Life Healthcare Group Holdings (LHC) H2 2025 earnings summary

Executive summary

• Revenue grew 6% year-over-year to R25.1 billion, driven by 1.1% PPD growth and strong revenue per PPD, with overall occupancy at 69.7% and surpassing 70% in H2.

• Normalised EPS from continuing operations increased just above 10%, with NEPS up 10.1% and strong cash generation supporting a 12% increase in total ordinary dividend to 56 cents per share.

• Significant asset optimization, including the sale of LMI and non-core hospitals, closure of underperforming units, and focus on operational efficiency in top hospitals.

• Robust cash generation (119.6% of EBITDA), with special and ordinary dividends totaling 291 cents per share declared.

• Strategic focus on growth (greenfield and brownfield expansions), operational optimization, and technology investments.

Financial highlights

• Revenue up 6% year-over-year to R25.1 billion; normalized EBITDA up 4.7% to R3.85 billion, with EBITDA margin stable at 15.3%.

• Normalized EPS up 10.1%; headline EPS up 14.7% on a pro forma basis.

• Return on capital employed/ROCE at 17.8%, slightly down due to CapEx projects.

• Free cash flow increased 36.5% to R1.75 billion.

• Net debt to normalised EBITDA at 0.77x, reflecting a strong balance sheet.

Outlook and guidance

• Focus on continuing operations with clear visibility and stable positioning.

• FY2026 targets include 1% PPD growth, 5% revenue growth, and EBITDA margin improvement, with 70% occupancy for next year.

• Targeting ZAR 400 million in real cost savings over three years, with 20-25% expected in the first year.

• Further brownfield and greenfield expansions, including 89 new acute beds and additional complementary service capacity.

• Margin improvement is a key management incentive and will be tracked across all units.