Life Healthcare withholds final dividend as pandemic weigh on earnings

Life Healthcare, a leading hospital group, has faced a challenging year due to the impact of the COVID-19 pandemic on its operations. The second half of the financial year was particularly difficult, as non-essential surgeries were postponed, leading to a decrease in revenue. As a result, the company has made the strategic decision to withhold a final dividend. CEO Peter Wharton-Hood sat down with CNBC Africa to discuss the company's performance during the pandemic and its plans for the future. The pandemic presented unprecedented challenges for Life Healthcare, requiring the management team to quickly develop protocols and operating procedures to deal with the surge in cases. Despite the difficulties, valuable lessons were learned which have been incorporated into the company's plans for the future. The CEO expressed optimism about the company's prospects in the second half of the year and beyond. One significant change brought about by the pandemic was the disposal of Scanmed, a decision made in response to shifts in the market. While the company received an offer for Scanmed below its carrying value, the management team believes that selling it at this price is in the best interest of the company. The proceeds from the sale will be used to reduce debt and focus on other growth opportunities. Life Healthcare is now looking towards domestic and international growth opportunities, with plans to expand its diagnostic and imaging services. Despite delays caused by COVID-19, negotiations for domestic opportunities are back on track, and the company expects to be operational in the second half of the upcoming year. Additionally, the incorporation of primary healthcare into its services and the satisfaction of pent-up demand for scanning services in the UK are expected to drive growth. The company's UK operations have been impacted by the second lockdown in the country, with a significant drop in scanning volumes initially. However, with patients now actively encouraged to undergo preventative and diagnostic screening, volumes have returned to near-normal levels. The management is optimistic that the improved lockdown measures will benefit the business going forward, despite ongoing Brexit risks. The interview also addressed the recent volatility in Life Healthcare's share price, which saw a sharp increase followed by a subsequent decline. The CEO attributed this volatility to market speculation around the potential approval of the company's drug, educanomat, and its impact on the sales of its tracer, neuropsych. The trading update issued by the company played a lesser role in the price fluctuations. As concerns rise about a possible second wave of COVID-19 in Africa, Life Healthcare has observed an uptick in COVID-related volumes in its eastern k hospitals. While the situation is being closely monitored, the CEO reassured shareholders that the company is better equipped to handle a potential surge, drawing from the lessons learned during the first wave. In conclusion, Life Healthcare has successfully navigated the challenges brought about by the pandemic and is strategically positioning itself for future growth. Despite the uncertainties ahead, the company remains confident in its ability to adapt and thrive in a rapidly evolving healthcare landscape.