Medical services company Primary Health Care's sell-off of Vision Eye Institute shares was a necessary step to address its faltering bottom line, an analyst says.
The ASX-listed health care and pathology provider, a major Vision shareholder, will sell $34 million worth of its VEI shares and use the proceeds to pay down debt.
Primary expects to make a pre-tax gain of $14 million on the sale of around 36 million shares to Chinese multinational Jangho Group.
In July, the company downgraded its full-year earnings forecast for 2014/15 to $400 million, from its earlier guidance of $410-425 million.
IG market strategist Evan Lucas said the company had been volatile for some time.
"It's had a lot of questions asked of it with regards to its debt level, what it's offering and the future growth of the company," he said.
"It's been a pretty horrible time for them. They've had a guidance change, change of tax, a new CFO (chief financial officer) come in the last month."
Mr Lucas said Primary was expected to have a disappointing earnings season and needed to consolidate its debt.
"They have been in trouble for a while. Their allied health service division has done poorly and it's not surprising to see balance sheet movement."
Primary Health Care shares closed two cents, or 0.43 per cent, lower at $4.60.
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