Mediclinic shares rise despite falling margins
Middle East expansion has been rewarded
MEDICLINIC International yesterday rose 5.53 percent to close at R59.52, despite the private clinic and hospital group reporting that its margins in Southern Africa and Switzerland fell in the year to end-March on regulatory overtones and a subdued global economy.
The group said revenue in its home region of Southern Africa grew 5 percent, but earnings before interest tax depreciation amortisation (Ebitda) eased 1.5 percent.
Mediclinic said the revenue rose 2 percent on reported basis.
Group chief executive Ronnie van der Merwe said adjusted earnings per share were now forecast to be 27 pence (R4.96), down from the previous period’s 30 pence.
Van der Merwe said Ebitda margins fell to about 21 percent from 21.5 percent on low volume growth.
“We executed against our growth strategy with investments across the continuum of care in all regions,” he said. “We opened Mediclinic Parkview Hospital in Dubai and several day case clinics in Switzerland and Southern Africa, and successfully integrated new investments across the group.”
Van der Merwe said the results were, however, in line with market expectations in a challenging healthcare environment.
Healthcare Consultant at Frost & Sullivan Nicholas Burger said the continent and the planned introduction of the National Health Insurance as well as the release of the Health Market Inquiry would create much concern among private sector stakeholders.
Burger said Mediclinic expanded its international footprint while players such as Netcare and Life Healthcare scaled down on their foreign endeavours.
“It may seem that Mediclinic are making risky decisions during uncertain times. However, the company’s expansion in the Middle East has been rewarded – this may be expected as the Dubai economy is starting to boom once again and healthcare investments/expenditure remain a key focus,” Burger said.
Mediclinic said the Switzerland based Hirslanden’s performance in the second half of the year was as guided, resulting in a full year Ebitda margin of around 16 percent, with revenue up around 2.5 percent.
Inpatient admissions increased by 3.8 percent, whereas revenue per admission was down 2.2 percent, reflecting the outmigration of care and higher proportion of general insured patients.
The group said Hirslanden’s financial performance reflected the impact of the outmigration of identified clinical treatments transferring from an inpatient to an outpatient tariff.
Van de Merwe said the group would prioritise adapting the business to the changing global healthcare environment.