AMG grows on the back of increasing PET-CT demand

Diagnostics and imaging firm Alliance Medical Group (AMG) has posted an 8.4% jump in revenue to £283m for the year ended 30 September 2018 on the back of strong PET-CT growth in the UK and solid performance from its operations in Northern Europe, Italy and Ireland.

Parent company, South African healthcare giant Life Healthcare, said the business had enjoyed solid underlying growth and was well-positioned to capitalise on anticipated high demand across its service lines going forward. However, EBITDA was down 2.9% on 2017 to £67m as pricing pressure in the mobile business together with the acquisitions of Piramal and Radiopharma continued to act as a drag on earnings in the short term.

EBITDA margins reduced from 26.4% to 23.7%, in part due to the dilution effect of mobile pricing, upfront costs on the PET-CT contract and the exit from AMG’s contract with private hospital group BMI Healthcare in the first half.

Life Healthcare, which intends to have 40-50% of its business ‘offshore’ by 2022, said the focus for AMG would continue to be partnerships with NHS trusts and the replacement of mobile infrastructure with static long-term facilities and contracts. During the year, AMG opened its first community diagnostic centre (CDC) in Colchester and signed contracts with an additional nine trusts. PET-CT scan volumes within its PET-CT scanning contract increased by 15% – a figure which it expects to maintain going forward.

Life Healthcare agreed the sale of its Indian business Max Healthcare in September 2018, but has ambitions to become a South African-led global healthcare business via AMG and its Polish business ScanMed. Going forward, it said the business would accelerate the integration of its international divisions and would look to bring its European diagnostic and imaging capabilities to its predominantly hospital-based South African business.

Overall, group revenue was up almost 13% on the previous year at R20.8bn. Normalised EBITDA increased by 10.7% to R5.5bn and headline earnings per share rose by 40.6% to 108.8cps.

Shrey Viranna, who took over as Life Healthcare Group CEO in February said: ‘Life Healthcare has once again delivered a strong overall financial performance during the period and is well positioned to grow on the back of continued operational excellence, an evolving business model covering the broader spectrum of healthcare, enhanced business analytics and unlocking value through the integration of the businesses.’