Shareholders say Green Cross is in good health

Green Cross director John Bolland saw off a challenge to his re-election at the company’s annual general meeting on Monday. 

Chair Kim Ellis was re-elected as a director of the company as was Bolland – although Alan Best from the New Zealand Shareholders' Association (NZSA) said the NZSA was voting against Bolland’s re-election as a director.

Best said the no-vote wasn’t a reflection on Bolland’s character, but because he’d missed the opportunity to expand more on the company’s succession plan and how the independent directors fit within that plan.

Wilton Asset Management’s Craig Brockliss was also elected as a director in place of Peter Williams, who retired after five years on the board as an independent director.

Brockliss told the meeting that Wilton is now Green Cross’s third-largest shareholder and had an “open mind” to how Green Cross operated.

“From what I can see so far, it's a good board and is run well,” he said.

Apart from the challenge, Green Cross board members and shareholders left with smiles after the primary healthcare provider’s goals for the year met with approval from shareholders and acceptance that the past year's "exceptional result" was a pandemic one-off.

Ellis opened the meeting in Auckland, which was attended by the Green Cross board and about 20 shareholders, saying the March year produced an “excellent earnings result”.

This was due to the company throwing its weight behind NZ’s pandemic response which enhanced performance across all three divisions of pharmacy, medical and community health, Ellis said.

“The exceptional result, however, was a once-off and while it has been useful to bank the cash, the emphasis now returns to the delivery of sustained underlying earnings,” he said.

Ellis told shareholders the pharmacy division had a strong year and managed to grow dispensary revenue and keep retail sales constant in a difficult market – all while vaccinating the nation. 

Improving the pharmacy business in the face of increased competition and challenging retail conditions was the next priority for the board and management, he said.

The medical division also continued lifting its earnings, helped by the eight acquisitions it made around the country. Ellis said there was a “healthy acquisition pipeline” for the year ahead, which chief executive Rachael Newfield later elaborated on, saying centres had already been bought in Whangārei and Invercargill and more were on the way. 

Ellis said the community health division also delivered a pleasing performance, notwithstanding the “continued inadequate funding from the Labour government”.

Growth strategy

Newfield told shareholders personalisation was “key” to the company’s pharmacy strategy.

She said the company added more than 81,000 people to its Living Rewards loyalty scheme, which totalled 1.9 million members.

Newfield said that was important because Living Rewards customers spent 62% more in-store than customers not in the loyalty scheme. 

“The pharmacy strategy is clear: we'll win by focusing on the customer,” she said.

When it came to the medical and community health divisions, Newfield said technology held a “critical role” and the company’s investment in systems, processes and people was paying off.

“We’ll be expanding use of our client portal in the year ahead, as well as investing in systems to deliver further back-office efficiencies,” she said.

Medical revenue was up 35% to $111 million and operating profit up 71% to $16m for the year ending March 31, she said.

In response to questions from NZSA’s Best on the level of government revenue, Newfield said more than half of pharmacy and medical revenue was from the government, while the community division was 99% government funded.

“We’re very conscious though at inflation running at 7% that health needs further investment to support sustainability and that community health division is absolutely right up there when it comes to that,” she said.

Newfield said Green Cross expected to deliver a similar percentage of covid-19 vaccinations in the current financial year, filling the gap left by district health boards' temporary vaccination centres. 

Green Cross shareholder Ian Rae told BusinessDesk after the meeting that he hadn’t been surprised by anything at the meeting and was pleased with how Newfield had answered shareholders' questions.

“I’ve a fondness for Green Cross,” he said. “Of all my recent share market purchases, it’s the only one where the share price has done well.”