IHH Healthcare Q4 net profit falls 58% despite higher revenue

IHH HEALTHCARE on Tuesday (Feb 28) reported a 58 per cent decline in net profit for the fourth quarter despite higher revenue, as it incurred an impairment loss and higher net financing costs.

Net profit for the three months ended Dec 31, 2022 fell to RM191.3 million (S$57.9 million) from RM453.6 million in the year-ago period. On a per-share basis, earnings in Q4 FY22 fell to RM0.0217 from RM0.049 in Q4 FY21.

A first and final dividend of RM0.07 per share was declared, which will be payable to shareholders on Apr 28. The dividend was 17 per cent higher than the RM0.06 dividend in FY21.

The decline in fourth-quarter net profit was mainly due to an impairment loss of RM305.9 million relating to the group’s assets and goodwill in China amid sustained Covid-19 restrictions, as well as higher net finance costs and adjustments, IHH said in its bourse filing.

The group’s revenue rose 9 per cent on year to RM4.9 billion in the fourth quarter of FY22 – its highest revenue performance for the year – as more local and foreign patients returned.

“Foreign patient volume recovery was especially strong in Malaysia and Singapore,” IHH said, adding that the “ramp-up” of Gleneagles Hong Kong Hospital and contributions from Acibadem Bel Medic in Serbia and Acibadem Adana Ortopedia Hospital in Turkey also resulted in the higher revenue.

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For the full financial year, IHH’s revenue rose 5 per cent on year to RM18 billion. However, net profit fell 17 per cent to RM1.5 billion amid the impairment loss in China.

The group noted its “balance sheet remained strong”, with RM3.7 billion of net cash generated from operating activities, and an overall cash balance of RM3.7 billion as at Dec 31, 2022.

Net asset value per share rose to RM2.97 as at Dec 31, 2022, from RM2.55 previously.

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In terms of outlook, IHH said it expects inpatient revenue to grow in a post-Covid world, and it “remains confident of its long-term growth trajectory”.

However, it noted that the healthcare industry faces near-term macroeconomic headwinds, such as inflationary pressures, high energy prices and rising interest rates.

“IHH will maintain a tight rein on costs and leverage synergies from its scale as well as operational productivity to mitigate cost pressures,” the group said.

IHH shares fell 0.6 per cent on Tuesday to close at S$1.75 before the earnings announcement.