Mediclinic share price: Group updates on recent performance

on Nov 10, 2016

Mediclinic (LON:MDC) has updated the market on its performance this morning.

**Highlights from the company statement:**
The Group delivered financial results in line with management’s expectations during the reporting period for Southern Africa and Switzerland. Switzerland achieved particularly strong revenue and underlying EBITDA growth. A specific focus on efficiencies and cost savings has enabled Hirslanden to continue growing its underlying EBITDA margin notwithstanding consistently high occupancy levels. In Southern Africa, the ongoing investment across the portfolio has supported growing inpatient volumes as well as the continued roll out of day clinics. In Dubai, the North Wing of Mediclinic City Hospital was opened in September 2016 providing a state-of-the-art Comprehensive Cancer Centre.

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In the Middle East, the newly enlarged business is well-positioned to service the fast-growing market where Mediclinic sees significant long-term growth opportunities. A key area of focus has been the integration of the Al Noor hospital group with Mediclinic Middle East. A number of operational and regulatory factors in the UAE, including the introduction on 1 July 2016 of Thiqa co-payments (health insurance for UAE nationals living in Abu Dhabi), a large number of doctor vacancies and a delay in opening the Al Jowhara Hospital and other facilities, impacted the newly acquired Abu Dhabi business in the reporting period. The integration process has progressed well and according to the Group’s plans with a new combined organisational structure and strategy in place. The Group remains on track to generate annualised cost synergies of AED75m from the combined Middle East platform.

Group revenue grew by 27% and underlying EBITDA grew by 11%. Mediclinic’s financial results for the reporting period benefited from the addition of Al Noor’s operations, which was not accounted for in the six months ended 30 September 2015 (the “comparative period”). The Combination of the businesses was completed on 15 February 2016. The inclusion of the Al Noor business accounted for around 16% of the overall increase in Group revenue. On a constant currency basis, the Group’s revenue and underlying EBITDA for the reporting period increased by 19% and 5% respectively. This growth was supported by investments in selected capacity projects as well as new service lines. The Group’s underlying EBITDA margin was primarily impacted by the underperforming Middle East business and as a result fell to 17.1% in the reporting period versus 19.7% in the comparative period. Underlying earnings of £94m in the reporting period were unchanged versus the comparative period, with Spire contributing £10m (nil contribution in the comparative period). Underlying earnings per share decreased by 26%, largely impacted by the shares issued to acquire and adverse operating performance of Al Noor. Earnings per share, which includes one-off income and charges, decreased by 15%.

Spire performed in line with expectations for its first half year ended 30 June 2016.


The Group’s main strategic focus remains to ensure high-quality care and optimal patient experience. To this end, Mediclinic continues to invest in its people, patient facilities and the technology within the facilities. The Group’s growing international scale also enables it to unlock further value through promoting collaboration and best practice between its operating platforms and to leverage the benefits of scale through synergies and cost-efficiencies. The Group is well-positioned to deliver long-term value to its shareholders with a well-balanced portfolio of global operations, a leading position across all four attractive healthcare markets and a platform for future growth.

Mediclinic continues to see a strong demand for quality private healthcare services across its three operating platforms and in the UK, notwithstanding the ongoing challenges in the global and regional economies and the regulatory changes that continue to impact healthcare and its affordability.

At Hirslanden, given high occupancy levels, the Group anticipates modest growth and stable margins for the full year 2016/17.

In Mediclinic Southern Africa, the Group expects continued growth, notwithstanding macro-economic challenges and increasing competition anticipated in the year ahead. In line with the Group’s key strategic initiatives, it will continue to make additional investment in the operations to drive competitive advantage.

In the Middle East, revenue growth (excluding the further impact of Thiqa volumes referenced below) is expected to be at the bottom end of expectations due to the continued weak macro-economic environment, the alignment of business and operational practices and a further delay to the opening of Al Jowhara, which is now open. In addition, the Abu Dhabi business continues to be impacted by the new Thiqa co-payment regulation. This has further impacted Thiqa volumes in the second quarter. Assuming these current volumes persist, we expect an additional impact to full year revenues of around AED150m leading to an overall decline versus 2015/16 pro-forma Middle East revenues. Notwithstanding good progress on the integration synergies the impact from the lower revenues is expected to result in underlying EBITDA margins around the bottom end of previous expectations.


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