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Mediclinic News : Mediclinic Southern Africa profits are expected to take first half dip

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Mediclinic Southern Africa profits are expected to take first half dip

Date

2016-09-28

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BUSINESS REPORT Healthcare provider Mediclinic International warned yesterday that it expected its earnings for the first half to be marginally lower. Mediclinic's share price closed 1.61 percent lower on the JSE yesterday at R163.63. Mediclinic concluded a reverse takeover of Abu Dhabi's healthcare provider Al Noor Hospital in February. It said the deterioration of the rand in South Africa at the end of 2015 had increased the price of pharmaceuticals and as it paid more for employees in line with its strategy to raise the bar for clinical care and implement pay increases for some clinical staff. In Southern Africa it expected its earnings before interest, taxes, depreciation and amortisation (ebitda) margins for the first half to be marginally lower than the corresponding period at 21.6 percent. In Hirslanden, Switzerland, it expected ebitda margins for to remain stable. In the Middle East, it said significant progress had been made on integrating the businesses of Mediclinic Middle East and Al Noor Hospitals Group. Ebitda margins for the first half were seen at roughly 11 percent as it continued to integrate the business and due to the introduction of a 20 percent co-payment for largest health insurer, Daman, for Thiqa members using private healthcare facilities from July as well as the delayed ramp-up of new units including the Al Jowhara Hospital in Abu Dhabi. As previously announced, Mediclinic Middle East's full year underlying ebitda margin was "expected to be in the mid to high teens with performance being materially second half weighted," the company said. Unchanged The full year guidance remained unchanged, the company said. Danie Meintjes, the chief executive of Mediclinic, said yesterday that the results were in line with management expectations. "The Middle East and Dubai's Mediclinic City Hospital north wing opened in September and initial patient numbers are encouraging", he said. "We continue to see growing demand for cost effective quality private health care service and we remain focused on ensuring our patients receive quality clinical care. Despite the industry trends of growing competition, Mediclinic is well positioned to maintain consistent growth", Meintjes said. Ian Cruickshanks, an independent analyst, said the results were disappointing for investors. "These results are looking good for a long-term performance, but short-term investors may neglect the company," he said. But Cruickshanks said he believed Al Noor would boost Mediclinic in the future. "The Al Noor combination will give it a good foreign exchange against the rand, but for long-term strategy," he said. Shmuel Simpson, an analyst at 360NE Asset Management, said: "In the short to medium term the lower revenue and ebitda for the Middle East is disappointing, but longer term the UAE still remains an attractive region and Mediclinic is well positioned for growth." A stronger rand will have some impact on costs in South Africa and may put pressure on local margins.
Created at 2016/10/04 04:46 PM by Mediclinic
Last modified at 2016/10/04 04:46 PM by Mediclinic