CATALIST-LISTED OUE Lippo Healthcare : 5WA +3.13% (OUELH) on Friday (Aug 5) posted a 93 per cent drop in net profit to S$8.4 million for its half year ended Jun 30, 2022, from S$113.8 million a year earlier. Its revenue, however, was several times that of the previous years: S$42.6 million for H1 FY2022, versus S$9.7 million for H1 FY2021.

 

The company&rsquo s financial statement was laden with exceptional items, reflective of a restructuring and the shuffling of control of assets among related companies by the healthcare group&rsquo s parent OUE.

 

Most of the increase in OUELH&rsquo s revenue came from the consolidation of First Reit : AW9U 0%, a healthcare Reit within the OUE stable.

 

On Mar 1, OUELH had sold 2 subsidiaries to First Reit in exchange for units of First Reit. The deal took OUELH&rsquo s stake in First Reit from 15.3 per cent to 33.1 per cent. The change in ownership allows OUELH to consolidate First Reit&rsquo s revenue into its own.

 

The transaction was also accounted for as a disposal of an associate, and allowed OUELH to recognise a net gain of S$3.1 million.

 

On top of this, OUELH recognised a fair value gain of S$4.2 million on First Reit&rsquo s investment properties.

 

Both items were reported as other income in OUELH&rsquo s statements, and should have boosted the company&rsquo s profits. But OUELH had booked a far larger exceptional item in the year-ago period.

 

Its net profit of S$113.8 million for H1 FY2021 was boosted by a one-off S$110 million gain from a shareholder loan conversion.

 

On Mar 16, 2021, OUELH had converted a total of S$189.6 million in loans and accrued interest owing to its parent, OUE, into convertible perpetual securities. OUELH booked a one-off gain representing the difference between the principal amount and the fair value of the perps, of S$79.6 million.

 

Stripping out these transactions and exceptional items, OUELH&rsquo s healthcare operations reported revenue of S$2 million &mdash up from S$1.2 million. Segment losses widened, too, to S$1 million from S$892,000.

 

The Company has received the above balance payment of S$200,000 from Crest. Upon receipt of the said balance payment, there are no further outstanding instalments due from Crest under the Settlement Agreement. There are also no other pending or outstanding claims between the Company and Crest. 

 

SHARES of OUE Lippo Healthcare closed higher on Tuesday (May 24), after the healthcare group said it will form new partnerships to add to its healthcare network.

 

The counter gained as much as 18.4 per cent or S$0.007 to trade at S$0.045 as at 9.04 am, before closing 5.3 per cent or S$0.002 higher at S$0.04 on Tuesday.

 

No married deals were recorded, according to ShareInvestor data.

 

As at 9.43 am, its shares have eased slightly to trade at S$0.041, up 7.9 per cent or S$0.003. Some 12.3 million shares worth S$540,000 changed hands.

 

On Monday, OUE Lippo Healthcare said Echo Healthcare Management, its joint venture with OUE, has formed a partnership called Echo Healthcare Services with 3 medical specialist groups.

 

The 3 partners include Respiratory Medical Associates (RMA) and The Respiratory Practice (TRP), which provide treatment for lung, sleep and allergy disorders, and Thoracic & Cardiovascular Surgery Specialists (TCSS), which provides cardiac and thoracic surgery.

 

Echo Healthcare Management will hold a 60 per cent stake in the new joint venture, while the founders of the medical specialists groups will hold the remaining 40 per cent stake collectively.

 

Echo Healthcare Services will also hold a 60 per cent stake in each of the medical specialists groups.

 

The total aggregate purchase price for all 3 specialist medical groups is S$31 million, comprising S$6.5 million for RMA&rsquo s shares, S$8.3 million for TRP&rsquo s shares and S$16.2 million for TCSS&rsquo shares, and payable with a mix of shares and cash.

 

The board of directors expects the company to tap on the medical specialists to elevate the overall healthcare standards and quality of OUE&rsquo s regional healthcare network. The medical partners will also be integrated into the healthcare network while retaining their clinical independence in their own practices.