API sees return to growth

Group reports total revenue of $4 billion, up 4.1% on the prior year, excluding PBS reforms and hepatitis C medicines

API has reported earnings before interest and tax of $94 million for full year results to 31 August 2019 – up 14.1% on the prior year.

Reported net profit after tax (NPAT) was $56.6 million, up 17.4% on the previous year, while underlying NPAT, also $56.6 million, was up 3.2%.

Pharmacy distribution revenue growth, excluding hepatitis C sales and the impact of PBS reform, increased by 4.2% to $2.9 billion.

“We’ve set up our pharmacy distribution business to cope with the ongoing impacts of PBS reform,” said API CEO and managing director, Richard Vincent.

“It generates strong and predictable cashflows so that we can invest for growth.”

API said wholesalers had helped successive governments to deliver substantial savings and benefits, but it was now becoming more difficult for wholesalers to economically provide equality of access to vital medicines for all Australians.

Mr Vincent said it was pleasing to see Astra Zeneca reverse its decision to move its high-value medicines to exclusive direct supply and allow community pharmacists to order all medicines through their preferred full-line CSO wholesaler.

Meanwhile the group’s total revenue, excluding hepatitis C medicines and PBS reforms, was $4 billion – a 4.1% increase on the prior year.

Mr Vincent said API continues to leverage its existing infrastructure to deliver solid profit growth in what remains a “challenging” market.

“Our core businesses performed to expectations,” he said.

“Priceline Pharmacy reported improving like-for-like sales growth throughout the year, and pharmacy distribution holding market share in a competitive environment,” said Mr Vincent.

The number of API’s Priceline Pharmacy stores grew by a net 13 stores, from 475 to 488, and its Clear Skincare network also expanded from 44 to 52 clinics over the past year.

API welcomed the positive results after a combination of PBS changes and exclusive direct distribution wiped more than $10 million from their gross profit last year.

“API’s financial position remains strong,” said Mr Vincent.

An increase in net debt reflects the cost of purchasing a 12.95% stake in Sigma Healthcare as well as investing in Clear Skincare clinics.

The financing costs of the Sigma investment have been offset by dividend payments received over the period, he said.

API said it remains focused on delivery its core strategy.

“While we have demonstrated our ability to return to positive retail sales, consumer confidence is expected to remain soft and we continue to adjust our cost base accordingly to deliver profit growth,” said Mr Vincent.

“We expect that performance during the year will initially be determined by the sale through the Christmas trading period and, in the longer term, resolution of the Seventh Community Pharmacy Agreement negotiations remains important.”

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