Shares in Wakefield Health rallied after the private hospital owner-operator said its earnings had recovered in the year to March.
The NZX-listed company reported a net profit after tax of $6 million compared with a net profit of just $0.58m in the previous year, which was affected by one-off deferred tax adjustments.
Revaluation of interest-rate swaps also distorted the comparisons between the two years.
After adjusting for these items, Wakefield's underlying earnings for the year were $6.52m, up 27.2 per cent. Wakefield declared a final dividend of 10c per share, up from 8c in the previous year, bringing the total dividend for the year to 17c (2011: 15c).
Wakefield shares last traded at $4.95, up 20c (4.2 per cent) from Friday's close, continuing a firming trend that started late last month, when the stock traded at $4.40.
The shares peaked at $10 in August 2009.
Chairman Alan Isaac said the improvement in the company's earnings was despite challenging trading conditions.
"Altogether it has been an extremely positive year where we have been able to rebuild the momentum in our existing business and at the same time expand into desirable new geographic markets for the company,'' he said in a statement.
He said investments made during the year had made a contribution to net earnings in the second half.
Looking ahead, Isaac said the company retained "measured optimism'' about its future growth prospects.
The 2012 financial year saw a stabilisation of the market, with a return to revenue growth after two years of decline, Isaac said.
"Nonetheless, the economic environment remains subdued, particularly in the Wellington market and in the wider market a number of risks and uncertainties makes forecasting more difficult.
The private health insurance market, which underpins a significant proportion of the company's business has been slowly but steadily contracting, with the total number of New Zealanders with private health insurance decreasing by 25,700 or 1.9 per cent in the year to March.
"As a result, it would seem unlikely for there to be a substantial uplift in private demand in the short term,'' Isaac said.
Wakefield Health said last year that it had discovered a breach of the shareholders' funds covenant within its agreement with its bankers, which it had remedied.
The company completed a $15m capital raising in November to help cover the cost of its $24.2m takeover of Norfolk Investments, which owns 60 percent of the Grace Hospital in Tauranga, and its purchase of 30 percent stakes in Endoscopy Auckland and Laparoscopy Auckland.
