Johannesburg – Private healthcare group Mediclinic International
says revenue for its South African unit will grow in the full year.
However, its challenging Middle Eastern unit continues to
weigh on the company.
Towards the end of 2015, Mediclinic agreed to combine
with Al Noor to create the biggest private health-care provider in the United
Arab Emirates.
However, this move has not been all plain sailing, as it
has experienced challenges in Abu Dhabi, where patient volumes and operating
performance have been below expectations, particularly in January this year.
In addition, in July 2016, the Abu Dhabi government ended
its policy whereby local residents were treated free of charge in private
hospitals. They now have to pay the first 20 percent of any treatment. This
impacted on patient numbers.
Mediclinic is also seeking to actively recruit staff in
the Middle Eastern country.
CEO Danie
Meintjes notes its largest two
platforms, Switzerland and Southern Africa, in addition to its Dubai business,
all performed in line with expectations during the 2017 financial year.
“However, as
previously announced, the Abu Dhabi business underperformed having been
impacted by a major regulatory change in addition to certain business and
operational challenges. We have been focused on resolving these issues and
stabilising performance in the Middle East.
“Our confidence
in the long-term growth opportunities of the region remains strong and we
currently expect performance in the Middle East to improve as we progress
through the 2018 financial year.”
In a statement issued on Thursday, the listed company,
said for the year to March, its Southern African operations will show revenue
up 6.8 percent to R14.4 billion.
Read also: Abu Dhabi challenges hit Mediclinic shares
This is despite inpatient bed days growing only 0.9 percent,
and revenue per bed gaining 5.8 percent.
It adds the results were delivered against a continued
weak macro-economic environment, stagnant medical scheme membership and
increased competition in the private healthcare sector.
Mediclinic says the underlying earnings before interest,
tax, depreciation and amortisation margin will be slightly lower than the
previous year at 21 percent. The margin was impacted by the medical versus
surgical mix, higher price increases on pharmaceuticals (sold at zero margin)
and investment in additional clinical personnel.
Mediclinic owns 74 hospitals and 40 clinics. Mediclinic
Southern Africa operates 49 hospitals and 2 day clinics throughout South Africa
and 3 hospitals in Namibia with more than 8 000 inpatient beds in total;
Hirslanden operates 16 private acute care facilities and 4 clinics in
Switzerland with more than 1 600 inpatient beds; and Mediclinic Middle East
operates 6 hospitals and 34 clinics with more than 700 inpatient beds in the
United Arab Emirates.
Mediclinic Southern Africa expects full year depreciation
and amortisation of around R460 million, net finance costs of around R495 million
and income tax expense of around R625 million. Net finance costs increased
compared to the prior year because of refinancing the corporate bridge loan in
June 2016, it says.
International
In the Middle East, Mediclinic expects revenue to be down
8 percent to AED3.1 billion. It notes, while the Dubai business performed well,
the Abu Dhabi business experienced challenging trading conditions impacting
revenues.
It says the underlying earnings before interest, tax,
depreciation and amortisation margin should, however, be slightly ahead of
previous guidance at 10.5 percent to 11.5 percent.
Mediclinic Middle East expects full year depreciation and
amortisation of around AED175 million and net finance costs of around AED30 million,
similarly impacted by the refinancing of the corporate bridge loan.
In Switzerland, revenue was up 3.5 percent to some CHF1.7
billion.
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