Life Healthcare Group Holdings Limited

For 2025, Life Healthcare reported revenue growth of 6%, normalized EPS from continuing operations just above 10%, occupancy of 69.7% for the year, and PPD growth of 1.1%. Cash generation was very strong at 119.6% of EBITDA, net debt-to-EBITDA was 0.77 including IFRS lease liabilities, ROCE was 17.8%, and the final dividend increased 12% to ZAR 0.56 per share, bringing total dividends for the year to just over ZAR 2.81 per share including the special dividend. On a continuing basis, Pieter said revenue was up 6% and normalized EBITDA was 4.7%; he also cited ZAR 4.6 billion of cash generated from operations, ZAR 1.3 billion of maintenance/replacement/infrastructure CapEx, and close to ZAR 450 million of growth CapEx. For 2026, management expects occupancy at 70%, PPD growth of 1%, and revenue growth of 5%, while targeting about 140 specialist doctor recruits and additional capacity additions including 89 acute beds, 40 acute rehabilitation beds, 20 renal stations, 3 PET-CT sites, and commercial production at the cyclotrons. They also said they are targeting ZAR 400 million of cost savings over three years, with 20% to 25% of that targeted in the first year.

Peter Wharton-Hood said the business had a very strong operational year, with better utilization, disciplined capital allocation, and a clearer strategic focus on where to grow, drive, and optimize. He emphasized greenfield and brownfield expansion, doctor recruitment, technology/data projects, and asset optimization as the main pillars of the strategy. His tone was constructive but frank, especially on underperforming assets and the need to make hard decisions in 2026.

Pieter Van Der Westhuizen focused on the accounting and cash flow impact of the LMI sale, saying the transaction closed at just north of $750 million, with an upfront payment of $355 million and net proceeds of roughly $200 million after costs and liabilities; the company may also receive up to $400 million in earn-outs through 2034. He said the Piramal liability is ZAR 2.9 billion and remains in continuing operations, while the gross profit on disposal was ZAR 5.3 billion in discontinued operations. On the P&L, he cited continuing revenue up 6%, normalized EBITDA of 4.7%, two impairments totaling ZAR 211 million, and a strong cash generation year with close to ZAR 4.6 billion from operations. He also noted the balance sheet is strong, with net debt-to-EBITDA close to 0 on bank covenants but about 0.8 if the Piramal liability is treated as debt-like, and he said the company is comfortable at that level.

Analysts pressed management on how the ZAR 400 million savings target would be phased, what exactly would be done with the underperforming hospitals outside the top 30, whether margin guidance would be provided, and how wage inflation would compare with revenue growth. Management said 20% to 25% of the savings target should be achieved in the first year, and explained that underperforming sites may be relocated, rightsized, or traded back to profitability through more specialists and better case mix, not necessarily through new construction. They also acknowledged the operational complexity of integrating the Fresenius renal business was greater than expected, said renal EBITDA margins are currently single digit but should return to 15% to 18%, and confirmed that the LMI accounting adjustments are excluded from normalized EPS. On wage inflation, they said tariff negotiations are ongoing and that the aim is to get labor inflation close to tariffs, though the environment remains tough.