Transcription of Finance News Network Interview with LifeHealthcare Group Limited (ASX:LHC) CEO, Matt Muscio
Carolyn Herbert: Hello I’m Carolyn Herbert for the Finance News Network and joining me from medical technology distributor, LifeHeathcare Group Limited (ASX:LHC) to discuss its full year 2015 results is CEO, Matt Muscio. Matt, welcome back.
Matt Muscio: Thanks Carolyn.
Carolyn Herbert: You’ve just reported your results for FY2015. What were the highlights?
Matt Muscio: We were pleased to have delivered a result that was in line with the outlook we provided the market. So with $99.3 million of revenue, that gave us top line growth of 13.8 per cent. We had EBITDA growth of 14 per cent and we had growth of both of our NPATA and our EPS, of 17.3 per cent. This included one month of M4 Healthcare, which was the acquisition we did in late May.
Carolyn Herbert: Now to operations, LifeHealthcare sells product in three key areas being spine neurosurgery, orthopaedics and cardiology. How have those areas been performing?
Matt Muscio: We made significant progress in the core channels of our growth strategy. Through our implantables across spine, neuro and orthopaedics, we have 15.5 per cent growth, which included significant share gains. This was driven by a seven per cent increase in revenue per surgeon, and a seven per cent increase in a number of new surgeons, within that space.
We attributed the result to the investment we made ahead of growth, in high calibre sales people as well as several new product introductions, including 3D printed implantables, magnetic growth technology. And we have a funnel of new product introductions, including our minimally invasive spine base platform and some new technology in orthopaedic tumour.
In our cardiology channel, we had a strong year by strengthening the channel with the acquisition of M4, at the end of the fiscal year. That extended our ultrasound offering into point of care. Beyond that, we made significant penetration into the mid tier private category, with the launch of the Affinity platform with Phillips (NYSE:PHG). And then finally to finish the year, with the acquisition MVA (Medical Vision Australia), that puts us in a position to go beyond cardiology into percutaneous coronary intervention.
Carolyn Herbert: You’ve just announced the acquisition of Medical Vision Australia. How does this fit into LifeHealthcare’s strategy?
Matt Muscio: So the acquisition of Medical Vision Australia sits within our cardiology strategy, leveraging the position that we’ve built in cardiac ultrasound. In Medical Vision Australia, the core products are diagnostic therapies used within the lab, through the supply of Volcano Corporation (NASDAQ:VOLC). Volcano is now owned by Phillips. So this acquisition also extends the very successful relationship we’ve had with Phillips, over a long period of time.
What this acquisition does is it gives us scale in the channel, gives us presence in the lab and what it will do is complement our current portfolio of biosensor stents. But we’ll continue to build on that with some more innovative product in that interventional cardiology space.
Carolyn Herbert: In the past couple of months we’ve seen the Aussie dollar fall. How has the Company adapted to the lower exchange rate?
Matt Muscio:LifeHealthcare continues to manage margin holistically, we’ve got a policy of hedging. Beyond that, when we look at the different levers, we continue to use price increases. We optimise our position on the prosthesis list. Being a company that has a significant capital division, we price our capital based off expectations around spot rate. We also have deep relationships with partners. And we look at trading terms, working with them to ensure that LifeHealthcare is in a position to continue investing ahead of growth, and delivering for both the partners and the Company.
Carolyn Herbert: Now to your appointment as CEO, what are you hoping to achieve?
Matt Muscio: First and foremost it’s to provide a smooth transition from our departing CEO, Daren McKennay. I’ll work with the team on delivering the growth strategy, which I’ve built with Daren and the executive leadership team. Continuing to deliver growth for the Company and for shareholders. Beyond that, it will be identifying where we go to in terms of fourth and fifth channel, within that strategy. And lastly, it’s to continue the success of the culture of the Company, by using the business model to attract innovative technology, and build on the market leading sales force that we’ve got.
Carolyn Herbert: Finally Matt, can you provide a comment on FY16 guidance?
Matt Muscio: We think we’ve built a foundation for solid predictable growth for the year ahead. So the guidance we’re giving the market is for an underlying organic growth rate, in the low teens. With the inclusion of the M4 acquisition, that puts us in the mid to high teens, and that doesn’t include the Medical Vision Australia acquisition. And the guidance we’ve given is for a similar margin and EBITDA rates, as we had from the previous year.
Carolyn Herbert: Matt Muscio, thanks very much for the update.
