IPCL Earnings Down 85% for H1 2024; Reduced Scan Volumes and Higher Admin Expenses the Culprits

  • Image Plus Consultants Limited (IPCL) reported a net loss of $16.25Mn for Q2 FY 2024/25, relative to $38.66Mn for Q2 2023. This contributed to an 85.0% decline in H1 2024/25 earnings to $15.40Mn ($102.77Mn in H1 2023).
  • Revenues slipped 2.8% to $539Mn for the six months ended August, largely driven by reduced scan volumes, with a 6% overall decline across all modalities. Total scans for H1 2024 slowed to 26,955, down 6.2% from 28,729 the prior year. Slowing revenues reflects IPCL's operational challenges, particularly with its CT modality, which generates higher revenue per patient.
  • CT scans dropped due to machine downtime at the Ocho Rios and Winchester branches. These units required CT tube replacements, but repairs were delayed due to protracted delivery timelines from the overseas manufacturer.
  • The company’s MRI and mammography services, which were launched in August 2023 and February 2024 respectively, showed growth, though both fell short of expectations. Management continues to explore strategies to increase scan volumes, particularly in the competitive Kingston and St. Andrew markets.
  • IPCL's direct costs fell by 5.5% for H1 2024 which supported an improved gross profit margin of 64.9% for H1 2024 relative to 63.8% in H1 2023.
  • However, administrative expenses increased over the period, amid an 80% increase in depreciation due to new imaging equipment, a 14.5% rise in salaries to $165.04Mn due to increased staff count, and a 52.3% jump in utilities owing to the MRI unit in Ocho Rios.
  • Despite the 85.0% earnings decline year to date, IPCL’s management expressed optimism about its H2 2024 performance, with efforts focused on optimising scan volumes and revenue growth across its service offerings.
  • IPCL’s stock price has decreased by 20.0% since the start of the calendar year. The stock closed Thursday’s trading session at $1.60 trading at a P/E of 13.33x, below the Junior Health Sector Average of 20.5x.

(Source: JSE, NCBCM Research)