Primary Health Care (PRY) is one of Australia’s leading listed healthcare companies, operating as a service company to medical and allied health professionals.

PRY also boasts a network of medial and pathology centres across Australia, and is a leading provider of healthcare technology solutions to medical practitioners, medical practices and hospitals.

The group’s revenue is divided into four main segments:

> Medical Centres
> Pathology
> Imaging
> Health Technology

1H13 Results

PRY’s 1H13 results were a solid improvement when compared to the same period in FY12. The group’s revenue came in at $720 million, a 5% increase on the prior corresponding half.

EBITDA for the 1H was $186.1 million, an 11.6% increase on 1H12. PRY was impressively able to increase its EBITDA margin by 150 basis points (bps) as a result of revenue gains, economies of scale and operating efficiencies.

The group was also able to increase its interim dividend by 30% to 6.5 cents per share.

Breaking it down

A closer look at the recent results revealed all of the major divisions making positive contributions to 1H13 earnings. The Medical Centres division increased its EBITDA by 9% to 84.0 million, with the business expanding its margin by 80 bps to 55.4%.

Pathology EBITDA grew by 13% to $69.5 million, with the margin up 100 bps to 17.0%. The Imaging division EBITDA was up 30% to $35.0 million, with the margin up a staggering 500 bps to 22.6%.

Overall it was good to see that all divisions recorded not only EBITDA growth, but also growth in margins, indicating a business with a focus on cost controls.

Looking ahead

All PRY’s divisions performed well in first half, and we see this continuing in the second half. The group showed it was able grow its business organically, with better economies of scale and operating efficiencies driving expanding margins.

With Australia’s ageing population, PRY should be able to grow its earnings at an organic level. The group has also lowered its borrowing costs from $56 million, to $40 million in the 1H13, which should also have flow on effects in the 2H.

With think these factors, combined with growth from its Medical Centres division, will result in a solid full year result and further share price appreciation.

For more share tips on not only the Primary Health Group, get our latest asx share market trading ideas by signing up for FREE 7 Day Trial and access all our research files.

   Written by: admin   Other posts from: admin

NIB Holdings (NHF) is a health insurance company, providing affordable health cover to almost 880,000 people nationwide.

Established over 50 years ago, with premium revenue of more than $1 billion in 2012, NHF is Australia’s fifth largest health fund and the only ASX-listed health insurer.

The company offers a wide range of policies suitable for customers across the board, but its focus on the youth market has helped it to achieve the fastest growth amongst the major players in the sector.

FY12 Results

NHF’s FY12 results continued to show the growth that we have come to expect from the company, as the below demonstrates.

Premium revenue over FY12 grew 11.5% to $1.12 billion.

Net underwriting profit was $70.7 million, which was a 15% increase on the prior corresponding years. EPS was 14.8 cents per share, which was a jump of 8% on the prior years.

Impressively, return on equity climbing 31.5% over 2012, to 21.7%. The group also has a healthy balance sheet, with no debt and operating cash flow increasing 52.4% to $134.6 million.

Strategy for growth

NHF has solid policy growth of 4.7%, which was well above the average industry growth rate of 3.7%.

The company’s growth has been driven by its focus on people under the age of 40, but has been slowly expanding its base and looking to increase in the following areas:

• Over 55s
• Corporate market
• Western Australian market
• International workers and students

We believe that increased investment on the above mentioned areas will be of benefit to NHF going forward. The company also has room for expansion, with no debt and $134.6 million in operating cash flow generated over FY 2012.

Outlook

NHF’s core health insurance business saw all of its key metrics improve in FY12, with policy subscriber growth complemented by a successful implementation of a price increase.

We think the company is in a great financial position to grow its earnings either via acquisition or organic investment. Given the current falling interest rate environment we could see another movement back into income stocks such as NHF – with a current dividend yield of 5.5%.

We think the NHF’s earnings growth potential and solid dividend yield will continue to deliver gains for its share price.

   Written by: admin   Other posts from: admin

CSL Limited (CSL) develops, manufactures and markets human pharmaceutical and diagnostic products derived from human plasma.

The company’s operations are concentrated in Australia, Germany, Switzerland and the US, although its reach extends to almost 27 countries with over 10,000 employees. CSL’s main operational businesses include CSL Behring (including CSL Plasma) and CSL Biotherapies.

The company’s products include pediatric and adult vaccines, infection and pain medicine, skin disorder remedies, antivenoms, Albumin, anticoagulants and immunoglobulin’s (IG).

