Mediclinic rises on rosier Middle East prospects
Operations in Switzerland, southern Africa and Dubai performed in line with expectations during the year to March — CEO Meintjies
Private-hospital group Mediclinic International’s share price looked rosier ahead of the Easter long weekend after the market responded well to a slightly better diagnosis on prospects for its Middle East operations.
Mediclinic CEO Danie Meintjes reported on Thursday that the company’s two largest platforms — Switzerland and southern Africa — as well as the Dubai-based businesses performed in line with expectations during the year to March.
He reiterated previous disclosures about difficulty at the Abu Dhabi business, which was affected by regulatory change and other challenges. Mediclinic aimed at resolving the issues in Abu Dhabi and stabilising performance in the Middle East, Meintjes said.
The company, which was still confident about long-term growth opportunities in the Middle East, expected performance in the region to improve in the year ahead.
Meintjes said Mediclinic Middle East’s revenue was down 8% with the Dubai business performing well and the Abu Dhabi business lagging.
He said that he expected the underlying earnings before interest, tax, depreciation and amortisation (ebitda) to be ahead of previous notice at 10.5%-11.5%. Market watchers said the perkier Mediclinic share price indicated investor relief that there was no further bad news from the Middle East segment.
There were also no surprises in the Swiss and South African businesses, they said.
Revenue at Mediclinic’s Hirslanden operations in Switzerland was up 3.5% with Meintjes reporting patient bed days were marginally lower and revenue per bed day increased 3.0%. He said that Hirslanden’s outpatient revenues, representing less than 20% of the overall platform revenues, continued to grow during the year.
The underlying ebitda margin for financial 2017 was expected to be about 20%, slightly ahead of the previous year’s 19.7%.
Meintjes said the improved margin stemmed from operating leverage and the benefit of a sizeable Swiss tariff-provision release. This was offset by higher costs and the continued change in mix regarding treating basic-insured patients.
In SA, revenue rose 6.8% to R14.4bn with inpatient bed days up about 0.9% and revenue about 5.8%.
Meintjes said the South African operations achieved these results against a continued weak macroeconomic environment, stagnant medical-scheme membership and increased competition in the private healthcare sector.
The underlying ebitda margin for the financial year was expected to be about 21%. Marginally lower than the previous 21.4%, this reflected a change in the medical-versus-surgical mix, higher price increases on pharmaceuticals (sold at zero margin) and investment in clinical personnel.