Our opinion on the current state of LHC

Life Healthcare (LHC) is the second-largest, JSE main-board listed, healthcare company with private hospitals, same-day clinics and surgeries and healthcare companies in South Africa, the UK (alliance Medical) and Western Europe. The out-going CEO, Shrey Viranna, says that the group is trying to diversify away from conventional hospitals more towards day-clinics and non-acute services. It is also trying to diversify away from medical aid schemes towards people who pay for their medical attention out of their own pockets. They have launched MyLife Clinic which offers a consultation and basic medication for R300. In its results for the year to 30th September 2023 the company reported revenue up 10,3% and headline earnings per share (HEPS) down 16,9%. The company said, "The Group's SA operations experienced strong demand for their services in the current year driven by the Group being the preferred network provider for medical aids. This led to higher utilisation of the Group's hospitals and complementary services which delivered PPD growth of 9.5%". Technically, the share peaked at R47 in September 2014 and then entered a long downward trend. It is now trading for around 1758c and is on a P:E of 19,93. The multiple reflects the company's expectation of improved results, its defensive nature, and its overseas diversification - which gives it some rand-hedge characteristics. In our view, this share looks like reasonable value, especially now that it is paying dividends again, but the trend remains downwards. On 19th May 2023 Business Day reported that Life is acquiring 51 clinics in South Africa, Eswatini and Namibia over the next year.