Raffles Medical H1 profit rises 0.5% to S$59.9 million; chairman says will consider M&A
RAFFLES Medical Group posted a 0.5 per cent rise in net profit to S$59.9 million for its first half ended Jun 30, from S$59.5 million in the previous corresponding period.
The growth in profit came despite a 9.5 per cent decline in revenue – to S$370.9 million from S$409.7 million in the year-ago period.
Manpower costs fell alongside Covid-related activities, the private healthcare provider said on Monday (Jul 31). The group also recorded a year-on-year fall in net reinsurance expenses, and a smaller impairment loss on trade receivables.
These were partially offset by higher expenses for purchased and contracted services, and a small increase in operating lease expenses.
Earnings per share stood at S$0.0322 for the half year, up from S$0.0320 in the year before.
Dr Loo Choon Yong, executive chairman of Raffles Medical Group, noted in a media briefing that the group’s reported topline was still above that of the pre-pandemic level.
In H1 2019, Raffles Medical reported revenue of S$255.3 million.
Dr Loo said that although the group’s Covid-19 operations are winding down, Raffles Medical continues to provide care in transition-care facilities that were set up during the pandemic – to ease patient load in the public hospitals.
In China, it has expanded its medical services over the last three years. It refurbished its Beijing clinic into a hospital in 2020, and opened a hospital in Shanghai in 2021.
The lifting of movement restrictions in China this year meant H1 revenue for the company’s China operations rose 16.2 per cent to S$28.8 million.
The resumption of regular flights at Hong Kong International Airport also bodes well for Raffles Medical’s airport outlet, with passengers, cabin crew and airport staff returning to work, said Dr Loo.
Medical tourism has recovered to about 70 per cent of pre-Covid levels, said Dr Loo. The somewhat-muted level may be due to some foreign patients preferring not to travel for treatment, as they turned to medical care in their home countries during the pandemic.
Another factor he cited was the growing competition from less-expensive medical hubs in the region, such as Bangkok, Kuala Lumpur and Melaka; rising costs and a strong Singapore dollar have made treatment in Singapore relatively expensive.
“Quite a lot of middle-class (patients) from Jakarta and eastwards used to come to Singapore exclusively. But I think they are beginning to find Kuala Lumpur as a viable alternative,” he said. And the languages spoken there are similar to those spoken in Indonesia and Singapore.
He nonetheless believes Singapore will continue to occupy the higher end of the market; people choose to come here for treatment because of the Republic’s stronger regulatory framework.
On the group’s expansion plans, Dr Loo said Raffles Medical will increase capacity in its current hospitals and expand its cadre of specialists to serve more patients. He did not rule out acting on “compelling” opportunities.
Pointing to the company’s cash and cash equivalents of S$299.6 million as at Jun 30, he said: “We have the means to expand or acquire more hospitals and healthcare businesses. We are looking, and we’ll see what happens.”
As at 4.32 pm on Monday, shares of Raffles Medical were trading S$0.04 or 3 per cent higher at S$1.38.
