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Why Livingstone Health's Revenue Is Up But Profits Are Down In HY2026 · Investor Exchange

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  Time for another Investor Exchange podcast. Here are your hosts,
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  Matt and Sally. Welcome to the Deep Dive.
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  Today, we're getting into the weeds with Livingstone Health Holdings Limited.
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  We've got their interim financial results right here for the half year that
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  ended back on September 30, 2025.
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  And our mission, as always, is to go beyond just the numbers on the page.
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  We want to figure out how they actually performed, why things moved the way
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  they did, and, you know, what kind of picture this paints for the future.
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  It's a really interesting one because when you first glance at these statements,
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  you see this kind of financial puzzle.
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  Right. The revenue, the top line looks fantastic. I mean, really robust growth.
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  But then you follow that number all the way down to the bottom line,
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  the profit for the period.
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  And it's, well, it's cratered. It's down significantly.
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  And that's the contradiction we love to dig into. How do you pull in 10% more
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  money, but walk away with way less profit?
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  It hints at something going on under the surface, maybe some big strategic costs.
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  So let's dive in and see what's driving this. Okay, so let's start with the good news, the top line.
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  Group revenue is up 10.2%. That's a jump from about $13.4 million to nearly S-15 million.
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  For healthcare group, that's pretty solid growth. Oh, it's excellent growth.
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  And it shows that their model is working.
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  The demand is there across all their different services.
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  If you break it down, specialist healthcare, that's their biggest segment,
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  anesthesiology, orthopedics, all that, that grew 10.3% to $9.5 million.
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  So the core is strong. The core is very strong, but it's not just that.
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  Primary health care, so your GPs and family doctors, that also saw a nice bump,
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  up almost 8%. And then you have the others segment.
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  Which is what, aesthetics and things like that? Yeah, aesthetics, wellness, podiatry.
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  That segment actually saw the biggest percentage jump of all,
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  up over 14%. And I see here that the specialist health care segment is still
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  the profit engine, right?
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  It brought in almost $2.0 million in profit for the half year.
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  Absolutely. That's the backbone.
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  It confirms that their high-margin, complex treatments are really carrying the financial weight.
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  So takeaway number one is pretty clear. The core business of treating patients
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  is performing really well.
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  OK, but that brings us to where it gets a lot more complicated.
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  Despite that fantastic 10.2 percent revenue growth, the profit before tax barely moved.
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  It was up just 2.4 percent.
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  So what costs are eating all that new revenue? Right, and you can see them pretty clearly.
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  The first big one is employee benefits. That expense line jumped 10.8%,
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  which is about $0.8 million.
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  Which makes sense, I guess. More business, you need more people,
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  you pay more bonuses. Exactly.
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  Management says it's from a higher headcount and performance-based pay tied to that revenue growth.
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  No surprise there. But this next one, consumables and medical supplies,
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  that one seems a little off. It's up 16%. Yeah, that's a big jump.
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  Revenue's up 10%, but supplies are up 16. That feels like a margin squeeze.
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  It is. That six-point gap is definitely something to watch.
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  It suggests they're facing some, you know, inflationary pressure on their input
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  costs that they haven't fully passed on yet.
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  But the even bigger hit to the margin came from other operating income.
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  Which dropped by almost half. A 45.5% decrease. That's a huge headwind.
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  It's massive. It went from over half a million dollars down to less than S$300,000.
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  So what happened there? Where did that money go? Well, it was mostly government
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  grants, things like the wage credit scheme, various health care grants.
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  That support is just being phased out. So it's not really an operational failure.
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  It's more that the training wheels are off and the company is now having to
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  stand on its own two feet financially.
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  OK, so rising internal costs and disappearing external support.
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  Not a great combo. Not at all. But amidst all that, there is one really positive
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  sign of good financial housekeeping.
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  Look at the finance costs. Oh, wow. Yeah, they're down by 43.4 percent.
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  Exactly. Slashed almost in half.
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  And that's the direct result of them actively paying down their loans and borrowings.
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  They're cleaning up the balance sheet.
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  So it's a real mixed bag. They're getting more disciplined with their debt,
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  but getting squeezed by operating costs and lower subsidies. That's the picture.
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  OK, now for the main event, the number that just looks bizarre on its face.
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  The overall profit for the financial period plunged 56.3%. It went from S$80,000 to just S$35,000.
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  So if profit before tax was slightly up, this has to be all about taxes and investments, right?
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  Precisely. You've nailed it. We're past the operational part of the story now.
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  Two things killed the net profit.
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  First, income tax expense more than doubled. It shot up over 111%.
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  Why such a huge jump in tax? It was due to what they call lower income tax group relief.
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  Can you just break that down for us? What is group relief? Sure.
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  Think of it as a tax benefit where a company can take losses from one of its
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  subsidiaries and use them to offset profits in another, lowering the total tax
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  bill for the whole group.
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  They just had less of that relief available this time around,
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  so their effective tax rate went way up.
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  Got it. OK, so that's the first hit. What's the second? The second is the share
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  of results from equity-accounted associates.
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  It just exploded into a $63,000 loss, which is a 250% swing.
