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Pulse Health Delivers Higher Earnings As Eden Hospital Outperforms

Pulse Health (ASX: PHG) has delivered an unaudited EBITDA 35% higher in the September 2012 quarter compared to the previous September quarter, with the Eden Rehabilitation Hospital performing better than the company's internal projections.

Justin Matthews, chief executive officer, commented: "The September 2012 quarter has been an exciting time for the company with the completion of the Eden Rehabilitation Hospital acquisition.

"During the quarter, the company has been in a strong cash position to support the working capital of an additional hospital as well as escalate payments to creditors.

"The quarter end cash balance is almost an A$800,000 increase from September 2011 and the company is in a position to pursue further expansion projects."

At the end of the September quarter Pulse Health at cash reserves of $1.83 million.

Cash receipts were delayed by over $800,000 due to a protracted health fund negotiation which has now been resolved. The majority of these amounts have been received in October 2012.

Pulse Health also reduced interest bearing debt by $180,000.

Eden acquisition

The Eden acquisition attracted a payment of $6.1 million.

Eden is an established and profitable 36 bed rehabilitation hospital strategically located in Cooroy, Queensland, a 30 minute drive from the existing Pulse Health facility at Gympie.

The lease is for 10 years, with a further 10 year option.

Queensland is a region under serviced for rehabilitation and the acquisition of Eden provided Pulse Health with reduced risks, time and cost of developing clinical programs, recruiting specialist staff and developing referral patterns.

The company now has rehabilitation facilities in Eden, Westmead and Forster.

Pulse Health now has six hospitals, community homecare and medical recruitment business.

The company has a regional and niche hospital focus with operations in Queensland and New South Wales employing over 570 healthcare professionals.

Analysis

Pulse Health has had a cracker of a quarter, anchored by growth from the Eden acquisition.

It is ideally placed in the defensive health care sector; it became profitable last year and yet is under the radar for many investors.

The private hospital sector is fast consolidating, with Archer Capital's $230 million acquisition of Healthe and MacquarieHealth Corporation acquiring Independent Private Hospitals of Australia.

Pulse Health also received an "Expression of Interest" last year. The company is attractively positioned with six hospitals.

There are not many ASX listed private hospital investment opportunities left, Pulse Health is increasingly likely to come under the gaze of both larger investors as well as corporate interest. Particularly given it has a post issue market valuation of under $20 million. Pulse Health has successfully bedded down the Eden acquisition. The next year holds significant promise for the company and for Pulse Health investors.

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