Mediclinic International says it made another annual loss after writing down the value of its investments in UK-based Spire Healthcare Group and Switzerland’s Hirslanden by a combined £405m (R7.4bn).

In the UK, Mediclinic has been grappling with lower revenues from state patients funded by the National Health Service, while regulatory changes in Switzerland mean some treatments have been shifted from in-patient stays to less lucrative outpatient visits.

The private healthcare group made a reported loss of £151m in the year to end-March, from a loss of £492m previously, as it recorded a non-cash impairment charge on its investment in Spire of £164m and a £241m impairment linked to Hirslanden.

The impairment in Switzerland, against the value of property, equipment, vehicles and intangibles, followed “changes in the market and regulatory environment”, the group said.

In the previous financial year, the group recognised impairments against Spire of £109m and write-downs against Hirslanden of £644m. That means it has impaired the value of those assets by £1.2bn in two financial years.

Mediclinic said revenue in the year to end-March was up 2% at £2.9bn, while adjusted earnings per share were 10% down at 26.9p, which was “in line with market expectations”.

“Adjusted group results for the 2019 financial year were in line with market expectations despite a changing regulatory environment, which led to the group’s disappointing first-half performance,” said group CEO Ronnie van der Merwe.

Over the past 18 months, all Swiss hospital operators have been affected by new regulations related to out-patient tariff reductions and “out-migration of care”, Van der Merwe said.

Thanks to cost savings and “operational efficiencies”, the financial impact of the new rules was “moderated” in the second half of the year.

“Adapting our business to the changing global healthcare environment remains a priority,” Van der Merwe said. “We have identified selective expansion and upgrade investments across the group and will continue optimising the delivery of the services and care we provide.”

RMB Morgan Stanley equity analyst Roy Campbell said in a note to clients that Mediclinic’s adjusted earnings were in line with estimates.

“While not completely unexpected, given the tough regulatory and operating environment in Switzerland, the only new news is the additional second-half £143m impairments in Hirslanden,” Campbell said. “While the quantum of the impairment is new, and the resulting unadjusted reported loss for the period is new, the market should be anticipating the result.”

Analysts at Vestact said the results “looked positive — the stock is up on a day of a very down market”.

Mediclinic’s shares were 0.3% up at R59.94 at 10.52am on Thursday.