LONDON (Alliance News) - Georgia Healthcare Group PLC on Monday said its pretax profit for the third quarter almost doubled compared to the prior year, as it announced a deal to buy pharmaceutical retailer and wholesaler JSC ABC Pharmacia.
Georgia Healthcare, which provides private healthcare services in Georgia, reported a pretax profit of GEL10.4 million for the three months ended September 30, up from GEL5.3 million a year earlier. The figure was also 65% ahead of the pretax profit posted for its second quarter.
Georgia Healthcare said it generated GEL115.4 million net revenue for the three-month period, up 82% from GEL63.5 million the prior year, thanks to a strong performance from its Healthcare Services unit.
The company said its earnings before interest, tax, depreciation and amortisation margin from this division reached 30%, up 140 basis points year-on-year.
Georgia Healthcare said it was focusing on decreasing the cost of goods sold compared to cost of services through realising captive cost synergy and manufacturer cost synergy over the next two to three years. The company said it was also looking to enhance the retail margin through launching private label products and expanding sales to hospitals.
Georgia Healthcare said it was "comfortably" on track to deliver on its target to more than double its 2015 Healthcare Services revenue by 2018, noting that for the current financial year it expects a "strong performance".
The results came as Georgia Healthcare said it was purchasing JSC ABC Pharmacia from "certain private shareholders" with the deal subject to competition agency approval.
JSC ABC operates in Georgia and the purchase "further consolidates" Georgia Healthcare's position as the leading integrated player in the country's healthcare ecosystem, Georgia Healthcare said.
The company said it will merge the new purchase with its existing pharmaceutical business GPC, and the new company will be named JSC Georgian Pharmacy.
Georgia Healthcare will own a 67% stake in the combined business following completion of the acquisition, and the remaining 33% minority stake will be held by JSC ABC Pharmacia's existing main shareholders.
"The combined pharma business does not require significant ongoing capital expenditure investments, and is therefore expected to generate strong free cash flow," the company added.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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