In many ways Mediclinic's (MDC) decision to buy hospital provider Al Noor was a good one. It's given the South Africa-based hospital group a London stock market listing, expanded its presence in the growing Middle Eastern healthcare market and accounted for 16 per cent of overall revenue growth.
And yet, the Middle Eastern market is perhaps not as attractive as Mediclinic had hoped. In Abu Dhabi, changes to health insurance policies by provider Thiqa resulted in more patients choosing to use state facilities over the private sector. Since the regulatory change came into effect in July, Thiqa's patient numbers have fallen, meaning Mediclinic’s Middle East division is likely to report full year revenue at the bottom end of previous guidance.
Outside of the Middle East, the company is doing well. Admissions and revenue at constant currencies were up in both the Swiss and South African divisions, while cash conversion remains high throughout the group. But £16m in net one-off charges* relating to the Swiss business dented the bottom line. This, added to the fact that there are now more shares in issue following the reverse takeover of Al Noor, sent underlying earnings per share down 26 per cent.
Analysts at UBS expect adjusted earnings per share for the year to March 2017 of 41.9p, up from 29.5p in FY2016.
*16 November 2016: the original version of this article referred to £21m of one-off charges, and did not include the £5m in related tax gains. This has been updated.
MEDICLINIC INTERNATIONAL (MDC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 838p | MARKET VALUE: | £6.18bn | |
| TOUCH: | 837-839p | 12-MONTH HIGH: | 1,125p | LOW: 785p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 527p* | NET DEBT: | 43% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 1.01 | 129 | 17.6 | 2.66 |
| 2016 | 1.28 | 148 | 14.9 | 3.20 |
| % change | +27 | +15 | -15 | +20 |
Ex-div: 24 Nov Payment: 12 Dec *Includes intangible assets of £2.09bn, or 284p a share | ||||