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  And we know what that is. That's mostly the metabolic clinic,
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  that new endocrine specialist clinic they bought a 30% stake in. That's the one.
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  They bought in back in April 2025, and this is the cost of that strategic move showing up on the books.
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  But why is it posting such a big loss so quickly? It's pretty standard for an investment like this.
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  When you buy into a growing clinic that's probably in an expansion phase,
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  it has startup costs, maybe it's investing heavily, Livingston has to account
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  for 30% of that clinic's loss.
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  It's a classic short-term hit for a long-term strategic gain.
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  It definitely makes the headline profit number look terrible.
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  But, and this is the detail I think listeners really need to hear.
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  Despite that overall profit falling off a cliff, the profit attributable to
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  the owners of the company, the actual shareholders of Livingston Health. Uh-huh.
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  That number went up by 78 percent. How is that even possible?
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  This is where it gets into some fun accounting. The reason the owner's share
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  went up is because the non-controlling interests, or NCI.
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  So the minority partners in their various businesses?
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  Exactly. Those minority partners
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  ended up absorbing a much, much bigger piece of the overall losses.
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  Their share of the loss ballooned from S-52,000 to S-200,000.
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  So the way things were structured, the new losses were disproportionately allocated
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  to those other partners.
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  So it protects the main shareholders of the holding company.
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  It does. It shows a very deliberate corporate structure designed to benefit
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  the parent company's owners, even when the overall net profit pie shrinks because
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  of things like tax changes or a new investment startup phase.
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  That is a really powerful piece of financial engineering. Let's connect this to the balance sheet.
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  Are they generating cash? They are. The operations are still throwing off good cash.
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  They generated S1.9 million dollars in net operating cash flow,
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  which is even a little bit up from last year. So they are making cash. Where did they spend it?
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  Priority number one was clearly debt. They spent S1.1 million dollars repaying
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  loans and another S1.1 million dollars on lease liabilities.
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  So S2.2 million dollars just on paying down debt.
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  Which lines up perfectly with those lower finance costs we saw earlier,
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  they are absolutely cleaning house.
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  On top of that, they used about $0.2 million for a payment related to the Phoenix
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  Medical Group acquisition and another $0.2 million in advances to associates,
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  like the metabolic clinic.
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  So the cash balance went down a bit by about $0.6 million, but it was all for
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  very specific strategic reasons, paying down debt and funding their expansion.
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  That's good management. It is, and you can see the positive effects elsewhere.
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  Total liabilities are down significantly from S-15 million dollars to about 13.1 million dollars.
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  They even got better at collecting their bills. Trade receivables are down,
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  which means cash is coming in the door faster. It's a picture of a company getting leaner and meaner.
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  Okay, that sets us up perfectly for the future. They're growing,
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  they're cleaning up the books.
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  So what's the game plan for the next year or so? It looks like a three-pronged strategy.
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  First is just operational efficiency. Keep expanding the medical team.
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  Keep trying to streamline costs. Standard stuff. Right. Second is technology.
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  They're talking about investing in digital transformation and data analytics
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  specifically to get better at cross referrals.
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  You know, get the family doctors to send patients to their own in-house specialists.
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  Makes sense. Keep the revenue inside the group. Exactly. And the third pillar
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  is just more of what they're already doing.
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  Aggressive expansion. They mentioned completing the PMG acquisition and the
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  investment in the metabolic clinic as key steps to broaden their talent pool.
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  Now, let's talk about the money to do that, because this feels like the biggest
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  signal in the entire report.
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  They already had an S3.0 million dollar loan facility, but they just secured
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  new facilities for up to 4.0 million dollars.
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  That's the real story right there. That's a huge war chest for a company of
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  this size. So what's the plan? The plan is crystal clear.
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  They're paying down old, probably more expensive debt with their operating cash,
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  while at the same time securing new, flexible, and cheaper debt capacity for one reason.
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  Acquisition. And they explicitly say these new S4.0 million dollar facilities
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  are largely undrawn, right? They do.
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  It's capital just sitting there ready to be deployed. They've loaded the cannon
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  and are just waiting to find a target.
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  And the proof is in the dividend policy or the lack of one.
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  Precisely. No dividend declared. They are conserving every single penny for
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  working capital and, more importantly, for future expansion.
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  It's all about growth. They're not just waiting for it to happen organically,
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  they are gearing up to go out and buy it.
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  So let's wrap this up. The deep dive shows us a really clear picture.
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  Livingston Health is pushing hard on revenue growth while at the same time aggressively
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  restructuring its finances.
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  The messy looking profit number was really just a temporary blip caused by less
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  government aid and the startup costs of smart strategic investments.
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  Right. And the key takeaway for me is the resilience and the forward looking strategy.
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  The profit that matters to shareholders was actually up significantly.
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  They've used their own cash to get financially healthy. And now they've secured
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  this huge S4.0 million dollar facility specifically to go on a shopping spree.
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  They are primed for expansion. They've absolutely cleared the deck and are ready
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  to make a move. So here's something for you to think about.
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  Given this discipline and this sore point million dollars in dry powder set
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  aside for acquisitions, what specific health care niche do you think they'll target next?
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  What piece of the specialist puzzle are they missing that they might go out and buy tomorrow?
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  Thank you.