FY12 results:

As the above shows CSL has a solid history of growing its earnings. Total sales for FY12 were $4.4 billion, which was on a constant currency basis is a 12% jump on FY11.

On a constant currency basis CSL’s FY12 NPAT was $983 million, a 14% increase on the previous year’s result. The balance sheet is also healthy with FY12 cash flow from operations was up 14% to $1.16 billion and $1.16 billion of cash on hand.

Aussie dollar:

Given the company earns a majority of its earnings in US dollars the falling Aussie dollar is a benefit to CSL. Several of the pillars that have been holding up the Aussie dollar are not looking as stable as they once were.

One of these pillars being Chinese demand for Australian commodities is not as strong as it once was, and this in turn means less demand for our currency. Another fact hurting the Aussie dollar is the RBA moving to an easing bias, as characterised by this week’s interest rate cut.

Buy-Back

Another factor likely to underpin the company’s stock price is the undertaking of share-buybacks. The company is currently in the middle of an on-market share buy-back that it is 77% complete.

What was interesting in the release of CSL’s FY12 results was the fact it flagged the potential for another on-market share buy-back. Given its strong cash flow, we think the company will be able to complete another buy-back without stretching its balance sheet.

Outlook:

CSL appears to be in solid shape as we move further into FY13.

The company is expecting constant currency NPAT growth of 12% in FY13, which we think is achievable given its recent history of meeting or exceeding guidance. We also think that a weaker Aussie dollar and the likelihood of another share-buyback will underpin further share price gains.

Our Recommendations:

On the 5th of October 2012 we issued a recommendation to our clients of the  Traders Report to purchase CSL at $46.10. The stock has since moved to a price of $47.17 as of 11:30am October 11th.

For further information on CSL as well as full access to our research files sign up for a FREE 7 Day trial today. Australian Stock Report provides general advice and must indicate that previous results are not a guarantee of future performance.

   Written by: admin   Other posts from: admin

Australian Pharmaceutical Industries Limited (API) is engaged in the distribution of pharmaceutical and healthcare products in Australia and New Zealand.

The company is divided into three main segments; Pharmacy Distribution, Retail, and Manufacturing.

Pharmacy Distribution distributes pharmaceutical and medical products to pharmacies. The division distributes to customers from its Distribution Centres throughout Australia.

Through Retail, API sells various health, beauty and lifestyle products and operates retail store brands including Soul Pattinson, Priceline, Priceline Pharmacy and Pharmacist Advice.

The Manufacturing business involves the ownership of rights in pharmaceutical medicines and consumer toiletries.

Latest results

API’s 1H12 results were a marked improvement on the same period in 2011. Underlying net profit was $11.8 million, up 10.3% from the prior corresponding half.

Profit growth came despite revenue dropping 12.5% to $1.61 billion. Underlying operating margin increased from 1.5% to 1.8%, highlighting the effectiveness of cost cutting strategies the company has been implementing.

Another aspect that impressed was the 3.1% growth in the group’s retail sales on the prior period. Comparable store sales also grew at a solid 2.8%. The retail growth is especially encouraging considering the tough trading environment in which several other retailers have been experiencing.

Moving forward

Approximately 75% of API’s earnings in the first half were from its wholesale business. The company is targeting an even split in earnings between its retail and wholesale divisions. The retail growth is expected to come from Priceline pharmacy.

API has been working on infrastructure for several years and the company believes it has the ability to double the current number of Priceline stores. We believe the split will be beneficial for the group’s bottom line given the gross profit margin for its retail arm is 23%, compared to wholesale’s 7.6%.

On September 24th, API announced that Priceline has expanded its store network to 350 stores. This decision reflects increased interest from pharmacists in joining Priceline, and highlights the growth potential of the Priceline chain.

Outlook

API has undertaken some significant structural changes that are starting to deliver benefits. Through increased operating margins the company was able to record an increase in profit despite a fall in revenue.

We believe that given the tough consumer environment, companies that are able to achieve efficiency gains will be well placed to prosper when consumer sentiment improves, and API is a prime example of this.

   Written by: admin   Other posts from: admin

COH clear for gains

Cochlear (COH) researches, develops and markets cochlear implant systems for hearing impaired individuals.The company currently occupies a ~70% share of the world market for the profoundly hearing impaired (PHI).

COH hearing implant systems include Nucleus and Baha, and are sold in over 100 countries, with direct operations in over 20 countries. With well over 80% of the group’s earnings not denominated in Australian dollars, the company’s bottom line is sensitive to currency translation.

FY12 Results

COH’s FY12 results don’t look that impressive at first glance.

Net profit was $56.8 million, down 68% on the prior year’s result.

