Abano 2013 Market Guidance

Listed healthcare investor and operator, Abano Healthcare Group, has today provided guidance for the financial year ending 31 May 2013.

Listed healthcare investor and operator, Abano Healthcare Group, has today provided guidance for the financial year ending 31 May 2013.

Following the divestment of Abano Rehabilitation in June 2012, the company expects reported consolidated revenues to grow to between $207.0 million to $209.0 million (1), with an Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of between $27.5 million to $28.5 million and a Net Profit After Tax (NPAT) of between $2.3 million to $2.8 million. Underlying EBITDA (3) is expected to be between $28.3 million to $29.3 million, resulting in an underlying NPAT of between $4.1 million to $4.6 million.

Abano has continued its growth and investment strategy, with a particular focus on its accelerated dental acquisition programme in New Zealand and Australia, and investment into its Auckland-based radiology business.

The dental businesses remain the primary revenue generators for Abano with same store sales continuing to grow in New Zealand, buoyed by the ongoing Lumino television campaign, while Australia has seen a slowing in growth in line with the softening Australian economy. Overall, earnings from the dental businesses continue to grow in conjunction with the accelerated acquisition programme, with increasing returns and margins as each new acquisition is acquired, due to the size and scale of the dental network.

During the financial year to date, 22 practices have been acquired, growing the trans-Tasman network to 139 practices, with a further three acquisitions expected to settle by the end of the financial year. However, the timing of settlements over the next few months means that the overall dental acquisition rate for the financial year will be lower than planned, with several acquisitions now scheduled for early in the new financial year. The availability of attractive practices and clinician interest in joining Abano’s dental network remains strong, with a solid pipeline of acquisitions planned.

In February 2013, Abano refinanced its existing Australian debt facilities with ASB Bank, and improved both pricing and tenure. These facilities are in place to support the accelerated acquisition strategy for the Australian dental business.

Radiology is also an important revenue contributor for the Abano Group and the official opening of the new, state of the art, Insight+Ascot Radiology clinic at the Millennium Institute in February 2013 was a recent highlight. The clinic opened later than originally planned, with the co-located orthopaedic group, an important referral base, also moving into the premises later than expected. Abano has invested heavily into radiology in the past two years, and along with the PET CT scanning centre which was opened in 2011, this new clinic is at an early establishment period with significant mid to long term benefits expected.

Audiology in Australia and South East Asia remains in an investment phase with progress being made in Australia and Taiwan, but sluggish sales continuing in Singapore and Hong Kong as previously indicated. A break even EBITDA result is still forecast to be reached in two to three years’ time. Abano’s annuity businesses in pathology and orthotics have performed well and both are forecast to produce solid results in their constrained DHB contracting environments.

Managing director of Abano, Alan Clarke, commented: “Our businesses have performed well to date in a difficult economic environment, with growth through both acquisition and organic expansion.

“Regional economic conditions and consumer confidence and spending, particularly in Australia following the announcement of the election remain difficult however, with no evidence of any significant or lasting improvement. Changes to private healthcare insurance rebates and dental subsidies in Australia have also recently been announced, and we are monitoring any impact carefully.

“Abano has a proven strategy and an experienced management team supported by over 1,700 professional and highly skilled staff and clinicians. We expect to see strong growth continuing as we reap the benefits of the acquisitions and investments made over the last few years.”

The Abano Board has reconfirmed its expectation to maintain the 2013 dividend at 21 cents per share.