Abano turns to profit after selling audiology stake

Australasian radiology and dental centre operator Abano Healthcare [NZX: ABA] turned an annual profit after selling its half share in audiology investor Bay International and expanding its dental chain.

The healthcare investor posted a profit of $28.4 million in the year ended May, boosted by a $20.2 million gain on the sale of the Bay International stake..

That compares with a loss of $1.3 million a year earlier or a $4.5 million profit including only continuing businesses. The latest results exclude earnings from its pathology and orthotics businesses which it sold last year. 

Underlying profit, which excludes one-time items, was $8.8 million, within the company's forecast of between $8.2 million and $9 million.

Annual revenue of $213.7 million compares with the previous year's $187.6 million from continuing businesses or $222.2 million including divested businesses, Abano says.

Abano is investing to increase its chain of dental businesses in a fragmented market across Australia and New Zealand. It is aiming at capturing 10% of the estimated $11 billion of revenue where it sees increased demand.

Last year, it bought 18 practices which are expected to add about $28 million to annual revenue, opened a new practice in Christchurch and merged several practices. At the end of May, the company had 188 practices generating annualised gross revenue of more than $254 million and is buying a new practice every two to three weeks.

"Our strategy is to build our networks through organic growth and the acquisition of quality dental practices, increase our market share and benefit from economies of scale," chief executive Richard Keys says.

The company is "well positioned to continue growing our businesses and increasing their earnings."

Its dental unit, which includes 102 Lumino The Dentists practices in New Zealand and 86 Maven Dental Group practices in Australia, increased operating profit 18% to $19.4 million as revenue lifted 15% to $198.7 million.

While the New Zealand dental business achieved 2.7% growth in same-store revenue, the Australian business had a 3.6% drop and the company says several initiatives are underway to boost performance.

Operating profit dropped at its diagnostics unit to $491,000 from $5 million a year earlier. The unit includes only its Ascot Radiology clinics in Auckland after Aotea Pathology was sold in May 2015.

The company will pay a final dividend of 20c per share on August 22, taking the annual dividend to 30c, up from 25c a year earlier.

The shares last traded at $7.98 and have risen 5.2% so far this year.

(BusinessDesk)

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