IHH Healthcare Q1 net profit doubles to RM470m

PETALING JAYA: IHH Healthcare Bhd (IHH) saw its net profit in the first quarter (Q1) ended March 31, 2017 double to RM470 million, from RM235.5 million in the previous corresponding quarter, following a RM313.4 million gain from its divestment of a non-core 6.07% stake in Apollo Hospitals.
Revenue increased 8.5% to RM2.7 billion, compared with RM2.5 billion in the same period last year, attributed to organic growth from its existing operations and continuous ramp up of the hospitals opened in 2015.
In a statement on Friday, the healthcare provider said the acquisition of Tokuda Group and City Clinic Group in June last year contributed to higher revenue.
IHH said earnings before interest, tax, depreciation, amortisation, exchange differences and other non-operational items (Ebitda) declined 8% to RM565.6 million, mainly due to start-up costs from the newly opened hospitals, as well as higher operating and staff costs.
Nevertheless, IHH said it remained in a strong financial position as at end-March 2017, with a cash balance of RM2.8 billion and improved net gearing of 0.20 times, from 0.21 times as at end of last year.
"Amid persistently challenging market conditions, we delivered a resilient performance," its managing director and CEO Dr Tan See Leng said.
"In the year ahead, we will build on our successes by enhancing service offerings and executing well on the projects in our pipeline. We will also continually rebalance our portfolio to optimise returns and focus on our core operational strengths," he added.
On prospects, IHH said it continues to believe in the sustained demand for quality private healthcare in its home markets and key growth markets of India and Greater China.
However, the group said it expects to face cost pressures on several fronts in the year ahead, including continued competition for talent, pre-operational and start-up costs from new operations, and higher purchasing costs with the stronger US dollar.
Nevertheless, IHH said it will mitigate these through prudent cost management, taking on higher revenue intensity procedures and ramping up new facilities to achieve optimum operational efficiencies.
IHH said the group remains confident that its brands and network of hospitals, supported by strong financial position, will enable it to successfully navigate the challenging operating environment.
On a separate note, IHH said its unit Integrated (Mauritius) Healthcare Holdings Ltd (IMHHL) has disposed its remaining 4.78%-stake in Apollo, for RM551.1 million (INR8.2 billion) via a book-building process.
IHH said the disposal were undertaken as part of an ongoing and regular review of the group's investment portfolio to maximize return to its stakeholders.
In addition, it said having acquired Ravindranath GE Medical Associates Private Ltd (Global Hospitals) and Continental Hospitals Private Ltd group in 2015, the group is consolidating and rationalising its investment to these operating companies in India as its fourth home market.
The proceeds from the disposal will be utilised for the group's working capital, it added.