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Mediclinic leverage creeping up

As foreshadowed, the private hospital/clinic booked a net earnings loss on non-cash impairments
May 24, 2019

Mediclinic International (MDC) recorded a 4 per cent revenue rise at constant currencies for its March year-end and adjusted earnings in line with market expectations at 26.9p a share. But, as was foreshadowed in November’s interim statement, the private hospital/clinic group swung to another statutory loss on an aggregate £405m in impairments on the group’s stake in industry peer Spire Healthcare (SPI) and on Swiss hospital business Hirslanden.

IC TIP: Hold at 327.4p

In March, Spire reported problems of its own linked to tighter NHS budgets and Mediclinic has been struggling with lower revenues from patients whose clinical care is reliant on the public purse. Switzerland's public/subsidised/private healthcare system has not been all that accommodating, either, as regulatory changes mean that some treatments have been transferred from in-patient stays to less profitable outpatient visits. Hirslanden’s cost base has been trimmed to mitigate the effects of the “outmigration of care”, enabling it to deliver a cash margin of 16 per cent for the year, in line with market expectations.

Bloomberg consensus gives adjusted pre-tax profit of £295m for the March 2020 year-end, leading to EPS of 28.5p, rising to £332m and 32.2p in FY2021.

MEDICLINIC INTERNATIONAL (MDC)  
ORD PRICE:308.2pMARKET VALUE:£2.29bn
TOUCH:309.8-310p12-MONTH HIGH:690pLOW: 293p
DIVIDEND YIELD:2.5%PE RATIO:na
NET ASSET VALUE:427p*NET DEBT:53%
Year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20151.9826644.69.3
20162.1124529.67.9
20172.7530731.07.9
20182.87-479-66.77.9
20192.93-137-20.57.9
% change+2---
Ex-div:13 Jun   
Payment:29 Jul   
*Includes intangible assets of £1.59bn, or 215p a share