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BUSINESS DAY Mediclinic, which owns and operates hospitals and medical facilities in SA, says it is taking steps to improve the financial performance of Swiss subsidiary Hirslanden, whose woes dominated the company's first half performance. In the six months ended September 30, Hirslanden, which operates 17 hospitals and four outpatient clinics, made an operating loss of £54m, from an operating profit of £72m and caused much of the group's dis appointing performance. "The poor performance in Switzerland more than out-weighed the revenue growth and margin expansion delivered by the Southern Africa and Middle East division," Mediclinic CEO Ronnie van der Merwe said on Thursday. He said regulatory changes regarding outpatient tariff adjustments and outmigration of care in Switzerland had shaken the health care sector in that country. Mediclinic was taking steps to ensure Hirslanden, which is the largest private acute care hospital in Switzer land, adjusts to the changes in part by increasing revenue and reducing costs. "I am confident that Hirslanden is better positioned than many of its competitors to deal with these challenges and remains profitable and cash generative," he said. Mediclinic has previously flagged the difficulties in Switzerland, saying the regulatory changes had offset the positive momentum in revenue growth in Southern Africa and the Middle East In the six months, Hirslanden contributed 46% to group revenue, while Southern Africa and the Middle East contributed 32% and 22%, respectively. Byron Lotter, a portfolio manager at Vestact said on Thursday that while the company had primed the market about the regulatory changes in Switzerland, "things seem to have become worse, hence the market's reaction". Mediclinic shares were down 5.18% to R63.19 on Thursday. Lotter said despite highlighting the risk, Mediclinic had been slow to react. "They have been slow on reducing costs: he said, adding that Mediclinic's cost cutting might prompt Swiss authorities to rethink the changes. "What will happen is that the quality of health care may deteriorate because Mediclinic will not be spending on new machinery” said Lotter. The group's overall revenue declined 1.3% to E1.4bn, dragged down by revenue from Switzer land falling 3% to £631m. Its Southern African division grew revenue 1.1% to £444m. In rand, the growth was 5% to R8bn. The company said investments at the Mediclinic Airport Road, Mediclinic Al Noor and the new Mediclinic Western Region hospitals would contribute to the growth of the Middle East business. The Southern African business, which includes SA and Namibia, increased revenue 5% to 1ll5.1bn, while earnings before interest, tax, depreciation and amortisation in that division increased 6% to R3.2bn. In the six months, Mediclinic Southern Africa invested R423m in expansion capital projects and new equipment. It spent R634m on the replacement of equipment and upgrading projects. Mediclinic said the Southern African business would invest R472m and R846m on expansion and maintenance capital expenditure, respectively.
Created at 2018/12/05 09:10 AM by Mediclinic
Last modified at 2018/12/05 09:10 AM by Mediclinic