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 occupancy surpassing 70% in H2.

• Normalised EPS from continuing operations rose 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.

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

• Robust cash generation and increased dividends, with a total payout of over ZAR 2.81 per share including special dividends and a special dividend of 235 cents per share.

Financial highlights

• Normalised EBITDA rose 4.7% to R3.85 billion; EBITDA margin stable at 15.3%.

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

• Strong cash generation at 119.6% of EBITDA; operating cash flow up 23.8% to nearly ZAR 4.6 billion; free cash flow increased 36.5% to R1.75 billion.

• Final dividend up 12.9% to ZAR 0.35 per share; total dividend for the year up 12%.

• Return on capital employed at 17.8%.

Outlook and guidance

• Forecasting 1% PPD growth and 5% revenue growth for next year, with FY2026 targets including continued greenfield and brownfield expansion and EBITDA margin improvement.

• Targeting 70% occupancy and recruitment of 140 specialist doctors.

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

• Further brownfield expansion to add 89 acute beds, new Cath and vascular labs, and expansion in complementary services.

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