IHH Q1 net profit doubles on divestment gain

GLOBAL healthcare provider IHH Healthcare Berhad on Friday reported a doubling of its net profit for the first three months of the year, lifted by a gain from divestment in Apollo Hospitals.

Net profit for the first quarter of 2017 rose to RM470 million (S$151.1 million), following a RM313.4 million gain from the group's divestment of a non-core 6.07 per cent stake in Apollo Hospitals.

Excluding exceptional items, net profit fell 15 per cent year-on-year to RM201.8 million, led by incremental depreciation, amortisation and finance costs for the new hospitals in Hong Kong and Istanbul.

Revenue in Q1 rose 8 per cent year-on-year to RM2.7 billion, driven by sustained growth in inpatient admissions and revenue intensity across all home markets, as well as the continued ramp-up of newer hospitals opened in 2015.

Tokuda Group and City Clinic Group in Bulgaria, acquired in June 2016, also contributed to the higher revenue, IHH said in a filing to the bourse operator.

Earnings before interest, tax, depreciation, amortisation, exchange differences and other non-operational items (Ebitda) slid 8 per cent to RM565.6 million, largely due to start-up costs from the newly opened Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital, as well as higher operating and staff costs.

IHH said that in the year ahead, it expects to face cost pressures on several fronts including continued competition for talent, pre-operational and start-up costs from new operations, and higher purchasing costs with the stronger US dollar. It said that it would mitigate these through prudent cost management, taking on higher revenue intensity procedures and ramping up new facilities to achieve optimum operational efficiencies.