Growth in Primary Health Care’s pathology and imaging businesses have helped reverse three years of declining profits, although challenges remain before its nationwide medical centre operation returns to growth.
Primary chief executive Malcolm Parmenter said the company lifted first-half profits – up 4.7 per cent to $22.1 million – on the back of improvements in its pathology and imaging businesses.
“The big cash earner for us is pathology,” Dr Parmenter said on Friday.
A surge in demand for genetics testing, up 24.4 per cent in the half-year, contributed to a 5.8 per cent lift in revenue at Primary’s core pathology business.
“Genetics is the future and precision medicine is where its all headed, in terms of genetics the big thing is pre-natal testing,” Dr Parmenter said.
In the first half of 2017, Primary conducted 3200 pre-natal tests, by December 31, that number had doubled to 7,000.
The imaging segment lifted pre-tax earnings by 14.7 per cent, boosted by strength in the hospital channel.
Earnings for the medical centres division dropped 17 per cent to $54.3 million as Primary continues with a rollout of new contracts for its general practitioners to replace unpopular old contracts that had created an exodus of GPs in recent years.
New contracts offer GPs a greater share of billing revenue and allow them more flexibility with bookings and work hours.
During the period, GP recruitment remained ahead of 1H 2017 with 67 doctors recruited and 50 departed.
“Our contracts were still full of fairly strong legal language and we had a bit of a history of litigating against doctors way back,” Dr Parmenter said.
“And that’s what doctor’s remember.”
Primary is now halfway through a five year overhaul of its GP recruitment processes and Dr Parmenter said there would be further headwinds before the project is complete.
“It has some time to run – a 12 to 18 month process – it’s not going to go on for years,” Dr Parmenter said
Primary raised its interim dividend by 0.3 cents to a fully franked 5.1 cents and reiterated full-year guidance for underlying net profit of between $92 million and $97 million.
At 1527 AEDT, shares in Primary Health Care were 11.5 cents, or 3.3 per cent higher at $3.645.
PRIMARY’S H1 PICK-UP
* Net profit up 4.7pct to $22.1m
* Revenue up 5.9pct to $856.5m
* Interim dividend up 0.3 cents to 5.1 cents, fully franked