Ebos says animal care led first-quarter revenue growth

Ebos Group says first-quarter trading growth was solid with animal care outperforming healthcare where government funding remains tight.

The company reported strong growth in its animal care business and modest underlying growth in the dominant healthcare division. That start puts it on track to generate underlying earnings growth in the year ending June 30, chief executive John Cullity told shareholders at today's annual meeting in Christchurch. That will accelerate the following year when Ebos starts servicing the Chemist Warehouse Group from July.

"We expect sales to the Chemist Warehouse Group will generate approximately $1 billion additional revenue in the first year of operations," he said.

Ebos reported a 16 percent increase in underlying earnings before interest, tax, depreciation and amortisation to $272.4 million in the year ended June 30. On a constant currency basis earnings rose 10 percent.

The group has grown into a multi-billion revenue business through a series of acquisitions, the biggest of which was the 2013 Symbion deal. It now gets more than 80 percent of its earnings in Australia.

Cullity said Australia's pharmacy regulation is complex but that the wholesale model serves the community well.

"The model today is under threat from the issues of exclusive direct distribution and the current government funding not adequately addressing falling PBS prices," he said, referring to the Federal government's pharmaceutical benefits scheme to subsidise prescription drugs for Australian residents.

"We are encouraged with the level of engagement with the Australian government’s minister for health, but we do require successful resolution of these issues for the benefit of all stakeholders including, most importantly, the population who are dependent on timely and full access to medicines."

Chairman Mark Waller said Ebos operates in a number of highly competitive and regulated markets on both sides of the Tasman, but will continue to invest in its principal healthcare and animal care segments to drive long-term value.

"Government healthcare funding remains constrained and we expect this to continue," Waller said. "That said, we’ve proven our ability to deliver strong growth in this environment over many years and we see many future opportunities for the group to grow in the years ahead."

Ebos is reportedly interested in Australian medical supplies business Device Technologies. The Australian Financial Review's Street Talk column reported Ebos has hired Australia & New Zealand Banking Group to help fund its bid for the firm, said to be worth more than A$500 million.

The company's shares slipped 0.5 percent to $21.15, having hit a record $23 on Sept. 21.

(BusinessDesk)