Mediclinic climbs on revenue growth amid 'challenging' conditions

Mediclinic International shares jumped after the company posted higher full-year revenues in its Swiss, Southern African and Middle Eastern businesses, though Spire Healthcare's performance dampened spirits on the back of an 'unprecedented' decline in NHS revenue.

The private hospital operator said revenues for the year ended 31 March were up around 2% from £2.9bn on a reported basis, while EBITDA dropped 4% from £515m, in large part as outmigration and TARMED regulatory changes led to a decline in the EBITDA margin of its Swiss unit, from 18% to 16%.

However, that division's revenue still increased by 3% as inpatient admissions climbed by 4%.

Revenue from the Middle Eastern business meanwhile grew by 7% over the course of the company's 2019 fiscal year as inpatient and outpatient volumes increased by 5% and 2%, respectively, while the newly opened Mediclinic Parkview Hospital in Dubai had "performed well".

Indeed, thanks to the contribution from Parkview and the expansion of Mediclinic's Airport Road hospital, management guided to revenue growth of 10% in fiscal year 2020 and stuck to an EBITDA margin target of 20%, versus the 14% seen in fiscal 2019.

Meanwhile, the Southern African business enjoyed topline growth of 5% amid a 1% jump in inpatient bed days and a 4% climb in revenue per bed day, and the FTSE 250-traded company also received its first revenue contribution from its Intercare Group investment, which contributed around ZAR60m (£3.3m).

But here too, operating margins came under pressure which together with "challenging" year for Spire Healthcare Group, in which Mediclinic holds a 29.9% stake, and the drop in profitability at Hirslanden resulted in lower group profits.

To take note of, in March the group amended its financing agreement in Switzerland to take into account the impact of the changing regulatory landscape on the group's profits and ensure it had the financial flexibility needed to fund both continued investment and incremental growth,.

Chief executive Ronnie van der Merwe said group results for the 2019 financial year were in line with market expectations in a "challenging healthcare environment", adding that he was encouraged by operational progress and completion of strategic objectives.

"I am optimistic about our future and confident that we will make further progress against our strategic objectives in the next 12 months. Adapting our business to the changing global healthcare environment is a priority and to this end further selective expansion and upgrade investments will be made across the group. We will also seek to make further improvements to our clinical performance and value-based care capabilities," said van der Merwe.

Mediclinic International's shares were up 8.37% at 329.23p at 0900 BST.