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IHH Healthcare Q1 profit slides 88% on absence of one-off gain; extends acceptance period for Fortis offer to June 30

MALAYSIAN healthcare group IHH Healthcare Berhad saw its fiscal first-quarter profit shrink by 88 per cent to RM57.24 million (S$19.26 million) due to the absence of a one-off gain recorded a year ago from its RM313.4 million divestment of Apollo Hospitals.

Its profit after tax and minority interests (excluding exceptional items) was 40 per cent lower due to higher depreciation, amortisation and finance costs from the new hospitals opened in 2017, as well as the recognition of foreign exchange losses arising from the group's USD-denominated cash balances, IHH said.

The group's revenue crept up 6 per cent to RM2.85 billion from a year ago on sustained organic growth from existing operations and contribution from its two new hospitals - Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital in Turkey, which opened in 2017.

Although the group's Ebitda was impacted by the start-up costs of the new Hong Kong and Turkey hospitals, the group is confident these new hospitals will "drive future growth", said IHH managing director and chief executive Tan See Leng.

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"Gleneagles Hong Kong is performing well with its Ebitda losses narrowing significantly in this first quarter. Gleneagles Chengdu is set to open by early 2019, and our Gleneagles Shanghai is progressing as planned. In India, our hospitals run one of the most extensive and successful multi-organ transplant and surgical gastroenterology programmes. These acquired assets, upon further synergisation, will create sustainable value as a long-term healthcare player in the country," Dr Tan further noted.

The group's largest operating subsidiary Parkway Pantai booked a 4 per cent increase in revenue on sustained organic growth, continued ramp up of its newer hospitals in Malaysia and contribution from Gleneagles Hong Kong Hospital.

Meanwhile, inpatient admissions at its Singapore hospitals grew 2.7 per cent to 19,352, driven mainly by local patients. Average revenue per inpatient admission rose 5 per cent to RM29,328.

The group announced it will enhance service offerings at its existing hospitals, and also ramp up newer hospitals to further optimise operating leverage, consolidate acquired assets and prepare for the progressive opening of its slate of greenfield and expansion projects.

In a separate announcement, IHH said on Friday it had issued a second extension letter to the board of India's Fortis Healthcare, extending the acceptance period of its enhanced revised proposal until 11.59pm on June 30, after which "the Enhanced Revised Proposal shall stand automatically revoked and incapable of acceptance".

IHH Healthcare had previously written to Fortis, following the revised offer tabled by Manipal Hospitals on May 14, to seek clarity on whether there is a new bid process to be initiated by Fortis's board.

It had previously extended the acceptance period for its offer of 175 rupees (S$3.43) a share for a 40 billion rupee investment to May 29.

IHH's counter closed at S$2.08 on Friday, up 0.48 per cent or one Singapore cent.