In early trade the Primary Health Care Limited (ASX: PRY) share price has sunk lower by 3% to $3.42 after the medical centre operator released its full-year results.
Here are a few key takeaways:
- Revenue increased 2.5% to $1,658.6 million.
- Underlying earnings before interest and tax fell 11% to $174.6 million.
- Underlying net profit after tax declined 11.4% to $92.5 million.
- Reported net loss after tax of $516.9 million.
- Underlying earnings per share of 17.6 cents.
- Dividends per share of 10.6 cents.
Overall I think it is fair to say that Primary Health Care delivered a disappointing underlying and reported result this year.
The reported $516.9 million loss was largely the result of a previously announced non‐cash impairment charge of $587.0 million which relates to Medical Centres goodwill and underperforming sites, including the old Symbion sites.
Furthermore, the company invested $39.2 million in restructuring and strategic initiatives and recorded $18.1 million of non‐recurring items. These were not included in the underlying result.
Underlying net profit after tax fell 11.4% to $92.5 million due to a sharp decline in earnings in the Bulk Billing Medical Centres division after the repositioning the business.
This includes a new revenue sharing arrangement which has increased in favour of the GP.
But pleasingly a strong performance from its Imaging and Pathology businesses helped offset some of this decline.
The company does remain cautiously optimistic that the repositioning of its Medical Centres division will deliver the pathway for sustainability and growth.
Should you invest?
Based on its underlying result, Primary Health Care's shares are trading at approximately 19x earnings at present. I believe this is expensive for a company that saw its earnings decline over 11% this year.
In light of this, I would suggest investors avoid its shares and consider an investment in healthcare sector peers Ramsay Health Care Limited (ASX: RHC) or CSL Limited (ASX: CSL) instead.
