IBA iba health group limited

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    IBA Health Group Limited (‘IBA’) has recorded revenues of $102.8 million, up 183%, and an underlying EBITDA of $25.4 million, up 60% (H1 FY07), reflecting the two-month contribution from iSOFT which was acquired in October 2007. The underlying results are before integration, amortisation of intangibles and one off acquisition costs of $18.2 million.

    The integration and one off acquisition costs have impacted the reported 6 month result, producing a net loss
    after tax of $1.2 million for the period.

    The combined business now has a substantial base of contracted and recurring revenues which will underpin
    future growth. Over 80% of FYO8 revenues are contracted or expected, with recurring revenues of over 60%.

    The company has provided guidance for full year FY08 revenues which are expected to be in the order of
    $380 - $400 million. The company is forecasting underlying FY08 EBITDA in the range of $85 - $95 million. The company also forecasts that it will produce a reported FY08 net profit after tax, after allowance for the amortisation of intangibles, financing charges and one off costs. EBITDA and profit are anticipated to improve in FY09 with increases to revenue and the benefit of further cost reductions.

    Integration of iSOFT into the IBA business is proceeding to plan with targeted cost synergies of $27 million for
    FY09. $16 million of annualised synergies have already been extracted. One off integration costs of $6.5 million were incurred over the period of which $3.4 million is reflected in this result.

    IBA’s net debt to total assets ratio, following the iSOFT acquisition, is 23%, with the majority of the debt
    funding of $192 million secured through a four year facility with ABN, and $90 million of contract financing, of which the majority unwinds over the next 18 months. An additional $56 million of debt funding is provided by
    Allco Equity Partners (‘AEP’). AEP is a separately listed company to Allco Finance Group.

    IBA’s underlying cash flow position remains strong, and is expected to improve by over $70 million per annum when the ESA (contract financing) prepayment period comes to an end in April 2008. Consequently IBA is unlikely to require the previously announced additional $50 million facility from AEP. A number of one off payments made as a result of the acquisition reduced net operating cash flow for the period.

    Following iSOFT’s change in ownership, IBA’s management has been successful in renewing customer confidence in iSOFT. The key relationships with National Health Service (‘NHS’) in the UK, and the Irish Health Service Executive, have been enhanced at the strategic and operational levels and contracted revenues secured. Also in the UK, a strategic partnership model has been established with Computer Sciences Corporation (‘CSC’) in relation to the NHS’s National Program for Information Technology (‘NPfIT’) contract. These further arrangements have de-risked the existing revenues and secured quarterly payments to IBA, and provide prospects for improved revenue potential.

    The roll out of the LORENZO software for the NPfIT program is on track. LORENZO minimises the cost and risk to customers of transitioning to future health care delivery models. It provides IBA with the opportunity to transition its existing client base, and to capture new global opportunities in the healthcare IT space.

    The iSOFT acquisition provides IBA with significant growth potential. The larger balance sheet now enables IBA to be considered for, and to tender for, the larger international e-Health projects. The global customer
    base of approximately 13,000 and the expanded product range provide significant cross sell opportunities
    across the group. Global growth in the IT healthcare industry is expected to continue providing further
    opportunities in both new and existing markets.

    As a result of IBA’s expanded global business, which has increased complexity and enhanced growth potential, the Board has decided to review its composition having regard for the requisite skill sets and experience. The Board has commenced a search for additional independent directors.

    Gary Cohen, Executive Chairman and CEO of the IBA Health Group, said: ‘I am very pleased with the iSOFT acquisition and how it is tracking, and the way in which the management team and staff have worked together to integrate the business. We are now four months into the acquisition, and it is pleasing to see that our
    expectations for profitable growth opportunities and extraction of synergies have been confirmed. We have
    successfully restored client confidence in the iSOFT customer base, focussing particularly on the NHS and
    CSC relationships.’


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