Building out its network of hospitals and clinics helped Georgia Healthcare (GHG) generate record sales in the first half of 2016, sending cash profit up 44 per cent to GEL 34m (£11.3m). The group also benefited from its recent takeover of GPC, a leading retail and wholesale pharmacy chain.
Georgia was spun out from the Bank of Georgia (BGEO) and listed its shares in November 2015. Management made progress towards its three main goals: owning a third of all hospital beds in the former Soviet state, rapidly launching ambulatory clinics to tap into the outpatient market and widening its range of medical services. Organic sales climbed 13 per cent in the main healthcare services division as it opened one of the largest outpatient and diagnostic centres in the nation. Moreover, it launched two ambulatory clusters in the capital Tbilisi, bringing its total number of ambulatory clinics to 37. And it's currently rolling out around 50 new services including pediatrics and oncology in nine of its referral hospitals.
After buying GPC, Georgia opened pharmacies in eight of its hospitals. Management has already realised more than half of the GEL 5m in cost savings it anticipated from the deal, and pegs revenue synergies from opening pharmacies in hospitals and ambulatory clinics at around GEL 9m-10m. However, a government programme offering basic healthcare coverage eroded medical insurance revenue.
Broker Jefferies expects EPS of 35 tetri, up from 15 tetri in 2015.
| GEORGIA HEALTHCARE (GHG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 302p | MARKET VALUE: | £398m | |
| TOUCH: | 295-315p | 12-MONTH HIGH: | 350p | LOW: 145p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 346 tetri* | NET DEBT: | 19% | |
| Half-year to 30 Jun | Turnover (GLm) | Pre-tax profit (GLm) | Earnings per share (tetri) | Dividend per share (p) |
|---|---|---|---|---|
| 2015† | 110 | 13.3 | 0.2 | nil |
| 2016 | 173 | 16.8 | 0.3 | nil |
| % change | +57 | +27 | +21 | - |
£1=3 Georgian Lari *100 tetri in 1 Georgian Lari †GHG shares were listed in November 2015 | ||||
