Abano Healthcare has delivered a dip in profit, but within its guidance range, following the sale of its pathology and orthotics businesses a year ago.
For its six months to November, Abano booked revenue of $108million, earnings before interest, tax, depreciation and amortisation of $12.8million and an after-tax profit of $3.4million, with underlying profit up 86% on the previous first half.
Against the same period last year, revenue fell from $114.9million to $108million and profit dipped from $3.48million to $3.39million.
Abano shares dipped less than 1%, down 5c at $7.85, following the announcement.
It will repeat last year's 10c dividend.
Chief executive officer Richard Keys said the interim result reflected the ongoing growth of the company's dental networks and improvements in audiology and radiology.
"We are well on our way to building one of the largest dental organisations in the region,'' he said.
Abano was continuing to build the profile and reputation of dental brands Lumino the Dentists in New Zealand and newly-branded Maven Dental Group in Australia.
Forsyth Barr broker Peter Young said Abano's $3.4million normalised profit was modestly ahead of expectations and towards the upper end of recent guidance: around $3million to $3.6million.
"The result was marginally below the prior year, with recent divestments [pathology and orthotics] offsetting growth in its remaining divisions, particularly in dental,'' Mr Young said, but not enough to prompt any material changes to earnings forecasts.
Mr Keys said while Lumino delivered same-store growth of 2%, the company was facing more challenging economic conditions in Australia, particularly in Queensland, where 41% of practices are based.
"These Queensland practices are offsetting the positive same-store growth we are achieving with our practices in all the other states, with an overall drop in same-store sales for Maven Dental Group of 3% for the six-month period,'' Mr Keys said.
Mr Young said Abano faced challenging conditions in Queensland but remained confident of the long-term opportunity in the dental market, with growth through acquisitions, benefits of scale and national branding in Australia.
Abano sold its orthotics business in November 2014 and exited its Aotea Pathology unit after quitting the lower North Island district health board tender process, BusinessDesk reported.
The sale meant 60% of gross revenue would be generated offshore, especially in Australia, where the company faced headwinds from a slower economy.
Mr Keys said Abano was "well positioned'' to continue growing the businesses, particularly in the dental sector, where the goal was to achieve a 10% share of the $11billion transtasman dental market.
"Our focus continues to be on expansion through dental practice acquisitions and the opening of greenfield audiology stores, as well as realising existing opportunities for organic growth within each of our businesses,'' he said.
Abano Healthcare Group
• Dental business, joint-venture audiology and radiology business.
• Two growing dental networks, totalling 181 dental practices, generating more than $245m in gross annualised revenues.
• Just acquired nine dental practices, expected to boost annualised gross revenue by $15m.
• Opened: five new greenfield audiology stores in Australia, further two stores moved from non-retail to retail locations.
• Target: 10% share of the $11b transtasman dental market.
SOURCE: ABANO
