Elite Diagnostic’s Profits Dips Despite Growth in Revenues  

• Elite Diagnostic Limited recorded a net profit of $6.09Mn for the quarter that ended March 31, 2023. This represents a 78.4% yoy decrease in profitability. Furthermore, for the nine months ended March 2023, net profit tumbled to $4.56Mn from $34.89Mn in 2022. Despite the higher revenues, profit declined because of increased expenses over the period under review. 
• Revenue for the quarter was up by 25.6% yoy to $202.21Mn. This was driven by revenue-generating machines being back in service, allowing them to increase work hours to clear the backlogs. Similarly, revenue for the nine months increased by 25.9% yoy to $565.76Mn
• Direct costs for the quarter and the nine months ending March 2023 were up 54.7% to $66.7Mn and 24.9% to $175.19Mn, respectively. This was due to the additional maintenance repair cost that was incurred for some machines that were out of operation since Q2.
• Administrative expenses were up 29.4% yoy to $77.92Mn for the quarter, while for the nine months, it was up 35.6%, owing to higher operating expenses from the extended shifts to clear backlogs.
• Additionally, depreciation was up 87.4% to $40.18Mn and 53.3% to $116.76Mn for the quarter and the nine months respectively.
• Elite’s stock price has decreased by 30.2% since the start of the calendar year. The stock closed Wednesday’s trading session at $2.20 and currently trades at a P/E of 44.0x which is above the Junior Market Health Sector Average of 15.7x.
• Going forward the company highlighted that it will implement a different strategy to ensure that the machines are brought back into service more quickly to minimize the reduction in projected daily revenues. Additionally, the installation of solar equipment at its Liguanea branch and subsequently at its Drax Hall branch is being coordinated to reduce its operating expenses in coming quarters.

(Source: JSE)