Pacific Edge shares take beating

Shares in cancer diagnostics company Pacific Edge were hammered after the company confirmed its Cxbladder tests were set to lose its prized Medicare insurance coverage in the US next month.

Medicare business generated three-quarters of the company’s operating revenue last year, and Pacific Edge said revenue was expected to reduce substantially until its Cxbladder tests regained coverage.

The benchmark S&P/NZX 50

Index fell 1.03%, or 122.946 points, to 11,759.15. On the broader market 64 stocks rose and 71 fell with $142 million shares traded.

Ebos Group fell 5% to $35.50, following its 9.8% drop in Tuesday after the healthcare products distributor confirmed its five-year contract with Chemist Warehouse in Australia would not be renewed when it expired at the end of June next year.

The contract to supply prescription drugs to Chemist Warehouse stores in Australia was worth about A$1.9 billion (NZ$2B) in revenue a year for Ebos, which had total revenue of A$10.7b last year. The new contract it was vying for would have included both prescription drugs and fast moving consumer goods, and was worth about A$3b a year.

Craigs Investment Partners said the loss of the contract came as a surprise and would reduce the company’s earnings by about A$60m.

Shares in investment company Infratil were put in a trading halt while the company arranges a share sale to fund its purchase of One New Zealand, previously known as Vodafone. Infratil yesterday announced it had reached an agreement with Canadian investment company Brookfield Asset Management to buy its 49.95% stake in the telco for $1.8b.

The purchase will double Infratil’s stake in One NZ to 99.9% and will be funded through an $850m equity raising, cash reserves and debt. The small number of remaining shares in One NZ are owned by individuals, including One NZ chief executive Jason Paris.

Infratil is selling $750m of shares in an underwritten placement, and will later sell $100m of shares to retail investors.

The placement involves the issue of 81.5 million new shares at $9.20 a share, which is an 8.9% discount to the last NZX closing price on Tuesday.

Dairy prices fell at the global auction overnight, with the average price for whole milk powder, which has the most impact on what farmers are paid, down 3%.

Pacific Edge said revenue was expected to reduce substantially.