SINGAPORE (May 25): IHH Healthcare saw its 1Q18 earnings ended March fall 88% to RM57.2 million ($19.2 million) from RM470 million in 1Q17 earnings due to start-up costs and the recognition of forex losses.
Revenue for the quarter was up 6% to RM2.9 billion from RM2.7 billion in the previous year on the back of sustained organic growth from existing operations as well as the continuous ramp-up of the two new hospitals, namely Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital, which opened in 2017.
In particular, revenue from Parkway Pantai generally registered growth across all countries except for Singapore – the largest contributor in terms of revenue proportion for the Parkway Pantai chain of hospitals and medical centres – where a 4% decline in revenue was registered to result in Singapore contributions of RM921.5 million in 1Q18.
In the quarter under review, the group recorded 8% higher depreciation and impairment losses of property, plant and equipment of RM218.5 million compared to RM202 million a year ago due to its Gleneagles Hong Kong and Acibadem Altunizade hospitals.
Other operating expenses grew significantly by 46% to RM398.3 million from RM272 million a year ago with the commencement of operations of these two new hospitals, as well as the ramp-up of operations at the group’s existing healthcare businesses.
The group also booked forex losses of RM103.9 million in contrast to a forex gain of RM1.4 million in the previous year, due to the weakening of the USD and its effect on the group’s USD-denominated cash balances.
Furthermore, IHH Healthcare recognised RM159.8 million of exchange losses on the translation of non-Turkish Lira balances over the quarter as compared to an exchange loss of RM94.1 million in 1Q17 as a result of Acibadem Holdings’ non-TL denominated borrowings/payables of its cash or receivables as finance in come or finance costs, respectively.
Tan See Leng, IHH Healthcare’s managing director and CEO, says he believes the new hospitals in Hong Kong and Turkey will drive the group’s future growth even though overall EBITDA growth was impacted by the start-up costs in 1Q18.
Looking ahead, the group intends to continue keeping a lookout for value-accretive opportunities to expand into all markets, as well as areas to leverage on technology to remain at the forefront of healthcare delivery in the future.
“Gleneagles Hong Kong is performing well with its EBITDA losses narrowing significantly in this first quarter. Gleneagles Chengdu is set to open by early 2019, and our Gleneagles Shanghai is progressing as planned,” says Tan.
“In India, our hospitals run one of the most extensive and successful multi-organ transplant and surgical gastroenterology programmes. These acquired assets, upon further synergisation, will create sustainable value as a long-term healthcare player in the country,” he adds.
Shares in IHH closed 1 cent higher at $2.08 on Friday.
