Mediclinic International, the medical care company which withheld interim dividend payments for the half-year ended September 30, continued to invest in capital expenditure as it lines up a new 236-bed private hospital in Saudi Arabia.
With global macro-economic uncertainty and inflationary pressures persisting, Mediclinic is expecting the risk of further Covid-19 and related disruptions to staffing and scheduling to worsen its operating framework.
This was likely to “impact the previously anticipated sequential increase in patient activity in Switzerland and Middle East” and limit the company’s “ability to fully offset incremental cost increases” in the two divisions.
Nonetheless, Mediclinic has continued to raise its investment appetite for its businesses, with total capital expenditure for the half-year period until the end of September topping £73 million (R1.5 billion) against £62m recorded for the corresponding period last year.
The increase in capital investment for the period is largely in line with “expectations for ongoing investment” to “enhance the existing business and deliver future growth” opportunities.
Shares in Mediclinic traded 0.09% weaker on the JSE at R101.40 in intraday trade yesterday, even as it reported a surge in revenues and earnings.
Mediclinic did not declare a dividend for the period as it awaits South African regulatory approvals for the proposed buyout by Bidco. The acquisition will be by means of an already agreed deal around a recommended 504 pence per Mediclinic share cash offer by Bidco.
The offer, being implemented by means of a court-sanctioned scheme of arrangement, is for the entire issued and to be issued share capital of Mediclinic not already owned indirectly by Remgro. Shares in Remgro traded 0.79% down at R139 in yesterday’s afternoon trade on the JSE.
It also includes the final dividend of 3 pence per Mediclinic share declared by Mediclinic for the 2022 full-year period on May 25.
Mediclinic said revenues for the period were 10% stronger at £1.7 billion compared to the same period last year while earnings and earnings per share were 28% stronger at £83m and 11.3 pence, respectively.
The higher revenue outturn was driven by a 13.7% growth in inpatient admissions and a 21.9% growth in day case admissions but was offset by lower average revenue per case compared to the Covid-19-impacted contrasting period.
However, in adjusted terms, operating profit in Mediclinic was down 11% at £131m, reflecting a 3% lowering in return on invested capital, which stood at 4% at the end of the previous full-year period.
Mediclinic explained that “in constant currency terms, adjusted operating profit was down 20%” for the period compared to the same period last year.
Patient volumes for the half-year period under review were “impacted by pronounced seasonality”, while “average revenue per case reduced due to mix changes” recorded.
However, the group noted that it had “experienced a testing 1H23 performance on the back of macro-economic pressures and the effect of pronounced seasonality post lifting of Covid-19 travel restrictions” on volumes.
Mediclinic’s southern African division opened two new day case clinics during the period, bringing its total to 14. In the Middle East, Mediclinic opened a cancer centre in Abu Dhabi.
“The group’s entry into the Kingdom of Saudi Arabia together with the Al Murjan Group continues to progress well. We expect to open the 236-bed private hospital in calendar year 2023,” it further said.