 236 sites across the UK and 12 other European countries and is a partner to the National Health Service (UK and Northern Ireland), Azienda Sanitaria Locale (Italy) and Health Service Executive (Ireland).

For the year to September 30, 2022, AMG added R7.7 billion (US$0.42b) to the group’s R28.2 billion (US$1.55b) revenue, and earnings before interest tax depreciation and amortisation (Ebitda) of R1.6bn to the group’s R5 billion (US$0.28b) Ebitda.

Life Healthcare’s board said AMG was strategically important to the group and the executives and AMG management were confident in AMG’s prospects and the potential of its strategy.

However, “the board is obliged to evaluate the proposals received and assess the implications in the context of the group’s strategy,” it said.

Meanwhile, in the four-month period ending January 31st, Life Healthcare’s southern African business experienced “a sound recovery” in activity with admissions for the review period up by 14% on the prior period.

Paid patient days (PPDs) increased 13% resulting in overall occupancies increasing from 55% in prior year to 62%.

Acute hospital PPDs grew by 13.5% on the prior period with a slightly lower length of stay as the normalisation of our case mix continues. Theatre minutes saw good growth, with minutes increasing by 11%.

The Healthcare Services segment had a solid first four months with a good performance from Life Nkanyisa. The recovery of the Life Health Solutions business continued.

Revenue for the first four months was up 11%. Earnings before interest tax depreciation and amortisation (Ebitda) margins continued to improve with Ebitda increasing by 16%.

Overall costs related to load shedding were not significant, but the increase versus the prior period was substantial, with diesel costs rising to R25 million (US$1.38m) in the first four months compared to R5m in the prior period.

Network deals with the Government Employee Medical Scheme and Medscheme were concluded late last year and the group was now the foremost designated services provider.

Diagnostic imaging volumes across all markets had increased by 2.4% and ahead of pre-Covid numbers. UK PET-CT scans had grown by 8.9% and record daily volumes were achieved in PET-CT in the UK and diagnostic imaging in Ireland in January 2023.

Diagnostic imaging volumes have grown by 6.4% and PET-CT scans by 11.8% compound annual growth, since the acquisition of AMG in 2016.

The international business grew revenue by.9.2% over the four months.

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