Mediclinic in healthy state
Mediclinic International posted a trading update on Wednesday heralding positive results for the six months to the end of September, which left analysts upbeat on the stock.
Group CEO Dr Ronnie van der Merwe said the Switzerland division Hirslanden had delivered good revenue growth, while patient volumes in South Africa were in line with expectations.
After two years of impact from regulatory changes to the Swiss healthcare system, Hirslanden delivered growth of around 0.5% in revenue and inpatient admissions.
Geneva private hospital Clinique des Grangettes, acquired towards the end of 2018, contributed to a 5.5% growth in Hirslanden inpatient admissions for the six months to November.
Roy Campbell, an equity analyst at RMB Morgan Stanley, cited the easing of regulatory pressure that would allow Hirslanden more time to mitigate pressures, resulting in improved margins, as an upside risk.
The southern African division saw an increase of 2.7% in inpatient bed days sold.
The majority investment in Intercare, which consists of four day hospitals, four subacute hospitals and one specialist hospital, paid off with a revenue contribution of R105 million.
Intercare accounted for the majority of growth in the division’s inpatient bed days sold during the period at 2.4%.
Bank of America Merrill Lynch research analyst Patrick Wood said the revenue growth of 7% in southern Africa was a touch ahead of expectations.
At Mediclinic Middle East, revenue growth of 8.5% was driven by the continued ramp-up of Mediclinic Parkview Hospital in Dubai and a gradual improvement in the Abu Dhabi business, with Mediclinic Airport Road Hospital delivering a strong performance.
Van der Merwe says Mediclinic Parkview Hospital continues to outperform expectations since opening a year ago. Inpatient and outpatient volumes in the division were up 9% and 5.5% respectively.
Campbell says the important areas are delivery, including:
The Abu Dhabi turnaround, where the solid performance at Airport Road is an indication that the change in the patient mix business model is working, with a strong 9% growth in inpatient volumes, and
The fact that the ramp-up of Parkview Hospital, which is a critical component of the Middle East growth story, is ahead of management expectations
Wood said that future upside risks would include faster-than-expected growth in the UAE – particularly the ramp-up of the Parkview hospital; significant private revenue growth in Switzerland driven by new doctors; and positive foreign exchange moves.