However, this did include a $101.3 million (post-tax) charge relating to the voluntary product recall of its implanted Nucleus CI500 range after an increase in failures in its Nucleus CI512 implants.

Total revenue over the period was down 4% to $779 million.

However if we look at sales on a constant currency terms they were actually up 1%.

Implant sales for the full year were 23,087 units, which was down 6% on the prior year.

Whilst the fall in implant sales would normally give us some cause for concern, especially given the recall issues, the second half sales showed a 15% improvement on the first half.

Aussie dollar

As previously mentioned, COH’s earnings are very sensitive to Australian dollar movements given that over 80% of its earnings are sourced overseas. Over the last month the Australian dollar has fallen against most currencies, and against the US dollar it has fallen from a little over $1.06 to $1.02.

Against the euro, the Aussie has fallen from about $0.86 to $0.81. It is well known that there is a strong positive correlation between the Australian dollar and the country’s mining industry.

As such, the recent weakness in the sector is likely to see continued weakness in the Aussie dollar.

Outlook

The recall appears not to have affected COH’s revenue, at least on a constant currency terms. The company’s long-term position still remains strong, with an aging population likely to support growth for many years to come.

COH’s earnings have always been defensive in nature and we don’t see this changing in the future. As such we believe that the short-term weakness in the Aussie dollar will continue to see COH’s share price to appreciate in the near-term.

 

   Written by: admin   Other posts from: admin

ResMed (RMD) is a leading developer, manufacturer and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders such as sleep apnoea.

RMD operates in over 65 countries through 16 direct offices and a network of distributors, including Australia, France, Germany, New Zealand, Singapore, the UK and the United States.

Latest results

RMD delivered an outstanding FY12 result that came in ahead of market expectations.  Revenue for the June 2012 quarter totalled $3.6 million, a 9% increase on June 2011’s result (constant-currency terms.).

Net income was up an impressive 31% in the same period to $76.8 million. For the full year, revenue grew 10% to $1.4 billion, whilst net profit rose 12% to $254.9 million.

The strong fourth quarter came on the back of healthy flow generator and mask sales in RMD’s core America’s division.

Flow generator sales growth came despite a slowing US economy, highlighting the success RMD is experiencing in penetrating the American sleep-disordered breathing market.

RMD achieved the profit result whilst benefiting from a lower Australian dollar, which helped contain general and R&D expense growth. Quarterly general and R&D expenses were up 3% on-year.

Importantly, the strong result allowed the group to declare a maiden quarterly dividend of 1.7 cents per Australian share.

Strong financials

The strong FY12 result bolster’s our confidence in RMD’s ability to maintain its high profit margins.

FY12 gross margin was 60%, with EBIT margin a similarly robust 21.5%. The numbers were similar to FY11, where gross margin was 59.6% and EBIT margin was 21.5%.

The strong margins came as the group benefited from favourable exchange rate movements and cost control measures such as supply chain efficiencies and expanding manufacturing in Malaysia.

Continued growth in flow generator sales combined with cost control measures and are likely to support margins going forward.

The balance sheet was also in healthy shape, with the group having a net cash position of $558,706 at the end of FY12.

Outlook

RMD’s FY12 results show a company growing its share of the lucrative US sleep-disordered breathing market.

American flow generator sales were healthy despite concerns over the economy, and RMD demonstrated operational efficiency through good cost control.

RMD’s balance sheet was in pristine shape, and in our view, the company’s already robust margins will benefit from continued flow generator and mask sales growth.

As such we think RMD is a stock to watch in the coming months.

 

   Written by: admin   Other posts from: admin

Biota Holdings Limited focuses on the research and development of new human drugs for the treatment of viral respiratory diseases.

Biota’s marketed products are used for the treatment of influenza along with an influenza diagnostic test kit.  The Company is also developing products for the treatment of RSV and rhinovirus.

Small Cap Biota Holding announced that it plans to merge with Nabi Biopharmaceuticals to form a combined company to be listed on Nasdaq.

Chairman Jim Fox said “We believe this is a necessary step to increase our options for the development and commercialization of our product portfolio and will ultimately improve the recognition of the underlying value of our product portfolio for our shareholders.”

Under the merger Biota shareholders will own about 74% of new company, whilst Nabi will own the remaining 26%.

Click to Receive FREE Daily Trading Recommendations!

   Written by: admin   Other posts from: admin

ResMed (ASX:RMD) is a leading developer, manufacturer and distributor of medical equipment for treating, diagnosing, and managing sleep-disordered breathing and other respiratory disorders such as sleep apnoea.

