Picture: SOWETAN
Picture: SOWETAN

The share price of private hospitals group Mediclinic International, which has a primary listing on the London Stock Exchange and a secondary listing on the JSE, was ailing on Tuesday after an underwhelming interim trading update.

The update pencilled in underlying earnings of about 11.5p a share, a drop of 10% compared with the 12.8p reported in the matching period in 2016.

Mediclinic shares, which have been under pressure for the past 14 months, touched a 12-month low of R113. Market watchers described the trading update as an understrength dose of numbers when shareholders were desperately keen to see symptoms of a strong recovery.

Mediclinic comprises 75 hospitals and 29 clinics in Switzerland, Southern Africa and the Middle East.

Mediclinic said that in constant currency, the interim revenue was flat with underlying earnings before interest, tax, depreciation and amortisation (ebitda) down about 5%. But after the translation effect of foreign currency movements, interim revenue was up 9.5% at £1.4bn with underlying ebitda up 5% 
at £231m.

Swiss operations contribute nearly half of Mediclinic’s revenue, with South African operations accounting for about 28% and the Middle East about 24%.

In a divisional review, Mediclinic CEO Danie Meintjes said patient volumes in Switzerland and Southern Africa were down in the first half of the year after being hit by the timing of the Easter holidays.

The management teams had implemented cost savings programmes and productivity initiatives to boost margins during the second half, he said.

In Switzerland interim revenue at the Hirslanden operations rose 0.1% to Sf800m ($814m) with bed days sold and inpatient admissions down 1.9% and 1.3%, respectively.

The newly acquired Linde Private Hospital in Biel was completed at the end of June 2017 and contributed about Sf15m to Hirslanden’s revenue.

Meintjes said Hirslanden expected modest revenue growth for the full year and predicted the 17.4% ebitda margin would improve in winter.

In SA, Mediclinic’s interim revenue rose 4% to R7.6bn, with inpatient bed days decreasing 3.3% and revenue per bed day rising 7.7%. Meintjes forecast revenue growth in SA to be about 4% for the financial year.

Despite the pressure on volumes, the underlying ebitda margin for the first half would be up slightly at 21%, thanks to a strong focus on cost management and efficiencies, he said. Full-year margin expectations remained pegged at 21%.

Revenue from Mediclinic Middle East was down 4.7%, but dropped only 0.6% after adjusting for sales of noncore assets.

Meintjes said inpatient and outpatient volumes were down 2% and 15%, respectively after having been affected by the business and operational alignment initiatives in the Abu Dhabi-based operations.

Guidance was unchanged for a modest improvement in revenue for the full year for the region, he said.

hasenfussm@fm.co.za

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