Fortis reports 31% jump in Q1 earnings, revenue up 6%

Malaysian healthcare group IHH Healthcare reported a 31 per cent hike in Q1 earnings to MYR 493.3 million (USD112 million) boosted by an increase in patient volumes, lower net finance costs and higher revenue which rose 6 per cent to MYR 4.16 billion (USD950 million).

In an analyst briefing held on May 27 for the fiscal quarter which ended March 31, IHH reported that EBITDA grew 4 per cent to MYR 996.5 million (USD 227 million), “driven by higher revenue but partially offset by higher staff costs, operating expenses, and lower government grants. This was compared to a higher base in the same period last year with MYR 15.6 million gain on disposal of an investment property.”

Net operating income expanded 21 per cent to MYR 407.4 million.

The company which is listed on both the Malaysia and Singapore stock exchanges has 33 hospitals in India. It owns the Gleneagles and Fortis brands of hospitals, clinics and diagnostic centres and has a presence in over 15 Indian cities including Hyderabad, Bengaluru, Chennai, New Delhi, and Mumbai.

IHH claims to be one of India’s largest healthcare providers and one of the country’s most renowned multi-organ transplant and tertiary care multi-speciality hospitals. It has a strong reputation for Oncology, Gastroenterology, Liver & Hepatobiliary, Cancer Care, Neurosciences, Urology, Renal Sciences and Cardiac Sciences, and its hospitals are also well known for Surgical Oncology, Gastroenterology, Bariatric Surgery, Emergency Care and Critical Care.

The healthcare group said its key markets expanded with a rebound in domestic patient revenue, the contribution from delivery of Covid-19-related services and a continued ramp-up of operations at Gleneagles Hong Kong Hospital.

The acquisitions of Kerela-based DDRC SRL Diagnostics Private Ltd on April 5, 2021, and General Hospital Acibadem Bel Medic in Turkey on July 20, 2021, also contributed to its performance.

These were partially offset by the effects of the disposal of Continental Hospitals Private Ltd on December 14, 2021, the temporary closure of all clinics in China for a period during March 2022 which was imposed due to a spike in Covid-19 cases in Shanghai, and the effects of a weakening lira on the group’s revenue from operations in Turkey.

In India, the group reported a healthy recovery of non-Covid inpatient admissions with revenue growing to MYR 870.2 million (USD 198 million). Despite overall inpatient admissions dropping 8 per cent, EBITDA increased 16 per cent to MYR 134.2. Revenue intensity increased 9.6 per cent as patients with more serious and urgent ailments sought treatment at the hospitals. For the quarter, average hospital occupancy was at 62 per cent.

The group expects that the key drivers for growth in India are the demand for domestic elective treatments as well as the recovery of medical travel.

Singapore, its largest market by revenue, saw a resilient performance with higher revenue intensity. Revenue strengthened by 8 per cent to MYR 1,250.5 million (USD285 million) largely contributed from Covid-19 related services, in particular the warding of Covid-19 patients in IHH hospitals. EBITDA fell 4 per cent to MYR 395.7 million due to higher staff costs for the Covid-19 projects. Inpatient admissions dropped 6 per cent due to a surge in Covid-19 community cases in Q1, but revenue intensity grew by 20.2 per cent. For the quarter, average hospital occupancy was at 55 per cent.

In a statement accompanying the results, IHH said that the group would leverage synergies from its international network to achieve cost savings, acquire strategic assets to drive capital-efficient growth through its cluster strategy and build distinct platforms such as laboratories businesses.

“The group will continue to roll out its digital transformation initiatives and allocate approximately MYR 400 million for investments over the next three years to innovate and deliver healthcare capabilities digitally,” it added.

With global inflation rising, most costs are expected to increase over time, but the group said it would continue to maintain a tight rein on costs and make appropriate price adjustments.

IHH sees short-term headwinds due to rising staff costs and inflationary pressures, including energy costs. However, it believes the long-term “mega trends” like longer life expectancy coupled with ageing more affluent population in Asia means a higher demand for quality healthcare services.

As part of its plan to sustain revenues as it begins to see Covid-19 services tapering off, the healthcare group plans to develop the laboratories segment as a core business. It sees growth in the underlying non-Covid-19 business and will focus on extracting operational synergies and driving digital transformation across the Group.

“As borders reopen and restrictions lift, we are seeing a firm recovery in our non-Covid business as domestic and foreign patients return. In the short term, we may expect to see some headwinds with the melt-off of Covid-19-related revenues as well as from global inflationary pressures. However, we remain confident that our longer-term growth trajectory remains intact,” said Dr Kelvin Loh, Managing Director and CEO of IHH Healthcare. ANI