South African company takes a hit after selling business to American pharmaceutical giant
Life Healthcare’s earnings have taken a hit following the sale of its Life Molecular Imaging (LMI) earlier this year amid complex accounting standards.
Life Healthcare sold LMI to the British subsidiary of American pharmaceutical giant, Lantheus.
LMI is a fully integrated research and development radiopharmaceutical company that focuses on developing and commercialising molecular imaging agents for use in PET-CT diagnostics.
It has operations in the EU, UK, and USA, and has extensive relationships with manufacturers, hospitals, imaging centres and neurologists in several key markets.
The purchase consideration comprised an Upfront Payment of an enterprise value of USD350 million (R6,475 million )
An additional USD 400 million (R7,400 million) could also be paid and is linked to milestones related to future sales of LMI products up to 2034.
In a trading update for the year ended September 30, 2025, Life Healthcare stated that it was able to return substantial funds to shareholders following the sale.
Total funds distributed for the 12 months from 1 October 2024 to 30 September 2025 reached R4.5 billion, thanks to a special dividend from the sale.
During the reporting period, the group reported a strong trading performance, achieving overall revenue growth of between 5.5% and 6.5%.
However, the disposals of LMI in the current year and Alliance Medical Group for roughly R20 billion in the prior year had a major impact on earnings in both periods.
Comparison between the two financial years is complex, with International Financial Reporting Standards requiring any adjustments to the liability relating to Piramal to be included in continuing operations.
However, any future adjustments to the potential earnouts and milestone payments must be disclosed as part of discontinued operations.
When Life Healthcare acquired LMI, there was a profit-sharing deal with Piramal Enterprises. As per the sale of LMI to Lantheus, some proceeds went to Piramal.
The Piramal liability is a pre-existing liability, measured at fair value, and is accounted for as part of continuing operations, amounting to R2.9 billion.
In addition to the adjustment to the Piramal liability, the group also recognised impairments of approximately R210 million in respect of underperforming units.
When including continuing and total operations, earnings per share are expected to decrease by between 18% and 23%, resulting in a range of 253.2 cents to 269.6 cents per share.
Headline earnings per share are expected to decrease by over 100% to a headline loss per share of between 109.2 and 116.9 cents due to the Piramal liability.
The group’s results for the current year are in the process of being finalised and are expected to be released on SENS on 27 November 2025.
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