Abano provides market update and guidance
Abano Healthcare Group today released market guidance for the year to 31 May 2008, forecasting revenues of between $121 to $125 million (2007: $89.5 million), EBITDA of between $21.5 to $23.0 million (2007: $13.9 million) and a Net Profit After Tax of between $6.8 to $7.5 million (2007: $5.0 million).
The directors have previously commented on the notice of partial takeover offer received from Masthead Portfolios Limited. Since that date, the board has received approaches from other parties expressing interest in Abano. In circumstances where the board considers it to be in the interests of the company and its shareholders, the board has and will allow suitable parties to undertake due diligence for the purposes of preparing alternative propositions.
However, the board has not determined that it is necessarily in the best interests of shareholders that a change of control should occur. The guidance above excludes any costs associated with these approaches, some of which may be recoverable from a bidding party.
Chairman of Abano, Alison Paterson, said: “Following the completion of the first quarter of the financial year and a detailed review for the purposes of the Independent Expert report required in response to the Masthead proposed partial offer, we are now able to provide informed guidance as to how the company is performing in the current financial year.
“All businesses across the Abano group have performed well in the first quarter of this financial year. In addition, the benefits from the growth strategies in place for our Dental, Audiology and Radiology sectors continue to provide further improvement to margins and bottom line returns.
“Our new structure and our focus on the four key divisions of Audiology, Dental, Diagnostic and Rehabilitation, has enabled the company to make high quality investment decisions which are now bearing fruit.
“As the intrinsic demand for healthcare continues to increase, so do the opportunities in the private healthcare market. We are well positioned to take advantage of this increased demand and expect to see shareholder returns continue to increase as we grow through expansion and acquisition.
“It is important that shareholders appreciate Abano is in the early stage of a significant growth phase and that benefits of the reinvestment of proceeds from the sale of Eldercare business into the four Abano business platforms is only now beginning to produce the types of returns anticipated.
“In the first four months of the financial year, we acquired three new dental practices, increasing our acquisition rate, and taking the total Lumino network to 27 clinics around New Zealand. Historically we have acquired six dental practices per year, however, this is expected to increase to between eight and ten practices in 2008. A number of opportunities are currently under review.
“The expansion of the dental business is complemented by a detailed business and marketing strategy to take the Lumino group onto the street-fronts of major cities and towns in New Zealand, with appropriate business and marketing support.
“During this same four months, four new clinics were added to the Bay Audiology network in New Zealand. Two new clinics were opened in Orewa and Napier, with a third site in Rangiora transitioning from visiting to a full time clinic due to local demand. In addition, Advanced Hearing Systems in Invercargill was acquired in August 2007. A further two clinics are currently under investigation with more expected by the end of the financial year.
“As with the Dental group, the Audiology business is pursuing a similar strategy of acquisition and conversion into strong branded and marketed practices with high customer awareness. Our medium term expansion strategy for Bay Audiology is to grow from the current 44 clinics with a further increase in revenues through expanded market presence and strong ‘back office’ systems and economies.
“In Australia, Bay Audio acquired The Hearing Centre practice in Brisbane in July 2007, as well as opening up a new clinic at Tweed Head, taking the total Australian network to 13 clinics. Audiology is seen as a significant growth opportunity for Abano in Australasia, and we will continue our market development strategy through establishing clinics in new markets as Bay Audio grows throughout Australasia, and expanding popular satellite clinics into fulltime sites.
“Abano has a depth of operational experience in the Australian market, through our senior Australian audiologists and Bay’s executive chairman, Peter Hutson who lived, practiced and owned audiology clinics in Australia in the early 1990’s. In addition, Abano’s managing director, Alan Clarke, successfully implemented and managed, over a six year period, a large medical services acquisition strategy for a Swiss based multinational, prior to joining Abano in mid 2000.
“The expansion potential in Australia, where we are currently focussing on establishing a strong platform in Queensland in preparation of rolling out our model into other states, is considerable.
“Radiology continues to perform strongly with our expanded clinic base now operating across two sites in Greenlane Hospital and Ascot Hospital in Auckland. Plans are being progressed for a third clinic in the new Ascot Central clinical building which is currently under construction and due to open in March 2008.
“The Orthotics business has recently signed a new contract with the Waikato District Health Board, providing increased fees and contract security. The business remains focused on increasing private revenue and improving margins to provide a more profitable service.
“Pathology and Rehabilitation, both of which have hold and maintain strategies in place due to their reliance on publicly funded contracts, are performing well. In addition to fee increases, the results of a restructure and an increase in bed numbers has seen the Rehabilitation business trading above expectations.”
An update on the company’s performance will be provided to shareholders at the Abano Healthcare Group annual meeting, which is being held on Friday 9 November 2007 at 10am in the Pakuranga Hunt Room, Ellerslie Function Centre, Auckland.