Mediclinic reiterates guidance, says trading in line

Private healthcare provider Mediclinic International maintained its full-year 2016/17 guidance across its three platforms on Tuesday, as it reported trading in line with management’s expectations for the five months to the end of August.

In the South African division, revenue came in at 6.05bn rand, delivered against weak macro-economic conditions and increased competition. The company said underlying earnings before interest, tax, depreciation and amortisation margins for the first half are expected to be marginally lower than the previous year, hit higher price increases on pharmaceuticals, investment in additional clinical personnel in line with the strategy of improving quality clinical care and the alignment of salary increases for certain clinical personnel.

In the Swiss business, Hirslanden, total revenue for the first five months of the year was CHF677m, boosted by improved capacity utilisation and increased outpatient activity. Meanwhile, underlying EBITDA margins for the first half are expected to remain stable versus the year before.

The group said it has made significant progress on integrating the businesses of Mediclinic Middle East and Al Noor Hospitals Group since the combination back in February.

Total revenue for the first five months of the year in the Middle East business was AED1.32bn and underlying EBITDA margins are expected to be around 11%, largely due to business and operational alignment, the introduction of a 20% co-payment for Thiqa members using private healthcare facilities from 1 July and the delayed ramp-up of new units including the Al Jowhara Hospital in Abu Dhabi.

Chief executive officer Danie Meintjes said: "Trading is in line with management's expectations. In Southern Africa and Switzerland, we continue to deliver growth in patient activity. In the Middle East, Dubai's Mediclinic City Hospital North Wing opened in September 2016 and initial patient numbers are encouraging. In Abu Dhabi, we are making good progress with the integration of the Al Noor business and remain confident in the prospects for the region."

Guidance was reiterated. In Mediclinic Southern Africa, the group expects continued growth, notwithstanding macro-economic challenges and increased competition anticipated in the year.

At Hirslanden, it anticipates modest growth at stable margins, while Mediclinic Middle East is expected to deliver low to mid single digit revenue growth and underlying EBITDA margins of mid to high teens with performance being materially second half weighted.