Interim report January-June 2017: Investments for the future and fewer working days puts pressure on the result for the period
- Divestment of weak businesses in Århus and Helsinki will strengthen the results in coming periods but has a negative one-time effect of SEK -16.3 million on the quarter
- Considerably fewer working days impact the clinics’ results negatively
- Successful start-up of GHP Vård och Hälsa with Trygg Hansa and development of the collaboration with Skandia
- Much greater focus on internal cost control in the clinics in future
Second quarter 2017
- Sales revenues decreased to SEK 249.6 million (262.0)
- Organic growth amounted to -4.5 percent (22.1)
- Adjusted EBITDA amounted to SEK 9.5 million
- EBITDA amounted to SEK -6.8 million (31.8)
- EBITDA margin amounted to -2.7 percent (12.1)
- Result after tax (EAT) amounted to SEK -14.0 million (20.1)
- Result per share amounted to SEK -0.21 (0.26)
First half year 2017
- Sales revenues increased to SEK 510.4 million (493.5)
- Organic growth amounted to 3.1 percent (13.9)
- Adjusted EBITDA amounted to SEK 27.7 million
- EBITDA amounted to SEK 11.4 million (49.9)
- EBITDA margin amounted to 2.2 percent (10.1)
- Result after tax (EAT) amounted to SEK -5.7 million (29.5)
- Result per share amounted to SEK -0.09 million (0.39)
The second quarter this year was expected to be a challenge from the point of view of profitability. There were considerably fewer working days than the same period last year, GHP International was not going to be more profitable until the end of the year, we have a couple of start-ups and we have invested in new competencies in the Nordic Region and in International. Despite this knowledge, the quarter was still a step backwards in financial terms. Much can be explained, however, by the fact that we have divested unprofitable units, which will mean improved operational results in the future.
We have a strong focus on development of the business, which is something we will draw benefit from later on but it has impacted the result for the quarter negatively. The past quarter we have, for example, started Trygg Hansa health care planning and together with Skandia expanded our collaboration with a new IBS-unit. This strengthens our leading position in the insurance market. We have also entered into a collaboration agreement for a neurorehabilitation hospital in the UAE as part of our continued international expansion and made considerable progress regarding digitalisation in health care.
Our clinics in Århus and Helsinki have for us been a challenge for a long time. Together they have made a loss of approximately SEK 3.5 million so far this year and also laid claim to many central resources. We therefore decided to sell both businesses. This gives a negative one-time effect in the quarter but will strengthen the result going forward.
The number of working days in each quarter has a great impact on our results. Apart from Collaborative Care and International, our remuneration is based entirely on how many patients we help, at the same time as most of our costs are fixed. During the first quarter this year, there were two working days fewer than during the same period last year and during the second quarter we had six working days fewer. We calculate that these eight days had a negative impact on results of at least SEK 14 million (of which SEK 11 million in Q2). Unfortunately, these working days do not come back during the rest of the year, when there will be more or less the same number of working days as last year.
In International we are working according to plan. It is taking a little time to establish processes and improve the hospitals we have just taken over. We therefore anticipate that it will be at the end of the year that we will be up at approximately the same level of profitability as last year in this part of the business.
Each year over the past eleven years our remuneration for different measures has fallen and salaries have gone up. Moreover, salaries in the health care sector are increasing faster than in the rest of society. This is not a new challenge for us, but it is a question of being better each year. So far this year we have not carried this out at the pace we would have wanted. A big reason for productivity not increasing as intended is that we are now undergoing a change of generation in the management of many of our clinics (for example, five out of seven CEOs in Stockholm are working their first year for GHP). We also have a new financial organisation in a new structure. The desired change of generation has taken time to implement, however, and we cannot yet see its financial impact. Nevertheless, the underlying situation at our clinics looks good. We have strong patient inflows and a new generation of ambitious employees.
In order to manage the challenges that we have encountered as quickly as possible, we are focusing on establishing stricter planning routines and more detailed cost control. By focusing on and taking the appropriate measures, I am confident that we will be able to rapidly improve our profitability.
18 July 2017
GHP Specialty Care AB (publ)
The Board and CEO
Queries should be addressed to:
Daniel Öhman, CEO, Tel: +46 708 55 37 07
Philip Delborn, CFO, Tel: +46 702 12 52 64
GHP is an internationally active health care provider that operates specialist clinics in a select number of diagnostic areas through the application of a business model that is unique in the health care industry, where leading doctors become partners and shareholders. Each clinic specialises in a particular patient group, and this leads to increased efficiency and higher quality. This is the cornerstone of GHP’s business philosophy – “Quality through specialisation”. GHP shares are traded on the Small Cap list of Nasdaq Stockholm under the ticker symbol “GHP”.
GHP Specialty Care AB (publ) | Corp. ID No. 556757-1103
Södra Hamngatan 45 | SE-411 06 Gothenburg | Sweden
Tel +46-31 712 53 00 | Fax +46-31 313 13 21 | www.ghp.se
GHP Specialty Care AB (publ) is required to publish the information herein pursuant to the Swedish Securities Market Act. This information was published, through the agency of the contact persons set out above, on 18 July 2017 at 08:00 am CET.
This report has not been the subject of review by the company’s auditor.
This is a translation of the Swedish version of the Interim report. When in doubt, the Swedish wording prevails.