SINGAPORE (Nov 27): IHH Healthcare reported 3Q earnings fell more than half to RM82.1 million ($26.9 million) from $173.3 million a year ago on higher costs from depreciation and amortisation and finance costs from the two new hospitals in Hong Kong and Istanbul in March. Stripping out exceptional items, PATMI decreased 42% to RM125.4 million.
Revenue for the 3Q17 ended Sept grew 15% to RM2.8 billion from RM2.4 billion a year ago. This was on sustained growth in inpatient admissions and revenue intensity across most home markets and the ramp up of new hospitals opened in March. Tokuda Group and City Clinic Group in Bulgaria, acquired in June 2016 and since consolidated into Acibadem Holdings, also contributed to the higher revenue.
Parkway Pantai, the group’s largest operating subsidiary, reported a 14% increase in sales to RM1.8 billion, thanks to sustained organic growth for its existing hospital business. EBITDA increased by 2% to RM362.8 million, in part eroded by the RM68.8 million in start-up losses incurred by Gleneagles Hong Kong Hospital.
Acibadem, Turkey’s leading private healthcare provider which IHH owns a 60% stake, posted a 18% rise in revenue for 3Q17 while EBITDA grew 44% to RM120.5 million.
ParkwayLife REIT, with a portfolio of 49 healthcare-related properties, reported a 1% decline in revenue to RM34.0 million as the Yen fell against the Ringgit impacting translated rental income from its Japanese portfolio. EBITDA was up 2% to RM362.8 million as a strong Singdollar boosted rental income for its Singapore portfolio when translated to the Ringgit.
In its outlook, IHH Healthcare expects the sustained demand for quality private healthcare in its home markets and key growth market of Greater China.
In the year ahead, the group also expects to face cost pressures on several fronts. These include wage inflation from increased competition for talent in its home markets, rising purchasing costs with the stronger US dollar and higher pre-operating costs and startup costs from new operations which would partially erode profitability in the initial stages.
Shares in IHH Healthcare closed 4 cents lower at $1.83 on Monday.
