In the wake of the competing takeover bids for Healthscope Ltd (ASX: HSO), the company has decided to shut two private hospitals in Geelong and Kew after a portfolio review, due to the hospitals not being viable.
After completing its review of 45 hospitals, in a statement to the ASX, the company revealed its plans to rationalise its portfolio by closing the underperforming hospitals, which together are expected to incur a 'Hospital Operating EBITDA' loss in FY18 of approximately $8 million.
The company's updated FY18 earnings guidance expects that Hospital Operating EBITDA for FY18 would be between $340 million and $345 million, compared to previously being forecast to be in-line with FY17 Hospital Operating EBITDA of $359.4 million.
Reasons for a downgrade are due to "softer than planned market conditions in recent months and the continued impact of site-specific issues at Geelong Private, Cotham Private and Frankston Private hospitals".