Today RMD announced a 12% increase in 1Q11 revenue to $314.8 million. However net profit was down 11% to $50.5 million.

Although the result was affected by adverse exchange rate movements, RMD was also hit by a weak 1% increase in flow generator sales.

The sales result missed analyst estimates, causing it to become the worst performer in today’s share market action.

Receive FREE Trading Recommendations for the next 7 Days, Click Here!

   Written by: admin   Other posts from: admin

Mesoblast (ASX:MSB) is a world leader in the development, manufacture and commercialisation of biologic products in the broad field of regenerative medicine.

MSB has the worldwide exclusive rights to a series of patents and technologies developed over more than 10 years relating to the identification, extraction, culture and uses of adult Mesenchymal Precursor Cells (MPCs).

MSB’s stock has been one of the hot stocks since the start of the year on market excitement over the therapeutic power of MPCs.

A unique business

The commercialisation of MPCs allows adult stem cells to be extracted from the bone marrow of donors, grown into therapeutic quantities and administered to non-related patients.

MSB’s lead products will target cardiovascular conditions, diabetes, inflammatory conditions of lungs and joints, eye diseases, bone marrow cancers, bone fractures, cartilage degeneration and musculoskeletal conditions.

The company aims to generate a series of high margin, off-the-shelf adult stem cell products that are obtained from a single donor, commercially expanded and frozen, and subsequently used in potentially thousands of unrelated, or allogeneic, recipients at the time and place of need.

Bone marrow approval

Mesoblast recently received approval from US authorities to begin an advanced trial of a treatment that could boost the number of bone marrow transplants for patients who cannot find a matched donor.

Following the approval, MSB has commenced the Phase III trial for bone marrow regeneration in patients with blood cancers.

MSB aims to produce a product that can be used in bone marrow transplants where a perfectly matched donor cannot be found.

Hearty hopes

Another key driver for MSB will be the results of its Phase II congestive heart failure trials in November.

Clinical results have thus far been encouraging, and if the full results turn out to be positive, MSB is likely to request a Phase III trial from the US Food and Drug Administration (FDA).

We believe a positive Phase II result will help deliver a significant jolt to MSB’s share price, as it moves the group closer to receiving regulatory approval to market its product.

Moreover, given the large number of reported heart problems in the US, Phase III approval can open up a huge market for MSB.

The Lonza and short of it

On 27 September, MSB announced an alliance with Swiss-based Lonza Group for the clinical and commercial production of its MPC product.

Under the deal, Lonza will supply MSB’s product requirements, in return for MSB having exclusive access to Lonza’s Cell Therapy facilities in Singapore.

The alliance is a critical plank in Mewsoblast’s strategy to market its product, as it creates certainty in the ability of the group to manufacture its MPCs.

Another interesting aspect of the alliance was Lonza using its intellectual property to help lower MSB’s manufacturing costs.

This would be in keeping with MSB’s aims to generate higher margin products, and would also provide it with the flexibility to develop new technologies.

Looking ahead

Whilst market excitement grows surrounding the therapeutic potential of MPCs, MSB has turned heads with its unique product innovation.

With regulatory approvals continuing to roll in and a global manufacturing alliance locked in, MSB is in a good position to bring its MPC technology to market.

The bone marrow product could be the company’s first revenue generating biologic therapy in the US and Europe.

MSB has huge revenue potential and exclusive rights to a series of patents and technologies relating to MPCs.

Furthermore, a successful outcome for MSB’s Phase II congestive heart failure trial could make MSB one of the stocks to watch in coming weeks.

Receive FREE Trading Recommendations for the next 7 Days, Click Here!

   Written by: admin   Other posts from: admin

Sigma Pharmaceuticals (ASX:SIP) is a manufacturer and marketer of prescription, over-the-counter, and generic pharmaceutical products. It is also the owner of a leading full-line wholesale and distribution business to pharmacies.

Today SIP reported a 1H12 net profit of $26.7 million, which compares to a net loss of $9.2 million a year earlier.

SIP’s strong cash flow generation put a major dent in net interest expense, which was a key driver of the profit result.

EBIT jumped 55% on-year, helped by a 9% lift in underlying revenue.  The healthy sales result reflected market share gains.

An interim dividend of 1.5 cents was declared.  SIP said more would be done in the coming year to keep it ahead of industry changes.

SIP has been one of today’s best performers in the Australian share market.  It has also been one of the top stocks in recent months, having more than doubled in price since March.

Receive FREE Trading Recommendations for the next 7 Days, Click Here!

   Written by: admin   Other posts from: admin