NMC Health's revenue rises due to long-term growth strategy

NMC Health, a private healthcare network operator in the UAE, reported a rise in half year revenues, boosted by the company’s long-term two-stage strategy.

The company said its focus since its initial public offering in 2012 was first to expand capacity to absorb market growth, driven by population increase, insurance penetration, increased healthcare spend retention, delivery of complex procedures and greater care within its hospitals. Secondly, it planned to expand into higher medical complexity and higher value added specialty healthcare segments through acquisitions.

For the six months ended 30 June, revenues increased by 46.9% year-on-year to $578.3m. Earnings before interest tax, depreciation and amortisation rose 68.2% year-on-year to $115.9m, which resulted in an EBITDA margin of 20%, up 254 basis points on the prior year.

Adjusted net profits attributable to shareholders increased by 48.2% year-on-year to $67.8m and basic earnings per share was 0.336 cents, up from 0.213 cents in 2015.

During the first six months, total patient visits to company assets increased by 42.6% year-on-year to 2.1m and healthcare services revenue per patient increased by 35% to $170 despite price increases.

The healthcare division contributed 66% of revenue in the period, compared to 55% in 2015 and 48% at the time of the company’s initial public offering.

Net debt increased to $ 790.2m due to expansion and the company said it remained in line with management expectations. Cash and short term bank deposits was $ 204.8m with a total debt balance of $ 995m.

The FTSE 250 listed company said the general macroeconomic outlook in the UAE remains stable with moderate gross domestic product (GDP) growth expected as the International Monetary Fund forecasts real GDP growth of 2.3% and 2.5% in 2016 and 2017 respectively. The ongoing insurance reform in Dubai continues to increase medical insurance penetration rates to expand the UAE healthcare market size and NMC Health’s prospects in the region.

Chief executive Dr Bavaguthu Shetty, said: "We have expanded our asset and brand portfolio organically and inorganically into additional healthcare services segments, extended our presence across the continuum of care, entered into higher growth and margin specialties with very favourable regional supply/demand dynamics and selectively entered into new geographies to position NMC at the intersection of multiple growth channels to the ultimate benefit of all our stakeholders.

“In the first half of 2016 we have just started to reap the long-term rewards of several years post the initial public offering work on the two stages of our growth strategy. Despite record growth this year, we expect strong performance to continue going forward supported by the increased utilisation of our organic 485 bed capacity expansion over the past 18 months, recent acquisitions of businesses in high growth segments, very good performance at the major specialty hospitals and in particular Dubai based hospitals and medical centres as mandatory healthcare insurance penetration continues to expand."

Shares in NMC Health were up 0.23% to 1,291p at 0924 BST.