Raffles Medical H1 profit climbs 51.3% with comeback in medical tourism
RAFFLES Medical Group reported a profit of nearly S$59.7 million for the half year ended Jun 30, a 51.3 per cent rise as compared with S$39.4 million a year ago. (see amendment note)
This came largely on the back of higher revenue with a comeback in medical tourism as Singapore reopened its borders, said the healthcare services provider in a regulatory filing on Monday (Aug 1).
The rise in the number of local and foreign patients seeking treatment has more than offset the decrease in revenue arising from Covid-19-related services, said Dr Loo Choon Yong, executive chairman of Raffles Medical Group , in an earnings call.
This helped push revenue higher, which saw an increase of 11.2 per cent to S$382.3 million in H1 2022, from S$343.8 million in H1 2021.
Diluted earnings per share for the first half of the year also gained 51.2 per cent to S$0.0319 from S$0.0211 in the year-ago period.
No interim dividend was declared for the half-year period. The group had earlier announced a change in practices starting FY21, to consolidate its interim and final dividends into an annual core dividend of up to half its average sustainable profit after tax and minority interests.
Prior to the Covid-19 pandemic which severely curtailed overseas travelling, foreign patients made up 25 per cent of Raffles’ business, said Dr Loo.
With the opening up of Singapore’s borders in April this year, they have started coming back as a result of pent-up demand, he said. Dr Loo estimates that the number of foreign visitors that have returned after the reopening is half of pre-Covid levels.
He expects the group to see more patients so long as the Covid-19 situation does not deteriorate in Singapore.
The pace of foreign patients returning would likely follow Changi Airport’s increase in passenger traffic, he added.
Changi Airport Group announced on Sunday that the number of passengers passing through the airport in June exceeded half of pre-pandemic figures for the first time, meeting the 50 per cent year-end target that had been set for the industry earlier this year.
“It won’t come back immediately because it’s not that there are no restrictions. Different countries have different restrictions. Don’t forget there are also other factors. Airline tickets are now more expensive related to load, fuel, war (in Ukraine),” he said.
While Raffles Medical still provides some Covid-19-related services, such as polymerase chain reaction testing and paediatric vaccination, it cannot be compared with the number of people getting vaccinated, swabbed and tested in 2021.
Raffles Medical Group also announced that it has received approval to set up an in-vitro fertilisation and assisted reproductive therapy centre in Hainan, China. Operations will begin in the first quarter of next year.
Due to ongoing travel restrictions in China due to its zero-Covid policy, Dr Loo said they are sourcing their staff for its new centre locally.
“Many people believe that, maybe, by the end of the year or before Chinese New Year, there will be some changes to the travel policy,” said Dr Loo.
Raffles Medical also expects to remain profitable for the rest of the year, although it flagged concerns in operational challenges from a tight labour market, inflationary cost pressures driven by the labour shortage as well as a rise in oil prices from the ongoing Ukraine war.
Dr Loo said that the company’s electricity bill has trebled and that it will try to absorb higher operational costs as much as it can. However, if the high inflationary environment is prolonged and continues till the next year, they may have no choice but to pass on some costs to their customers.
Raffles Medical ended Friday 0.9 per cent higher or S$0.01 at S$1.15 before the results announcement.
Amendment note: An earlier version of this article incorrectly stated that Raffles Medical’s H1 profit increased by 54.4%, when it is in fact, a gain of 51.3%. The article has been corrected.
