April 24, 2019 / 11:43 AM / 8 months ago

UPDATE 1-South Africa's Life Healthcare warns on earnings after disposal

(Adds shares, details)

JOHANNESBURG, April 24 (Reuters) - South Africa’s Life Healthcare said on Wednesday half-year earnings could fall as much as 55 percent due to costs related to the disposal of its stake in India’s Max Healthcare, impairments and other investments.

Shares in the company fell 5.30 percent to 26.27 rand after the private hospital operator predicted headline earnings per share (HEPS) for the six months ended March 31 of between 24.1 cents and 29.5 cents, down from 53.7 cents a year earlier.

HEPS is the main profit measure used in South Africa and strips out certain one-off items.

In September, Life Healthcare said it would sell its 49.7 percent stake in Max Healthcare to KKR-backed Radiant Life Care Pvt Ltd for 4.3 billion rand ($300 million).

Life Healthcare also cited a 256 million rand marked-to-market valuation loss related to the disposal, as one of the factors impacting HEPS, along with an increase in contingent consideration relating to past company acquisitions.

Marked-to-market accounting is a way of valuing assets based on how much they could sell for under current market conditions.

Group revenue is expected to rise by between 8.6 percent and 10.4 percent, while normalised earnings before interest, tax, depreciation and amortization (EBITDA) will increase as much as 4.8 percent.

Life Healthcare competes with listed rivals Mediclinic International and Netcare Ltd.

Last Wednesday Mediclinic hit a more than three-month high on after it reassured investors with a forecast for net profit that was in line with market expectations despite a tough business backdrop.

$1 = 14.3247 rand Reporting by Nqobile Dludla; editing by Jason Neely and Elaine Hardcastle

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