Revenue down across Switzerland, Middle East and South Africa

 

Mediclinic, which has a 29.9% stake in Spire Healthcare, attributed its lacklustre results to underperformance in its Swiss division, where it said regulatory changes had had ‘a greater than expected impact on admissions and the insurance mix’. Both the Swiss and Middle East businesses were also affected by ‘customary seasonality’, while in South Africa margins were maintained on lower volumes due to weakness in the second quarter.

It has been a tough two years for Mediclinic since its entry into the FTSE 100 in 2016. Muted sales growth, various profit warnings, and a failed bid for Spire Healthcare have sent shares on a rollercoaster ride. In May, the company posted pre-tax losses of £479m for the full year after taking a £644m write-down on the value of its Hirslanden business in Switzerland and a charge of £109m on its stake in Spire.

Mediclinic said its Swiss business had continued to feel the pressure in the first half with weaker than expected inpatient admissions of 3.6% and revenue per bed day down 2.8%. Hirslanden’s outpatient revenues, which represent 19% of the overall division’s revenue, grew by 1.75% but were offset by national outpatient tariff reductions which came in on 1 January 2018.

In the Middle East, Mediclinic said ‘the characteristically quieter first half’ saw revenue growth of around 5% as a 3.1% increase in inpatient admissions was offset by outpatient volume decline of 0.8%.

The company said seasonal benefits in the second half, combined with the continued gradual improvement in the Abu Dhabi patient mix were expected to deliver a strong second half performance and that EBITDA for the full year is on track while revenue growth is forecast to be in high single digits.

In Southern Africa, revenue was up around 5% as inpatient bed days rose by 0.5% and revenue per bed day increased by 4.5%.

In the UK, Mediclinic said its equity accounted share of profit from Spire was £1.8m in the first half (H1 2018: £1.1m) after adjusting for the amortisation of intangible assets recognised in the notional purchase price allocation of the equity investment. The carrying value of its investment in Spire will be considered as part of the interim review process and reported with its interim results next month.

CEO Dr Ronnie van der Merwe, who took over from Danie Meintjes in June, said the recently announced combination of Hirslanden Clinique La Colline and Clinique des Grangettes would strengthen Hirslanden’s position in the ‘attractive Geneva market’ going forward. In the Middle East and South Africa, he said the company had delivered several key operational initiatives, which would contribute to future growth.

‘Trading in the first half of the year experienced the customary seasonality in Switzerland and the Middle East. In the Middle East, we delivered a gradual improvement in revenue and margin expansion ahead of the anticipated stronger growth in the second half of the year. In Switzerland, the business continues to adapt to recent regulatory changes in the outpatient environment, which in the period had a greater than expected impact on admissions and the insurance mix. In Southern Africa, margins were maintained on lower volumes due to weakness in the second quarter from fewer pneumonia and bronchitis related cases during the winter.

‘For the full year, our performance in Southern Africa remains in line with guidance. In the Middle East, full year EBITDA delivery remains on track with revenue growth lower than previously expected. In Switzerland, we now expect to deliver modest revenue growth in the full year including contribution from Clinique des Grangettes, with an adjusted EBITDA margin of around 16%,’ he said.

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