GXH - Green Cross Health (formerly PHB - Pharmacybrands)

[RTM]

GXH Annual Report Out.

Result summary
• Revenue of $567m (+5.6%)
• EBITDA at $36.9m (+2.3%)
• Operating Profit $29.4m (-2.2%)
• Net Profit after Tax Attributable to the Parent Shareholders
of $16.1m (+3.2%)
• Pharmacy Revenue flat at $340m, Operating Profit down 5.5% at $27.3m
on the back of a record low cold and flu winter season and a decline in
gross margin as the company responded to competitive pressures
• Medical performed strongly with Revenue up 33.8% and Operating
Profit up 20.4% to $4.4m driven by an increase in enrolled patient
numbers from organic growth and selective acquisitions
• Community Health Revenue up 9.3% but Operating Profit $0.1m (down
$1.1m) as the division continues to struggle with under-funding from
various legislative changes
• Operating Cash Flow $29.5m (down $3.7m)
• Net Debt $32.5m (reduction of $6.0m)

Long term I believe this business has many more opportunities for growth. I am in favour of their direction with medical centre operations. Aware the pharmacy side is taking a slower growth path due to competition, yet they could grow in online sales themselves if they were to increase their focus in this area.

Reasonable divi ��

Thanks FFT.
I was out cycling and missed this.
Disc: Holder, enjoying dividend and little else.

[percy]

I thought it was a good result.

[BlackPeter]

I thought it was a good result.

I guess "good" is relative, I would probably describe it as a mixed bag. While their health centers are doing well - the community service has clearly problems (only the government can fix) and the pharmacies (still their biggest business unit) do feel the squeeze.

Having said that - it appears they can stand the onslaught from discount pharmacies - and I think the medical centers may be the way to go (particularly integrated with pharmacies). In the short term - people say this flu season will be worse than the last one (which must be good for the pharmacists). Country running out of flu jabs at $29 or so per shot.

TA - wise: There are indications the share bottomed out and based on fundamentals it looks reasonably priced:

Forward PE (if we believe the analysts) is 8.3, forward earnings CAGR nearly 5. Not stellar, but not too bad for a healthcare stock. Good as well to see further debt reductions.

Ah yes - and one other wee thing I like about them - they try to make their financials readable even for people without a beancounting degree. Sure - this does not make the picture prettier, but much better understandable. I could think about one or two OCA-r companies who could learn from them ...

Discl: bought a small parcel and hope it will do better than TRA ;

[Leftfield]

I guess "good" is relative, I would probably describe it as a mixed bag. While their health centers are doing well - the community service has clearly problems (only the government can fix) and the pharmacies (still their biggest business unit) do feel the squeeze.

Having said that - it appears they can stand the onslaught from discount pharmacies - and I think the medical centers may be the way to go (particularly integrated with pharmacies). In the short term - people say this flu season will be worse than the last one (which must be good for the pharmacists). Country running out of flu jabs at $29 or so per shot.

TA - wise: There are indications the share bottomed out and based on fundamentals it looks reasonably priced:

Forward PE (if we believe the analysts) is 8.3, forward earnings CAGR nearly 5. Not stellar, but not too bad for a healthcare stock. Good as well to see further debt reductions.

Ah yes - and one other wee thing I like about them - they try to make their financials readable even for people without a beancounting degree. Sure - this does not make the picture prettier, but much better understandable. I could think about one or two OCA-r companies who could learn from them ...

Discl: bought a small parcel and hope it will do better than TRA ;

Good review and good luck with your investment..... looks sound to me.

[percy]

I thought it was a good result.

A good result for shareholders, in a company with so many challenges and low growth prospects.A credit to directors and management.
However I certainly would not be adding it to my portfolio.
Only prospects for shareholders of capital appreciation ,would be a takeover from EBO.As EBO already have virtual control, they may decide not to bother.
Perhaps EBO would be a sounder investment.

[winner69]

Chemist Warehouse taking over New Zealand ...mention of 70 stores

https://www.stuff.co.nz/business/115...ss-the-country

[BlackPeter]

Chemist Warehouse taking over New Zealand ...mention of 70 stores

https://www.stuff.co.nz/business/115...ss-the-country

Must be good for consumers ... and while I see some small pharmacies going down the drain, if GXH (ex Pharmacy brands) are not able to compete, than they better go home!

[Lisa]

I’m not going to drive 23mins to my nearest Mega Mall, when my local doctors (a Green Cross medical centre) has a pharmacy (a Unichem) right next to it. The Green Cross model is different to the Chemist Warehouse one and suited to New Zealand’s distributed population.

[BlackPeter]

I’m not going to drive 23mins to my nearest Mega Mall, when my local doctors (a Green Cross medical centre) has a pharmacy (a Unichem) right next to it. The Green Cross model is different to the Chemist Warehouse one and suited to New Zealand’s distributed population.

Welcome to the forum ... and you are absolutely right, some (probably most) people will pick the most convenient option for them to buy their medicines but some will pick the (for them) cheaper alternative, which will often be the discounter (e.g. because they are anyway going the mall).

We do have next to our GP a Unichem pharmacy (charges prescription fees and holiday / late hour penalties) with lots of often idle staff. Across the road is a Countdown with pharmacy which doesn't charge a prescription fee nor any penalties for the weekend. Haven't seen their staff idle yet. As well - lots of parking in front of the Countdown and people can use their NZ special waiting time for preparations to do other things than just sit around. Guess, where many people in this area get their medication from?

I think it is blatantly obvious that discounters will eat into GXH's market share for prescriptions, unless they smarten up. I don't think however it would be hard to dispense medication a bit smarter, faster and with less human involvement. It should be much easier for a big chain like GXH to improve their service and make it cheaper, than for a small pharmacy, i.e. I don't think it is a lost cause for them. They just need to smarten up.

As a share holder as well as a consumer I would be delighted if they would just do that.

[jg8512]

Welcome to the forum ... and you are absolutely right, some (probably most) people will pick the most convenient option for them to buy their medicines but some will pick the (for them) cheaper alternative, which will often be the discounter (e.g. because they are anyway going the mall).

We do have next to our GP a Unichem pharmacy (charges prescription fees and holiday / late hour penalties) with lots of often idle staff. Across the road is a Countdown with pharmacy which doesn't charge a prescription fee nor any penalties for the weekend. Haven't seen their staff idle yet. As well - lots of parking in front of the Countdown and people can use their NZ special waiting time for preparations to do other things than just sit around. Guess, where many people in this area get their medication from?

I think it is blatantly obvious that discounters will eat into GXH's market share for prescriptions, unless they smarten up. I don't think however it would be hard to dispense medication a bit smarter, faster and with less human involvement. It should be much easier for a big chain like GXH to improve their service and make it cheaper, than for a small pharmacy, i.e. I don't think it is a lost cause for them. They just need to smarten up.

As a share holder as well as a consumer I would be delighted if they would just do that.

Anyone have a sense what GXH's current market share is?
(In other words, what proportion of the market might chemist warehouse and GXH be able to take from the un-smartened pharmacists - before they are just fighting it out between themselves and countdown?)