Life Healthcare’s FY25 boosted by R5.3bn disposal gain but statutory loss widens

Key topics:Strong core growth: Revenue up 6%; NEPS up 10%; robust cash generation and liquidity.Massive disposal profit: R5.3bn gain on LMI sale funds R3.4bn special dividend.Statutory hit: R2.9bn Piramal liability adjustment pushes HEPS negative and drives continuing operations loss.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..BizNews Reporter.Life Healthcare has delivered a mixed set of results for the year ended 30 September 2025, with strong operational growth and a transformational asset disposal overshadowed by a large non-cash fair value charge linked to the Piramal liability. The group reported solid trading momentum in its hospitals, complementary and healthcare services divisions but statutory earnings were dragged sharply lower by accounting adjustments tied to historic international expansion.Management emphasised that the group remains financially strong, underpinned by improved liquidity, disciplined cash management and substantial capital unlocked through the sale of Life Molecular Imaging (LMI).Core operations deliver solid growthContinuing operations performed well across the group, reflecting resilient patient volumes and disciplined cost control.Revenue from continuing operations grew 6% to R25.1 billion, while normalised EBITDA rose 4.7%, supported by improved activity in Southern African hospitals and complementary services.Normalised earnings per share (NEPS) increased 10.1% to 100.3 cents, demonstrating core profitability momentum despite a challenging healthcare funding environment.Cash generation was a standout. Life Healthcare generated 119.6% of normalised EBITDA in operating cash, a significant improvement on FY24’s 101.1%. Net cash inflow from operating activities rose to R4.43 billion (2024: R3.72 billion).The group’s interest cover ratio remained exceptionally strong at 17.58×, far above covenant requirements. Available undrawn banking facilities of R1.8 billion further reinforced a stable liquidity position.R5.3bn Profit from LMI Disposal Fuels Major Capital ReturnThe defining event of the year was the disposal of Life Molecular Imaging (LMI), concluded in July 2025. The sale, valued at up to USD755 million, delivered a R5.3 billion profit from discontinued operations and a R5.47 billion net cash inflow.The board used part of these proceeds to return capital to shareholders, paying a special dividend of R2.35 per share, totalling R3.4 billion. A final dividend of 35 cents per share was also declared.Management described the disposal as strategically significant, enabling Life Healthcare to streamline its focus around core Southern African healthcare operations while strengthening its balance sheet.Piramal Liability Triggers Sharp Statutory LossDespite strong core performance, statutory earnings fell dramatically due primarily to the fair value remeasurement of the Piramal liability, a legacy of the LMI acquisition structure.The liability’s fair value increased by R2.9 billion, resulting in:A continuing operations loss of R1.34 billion, reversing the R1.53 billion profit reported in FY24.HEPS plunging to –112.1 cents, from 152.9 cents in the prior year.EPS declining to 263 cents, from 328.8 cents.The Piramal liability now totals R3.3 billion, representing the majority of the group’s R3.6 billion fair value financial liabilities.Impairments and Operational WeaknessesSeveral underperforming units led to impairments totalling R211 million.The Namibian renal dialysis operations, acquired from Fresenius Medical Care, performed below expectations, triggering a R132 million impairment.Life Health Solutions suffered a R63 million impairment after losing key corporate contracts.Gaborone Private Hospital saw an R8 million goodwill impairment due to declining public-sector referrals following a change in Botswana’s government.IT Control Deficiencies Require Heightened Audit ScrutinyIT general control weaknesses persisted through FY25. Deloitte was unable to rely on the control environment and instead adopted a fully substantive audit approach involving extensive manual testing and data analytics.Management said the replacement of the ageing iMeds system and the transition to a modern SAP environment remain urgent priorities for FY26.Balance Sheet Strengthens Despite Accounting VolatilityTotal assets increased to R25.7 billion, while equity declined to R12.1 billion due to the Piramal liability adjustment. Cash balances rose to R3.81 billion, though R2.9 billion of this is earmarked for settling the liability in early 2026.Capex remained steady at R1.8 billion, with maintenance capex at R1.4 billion.OutlookLife Healthcare enters FY26 with a simplified operating structure, strong liquidity, and solid underlying earnings momentum. But the sizeable Piramal liability, ongoing IT control remediation, and impairments in selected units remain key areas of focus..Read the results in full by downloading the PDF below

Life Healthcare’s FY25 boosted by R5.3bn disposal gain but statutory loss widens

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