Hospital operator Mediclinic International PLC said on Tuesday its interim underlying earnings and revenue rose for the period despite the effects of Easter, the quieter summer period, and an expected slowdown in the Middle East.
For the six months ended September 30, the company said that underlying earnings before interest, tax, depreciation and amortisation was GBP231.0 million, up 5.0% from GBP220.0 million the year prior.
Revenue was GBP1.4 billion, up 9.5% from GBP1.3 billion the year before, taking into account the effects of foreign currency translation.
At constant-currency rates, however, underlying revenue was flat with underlying Ebitda down around 5%.
Mediclinic said that its share of profit from its 29.9% holding in Spire Healthcare Group PLC was down to GBP1.1 million from GBP9.8 million the year before, hit after Spire made a GBP27.6 million provision related to a civil litigation settlement regarding former consultant Ian Paterson.
Mediclinic said that its Switzerland business saw revenue grow 0.1% to CHF800.0 million, around GBP620.0 million, with Ebitda margins shrinking to 17.4% from 18.4% the year before.
The lower margin reflects, Mediclinic said, lower patient volumes and an ongoing insurance mix change, partially offset by cost management and efficiency savings.
The company said underlying Ebitda margins for the second half will reflect the seasonal benefit of winter. The full year margin, it said, will be impacted by reductions for Swiss healthcare programme TARMED outpatient tariffs from January 1, outmigration of care, two Easter holiday periods, costs relating to its Hirslanden 2020 strategic programme, and the acquisition of Linde private hospital.
Bed days sold and inpatient admissions were down 1.9% and 1.3% respectively, impacted by the timing of Easter and a subdued market during the summer months. Revenue per bed day remained broadly flat.
Revenue growth for outpatients, representing 19% of total Swiss revenue, grew 6% in the period.
During the period Mediclinic acquired the 115-bed Linde private hospital in Biel, Switzerland, with the acquisition bringing some CHF15.0 million to first half revenue, with further "modest" revenue growth expected for the year.
In southern Africa revenue grew 4.1% to ZAR7.6 billion, around GBP430.0 million, and Ebitda margins expected to be 21.0% from 20.7% the year prior despite pressure on volumes. Full year margin expectations remain on track at around 21%. These results, Mediclinic said, were delivered against a continuously weak macroeconomic climate in the region.
Performance was further impacted by Easter and other public holidays leading to nine fewer working days in South Africa than the same period the year before. Full year revenue growth is expected to be around 4%.
Inpatient bed days decreased 3.3% and revenue per bed day increased 7.7%.
In the Middle East revenue sank in line with guidance 4.7% to AED1.5 billion, around GBP310.0 million, with Ebitda margins compressing to 8.5% from 11.0% the year before. The company said that excluding the sale of non-core assets revenue was down 0.6%.
Ebitda growth is expected in the second half, with an expectation of "gradual" improvement in the underlying Ebitda margin over time. Full year guidance remains unchanged.
Inpatient and outpatient volumes were down 2% and 15% respectively due to business and operational alignment initiatives undertaken in Abu Dhabi last year. It said the Dubai business continues to perform "very well".
The action taken in the previous year is laying the foundation for sustainable growth, Mediclinic said. Doctor vacancies have normalised and since health insurance co-payments for UAE nationals - known as Thiqa - in Dubai were removed in April it has seen a continuing trend in Thiqa payment activity.
Thiqa inpatient and outpatient numbers grew 40% and 15% respectively during the half. The company said the removal of the payment has allowed it to shift away from basic patients towards enhanced and Thiqa, improving the quality of revenue.
Revenue guidance remains unchanged in the region for the full year with Mediclinic expecting to see momentum in higher margin business in the second half, driven by the seasonality benefit in the UAE following the quieter summer.
Investment projects at the two main Abu Dhabi hospitals is underway, and the new Mediclinic Parkview hospital in Dubai is on track for completion in the fourth quarter of the next financial year. Project planning for the Western Region hospital has also begun.
"The Middle East business has started the financial year well following the positive operational and regulatory changes in Abu Dhabi", Mediclinic Chief Executive Officer Danie Meintjes said. "The Dubai operations continue to perform strongly, benefiting from growing patient numbers at the Mediclinic City Hospital's new North Wing. We expect the Middle East business to generate strong sequential and comparative revenue growth and underlying Ebitda margin expansion in the second half of the financial year."
"In Switzerland and Southern Africa, patient volumes in the first half of the year were down on the prior year period, impacted by the timing of the Easter holiday period", Meintjes added. "The management teams in both platforms have implemented the appropriate cost savings programmes and productivity initiatives that will help margins during the second half of the year."
Shares in Mediclinic were down 5.3% at 639.00 pence Tuesday.