Earnings growth in Healthscope's extensive private hospital business is likely to remain under pressure due to weaker patient numbers and volatility in the range of treatments being sought.
The company's 45 private hospitals generate the bulk of its operating pre-tax earnings, and chief executive Robert Cooke expects earnings growth in the second half of the financial year to be similar to the 2.2 per cent achieved in the first half, if current market trends continue.
Heathscope's hospitals achieved 10 per cent growth in earnings before interest, tax and depreciation (EBITDA) in the first half of the 2015/16 financial year.
Amid heightened public commentary about the affordability of healthcare, the private hospital sectors is experienced slower growth, impacting patient numbers, and there has been increased volatility in case mix, Healthscope said.
"At this stage, we expect ongoing variability in the hospitals sector to continue in the near term," Mr Cooke said.
The company's total EBITDA in the six months to December rose 5.1 per cent from a year earlier to $217 million, underpinned by strong growth in its pathology business in New Zealand.
Healthscope's half year net profit dropped seven per cent to $90.5 million.
The company also operates 48 medical centres, including skin clinics and a specialised breast clinic in Australia.
Healthscope shares were up 17 cents, or 7.6 per cent, to $2.41 at 1305 AEDT, after tumbling 19 per cent when it warned of slowing earnings growth in October.
SLOW EARNINGS GROWTH HITS HEALTHSCOPE'S PROFIT
* Half year net profit down 7 pct to $90.5m
* Revenue up 4 pct to $1.19b
* Unfranked interim dividend unchanged at 3.5 cents
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