IHH Healthcare quarter one earnings sharply down
PETALING JAYA: IHH Healthcare Bhd, which is seen as one of the two favourites for the bid of India’s Fortis Healthcare Ltd, reported a sharp drop in net profits to RM57.23mil in the first quarter ended March 31, 2018 (1Q18) against RM470.05mil recorded a year ago,
To put it in perspective, the integrated healthcare provider said the earnings of RM470.04mil previously included one-off divestment gain of RM313.4mil from the Apollo Hospitals divestment.
“Profit after tax and minority interests (excluding exceptionals) was at RM120.5mil as stronger operational performance was offset by start-up costs of newly opened hospitals,” it said in a filing with Bursa Malaysia.
IHH’s revenue for the period rose 6% to RM2.85bil from RM2.68bil a year ago on sustained organic growth from existing operations and contribution from its two new hospitals – Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital – which opened in 2017.
Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 8% to RM608.9mil on the stronger revenue performance. Its earnings per share for 1Q18 were 0.44 sen compared with 5.71 sen.
IHH maintained a strong financial position as at end-March 2018, with a cash balance of RM6.1bil and net gearing of 0.03 times.
Managing director and chief executive officer Dr Tan See Leng said the group continued to deliver strong operational performance.
“We saw solid growth in inpatient admission and revenue intensity across our home markets, underpinned by favourable population demographics.
“Although the group’s EBITDA growth was impacted by the startup costs of the new hospitals in Hong Kong and Turkey, we are confident these new hospitals will drive future growth,” he said.
Commenting on Gleneagles Hong Kong, Dr Tan said it was perform- ing well with its EBITDA losses narrowing significantly in this first quarter.
As for Gleneagles Chengdu, he said it was set to open by early 2019, and Gleneagles Shanghai was progressing as planned.
In India, he said its hospitals ran one of the most extensive and successful multi-organ transplant and surgical gastroenterology programmes. These acquired assets, upon further synergisation, will create sustainable value as a longterm healthcare player in the coun- try.
On Parkway Pantai, which is the group’s largest operating subsidiary, it reported a 4% increase in revenue on sustained organic growth due to the ramp up of its newer hospitals in Malaysia and contribution from Gleneagles Hong Kong Hospital.
EBITDA improved by 2% to RM340.3mil as Gleneagles Hong Kong Hospital narrowed its startup losses as a result of operating leverage.
Inpatient admissions at the Singapore hospitals grew 2.7% to 19,352, driven mainly by local patients. Average revenue per inpatient admission (revenue intensity) rose 5% to RM29,328.
Inpatient admissions at its Malaysian hospitals decreased 0.6% to 50,250. However, revenue intensity improved by 9.6% to RM6,427 with more complex cases being undertaken.
In India, inpatient admissions grew 6.7% to 17,075 as IHH continued to ramp up and optimise its operations. Revenue intensity increased by 8.5% to RM8,058 as the higher volumes were met with corresponding improvement in case mix.
“Looking ahead, we continue to be on the lookout for value-accretive opportunities to expand into all markets as well as areas where we can leverage on technology to remain at the forefront of healthcare delivery in the future,” Dr Tan said.
Shares of IHH closed 8 sen up to RM6.26 yesterday.