Green Cross acquisitions drive 18% lift in annual profit

Green Cross Health [NZX: GXH] lifted annual profit 18% as the primary healthcare group added to its pharmacy chain and expanded into community nursing and medical services.

Net profit attributable to shareholders rose to $17 million, or 12.53 cents per share, in the 12 months ended March 31, from $14.4 million, or 10.88 cents, a year earlier, the Auckland-based company said in a statement. The company's pharmacy retail chain continued to make the biggest contribution, accounting for two-thirds of the $447.7 million in annual revenue, which was up 39% from a year earlier.

"Green Cross Health is taking shape as a leader in the provision of primary healthcare services," chairman Peter Merton said. "Following last year's acquisitions, the company has started to lay the foundations for collaborative health care delivery across pharmacy, medical and community health."

The healthcare group used to be known as PharmacyBrands and has transformed itself into broader medical services provider with the acquisitions of community healthcare and support business Access Homehealth, medical centre firm Peak Primary, and nursing and healthcare service company Total Health Care.

Green Cross either owns or licenses 338 pharmacies and services 47 medical centres, some of which are independently owned.

The Peak Primary acquisition drove revenue growth of 88% to $46.5 million in Green Cross's medical services division with operating profit up 14% to $2.8 million. The community health unit more than tripled revenue to $105.7 million, though earnings were up 5.7% to $629,000, and pharmacy services lifted sales 11% to $295.6 million for an 18% gain in operating profit to $26.7 million.

Green Cross said its community health division met expectations, even though funding in the sector was "challenging" and it is expected to deliver better returns after the unit was restructured.

The medical division is seen as providing an opportunity for "significant growth" and the company will invest in infrastructure, support services, and innovation in that segment. Pharmacy is expected to benefit from Green Cross's loyalty programme and a number of acquisitions in the past year.

Green Cross took on debt to fund its expansion and had net debt of $52.6 million as at March 31 compared to $15.4 million a year earlier.

The board declared a final dividend of 3.5c a share, payable on June 24 to shareholders on the register at the June 10 close. That takes the annual payout to 22 cents a share, including a 15c special dividend.

The shares rose 2.1% to $2.90 and have gained 12% so far this year.

(BusinessDesk)