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Healthscope punished after revenue warning

AAP logoAAP 20/10/2016

Shares in private hospital operator Healthscope have fallen sharply after the company revealed its revenue growth softened in the first quarter and could dent earnings growth.

Chief executive Robert Cooke told the group's annual general meeting Healthscope experienced slower-than-expected revenue growth in the first three months of the 2016/17 financial year.

There was slower patient volume growth across the sector in the quarter, and if this trend continues the group's hospitals division will likely experience flat year-on-year operating earnings growth.

"We have seen this impact a number of our hospitals, resulting in increased variability in volumes and case mix, month to month, in the first quarter and particularly in September," Mr Cooke said.

Healthscope shares plunged 55 cents, or 18.8 per cent, to $2.38, an eight month low, and fellow private hospital operator Ramsay Health Care fell 5.9 per cent.

Mr Cooke said the company remained confident in the long-term demand for hospitals because the fundamentals driving the business have not changed.

"Healthscope continues to invest significant capital in its hospital expansion program, focusing on key hospitals located in high growth corridors with ageing demographics," he said.

The company achieved 19 per cent profit growth in 2015/16 to $183 million, partly due to a boost in its hospitals' capacity and strong earnings growth from its pathology operations in New Zealand.

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