Can Healthscope climb out of the sin bin?

Livewire Equities

When it re-listed in July 2014 Healthscope was the largest IPO to hit the ASX in four years. Having spent time held by private equity, the $3.6 billion float was priced on a 22x PE. It's been a bumpy ride, but opinions on the outlook are divided ahead of today's result.

A stunning debut ( but no encore)

Healthscope shares closed up 5% from their $2.10 on that first day and duly rallied to over $3.00 by March. However that's where the music stops. Healthscope downgraded their earnings in October 2016 with shares tanking. The stock has failed to recover, drifting lower through 2017 and currently trades at the same level as the IPO back in 2014.

After a soft first half result the focus will be on the how Healthscope’s underlying Hospital’s division is performing within the industry and against its listed rival in Ramsay Healthcare.

Change in CEO

Long time CEO Robert Cooke was replaced as Managing Director and CEO in May of this year. Gordon Ballantyne, who joined after holding a senior position at Telstra, will preside over his first results presentation.

Action on the register

Hyperion Asset Management, known for their growth bias, have been steadily reducing their substantial holding over the past 6 months. They speak for about 6% of the register down from 8.5% in March this year.

Ashok Jacob’s Ellerston Capital have been also been active, the most recent filing showing the firm sitting on 7.3% of HSO stock.

Short interest steady

Short interest currently sits at close to 8%, indicating the hedge funds out there still believe there are earnings risks for the business.

What the brokers are saying

Brokers are divided on the stock with 2 buys, 2 holds and 2 sells from the 6 firms with coverage. Consensus is for Healthscope to deliver earnings per share of 10.8 cents.


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