Primary Health Care’s medical centres business has dragged its underlying profit down almost five per cent, but the company says investments in the division are having an impact.
Primary made an underlying profit for the 12 months to June 30 of $92.1 million, down from 96.8 million in 2015/2016, with a strong performance in its imaging and pathology units partially offsetting a 34 per cent fall in earnings from its Medical Centres business.
The company reported a headline loss of $517 million after it was hit with a non-cash impairment charge of $587 million in relation to its medical centres and underperforming sites.
It said it had also invested $39.2 million in restructuring initiatives and recorded $18.1 million of non-recurring items.
Primary acting chief executive Malcolm Ashcroft said the medical centres division is undergoing a major change, particularly in contracting arrangements with general practitioners, triggered in 2015 when the government changed its stance on tax effectiveness of up-front payments to doctors.
Mr Ashcroft said the fall in the division’s profitability comes as the company is now required to pay doctors a higher percentage of revenue than in previous years.
He said Primary is investing in recruitment and retention strategies to put more doctors into its existing network, which will in turn drive further cash flow improvement.
The business recruited a record number of 153 general practitioners, up 38 per cent on the prior year, while retention rates also grew, up 91 per cent.
“The investments we have made around engagement and support services are really having an impact on the front line, so people are actively choosing to stay,” Mr Ashcroft told AAP.
Primary’s total revenue grew one per cent to $1.66 billion, with the bulk coming from its pathology business, driven by an increase in volumes and average fee per episode.
The imaging business reported a two per cent increase in total revenue to $333.5 million and a 30 per cent climb in earnings to $29 million.
Mr Ashcroft said while imaging is one of Primary’s smaller businesses, it delivered an “outstanding” result considering it was in decline for the past two years.
Primary shares closed up 10 cents, or 2.8 per cent, at $3.63.
PRIMARY’S FY17 RESULT HIT BY IMPAIRMENT:
* FY loss of $517 million
* Revenue up 1pct to $1.66b
* Final dividend 5.8cps fully franked, down from 6.4cps