Abano posts 2% gain in first-half profit on dental growth
Abano Healthcare Group posted a 2 percent gain in first-half profit to a record, meeting guidance while announcing the exit from its remaining non-dental business with the $17 million sale of Ascot Radiology.
Profit was $6 million in the six months ended Nov. 30, from $5.9 million a year earlier, the Auckland-based company said in a statement. Gross revenue climbed 14 percent to $159 million.
The profit was in line with the $5.4 million-to-$6.2 million guidance Abano gave last month and was "driven by acquisition growth in the dental business, improving dental same-store sales growth and a solid performance in radiology," the company said.
It bought 10 dental practices in the first half, which it expects will generate annualised gross revenue of $18 million, although the benefit of a full-year contribution won't show up until 2019 while the acquisition costs will be recorded in the current year.
The company, which operates the Lumino the Dentists chain in New Zealand and Maven Dental Group in Australia, will book a one-time gain of about $2.1 million after costs on the Ascot sale in the current year after agreeing to sell its 71 percent stake to the radiologists who own the remainder of the business. Settlement is expected on Feb. 27 next year.
"The sale will complete Abano's transition into a single focus dental group and sale proceeds will be used to fund the continuing growth of the dental group," it said. "Dental margins for the full year are expected to be in line with the previous financial year, despite the increased investments being made into marketing, technology and branding and the same store revenue performance in Australia."
Overall, same-stores sales fell 1.6 percent in the first half, an improvement on the year-earlier drop of 5.8 percent.
"Clinical days increased, although average revenue per dentist declined slightly as expected, as a greater number of younger and less experienced dentists replaced a higher than average number of senior retiring dentists in the previous financial year as part of Lumino's succession planning," Abano said.
"Economic conditions are a key influencer on the dental industry, with non-urgent dental services often considered a discretionary healthcare spend. The Australian economy remains challenging with recent economic reports indicating spending on almost every discretionary purchase was down in the September quarter, with the lowest household consumption growth since the global financial crisis," it said. "To combat this environment, management are focused on initiatives to encourage new and repeat patients visits."
Abano will pay an unchanged first-half dividend of 16 cents a share on Jan. 19 with a record date of Jan. 9.
Its shares last traded at $10 and have gained 26 percent in the past year.