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Healthscope Ltd announces full-year results: Here’s what you need to know

What: Healthscope Ltd (ASX: HSO) shares have dropped 2.5 cents or 1.1% today despite the company meeting guidance for its full year ending 30 June 2014.

The company which is Australia’s second largest private hospital operator, reported a full-year net loss of $19.3 million (beating prospectus forecast of $145.1 million) thanks to lower net financial costs as well as operating earnings of $357.3 million, which were slightly above its prospectus forecast.

So What: Over the course of the year, Healthscope continued to benefit from Australia’s favourable healthcare environment. With an ageing population, increased medical treatment capabilities as well as high levels of private healthcare insurance across the nation, the company managed to grow revenue by an impressive 5.1% on FY13 to $2.33 billion. Pleasingly, this also translated into strong earnings growth with margins improving and EBITDA increasing by 9% to $357.3 million.

In particular, the group’s Hospitals and International Pathology divisions provided the boost for revenues. Its Hospitals division, which comprises 79% of the company’s EBITDA, grew revenues by 5.5%, while revenue from its International Pathology division grew 17.6% on FY2013 to $224.2 million.

Healthscope will continue to strengthen its Hospitals segment over the coming years with a number of redevelopments underway. These include the Knox Private Hospital in Victoria, Gold Coast Private Hospital, Norwest and National Capital Private Hospital.

Now What: While Australia’s healthcare sector remains an attractive industry to invest in, I would be reluctant to purchase shares of Healthscope until its shares cool down in price a little. At this stage, I would be more inclined to invest in Healthscope’s larger rival Ramsay Health Care Limited (ASX: RHC) which not only pays a dividend but also boasts strong growth prospects in the Asian market.

Another company I am even more bullish on is one that top Motley Fool investment advisor Scott Phillips has recently dubbed the "#1 dividend-paying stock for 2014-2015." With solid growth prospects and a fat, fully franked dividend, this ASX stock could be a huge winner for your portfolio. Discover the name and code FREE by clicking here now.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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