IHH’s 3Q profit driven by Parkway Pantai hospitals

by ALIFAH ZAINUDDIN / pic by BLOOMBERG

PREMIUM healthcare provider IHH Healthcare Bhd continued its solid run this year with a third-quarter (3Q) net profit of RM236.34 million, compared to the previous year’s net loss of RM104.07 million, as a result of higher earnings from its Parkway Pantai hospitals.

Turnover for the quarter grew 33% to RM3.79 billion from RM2.84 billion a year ago backed by sustained growth from its existing operations and the continuous ramp-up of Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital in Turkey, IHH said in a filing with Bursa Malaysia last Friday.

The higher income was also contributed by the increased capacity at Acibadem Maslak Hospital and the acquisition of Amanjaya Specialist Centre Sdn Bhd and India’s Fortis Healthcare Ltd — both of which recorded a revenue of RM9.1 million and RM712 million respectively for the quarter.

Year-to-date, IHH’s net profit tripled to RM510.85 million from RM118.27 million over the same period last year, while revenue increased 33% to RM11.08 billion from RM8.36 billion.

IHH CEO (designate) and ED Dr Kelvin Loh said in a statement that the group’s priority on operational synergies and integration underpinned its strong set of results and vision to become the world’s most trusted healthcare network.

“The proposed acquisition of Prince Court Medical Centre Sdn Bhd is set to enhance our leadership position in Malaysia. Our proactive stance to recalibrate our non-lira loans in Acibadem has also reduced our exposure to currency volatility in Turkey.

“In India, Fortis delivered another impressive performance as we continue to see healthy momentum with an improvement to its operational profitability in both the hospital and diagnostics business,” he said.

Dr Loh added that the group is optimistic with the progress in Greater China, with the opening of Gleneagles Chengdu.

“We continue to ramp up operations at Gleneagles Hong Kong, where there is a demand to serve more patients,” he said.

The group aims to further consolidate its multi-country portfolio strategy in diversification of its earnings base and will look to further differentiate its offering via both organic and inorganic growth.

“The strategy provides a good balance of cashflow-generative markets such as that of Singapore and Malaysia, medium-term growth momentum from Turkey and long-term growth opportunities from India and Greater China,” IHH said.

The group’s expansion projects in Malaysia and China are also expected to provide sufficient capacity to meet demand.

While its pre-operating costs and start-up costs of new operations to partially erode its profitability during the initial stages, IHH seeks to mitigate the effects by ramping up patient volumes in tandem with phasing in opening of wards at these new facilities to achieve optimal operating leverage.

The group expects higher costs of operations arising from wage inflation as a result of increased competition for trained healthcare personnel in its home markets. The prospect for authorities to consider new pricing controls could also impact margins.

IHH, however, expects to mitigate these effects through improvements in case mix and tight cost control. It will increasingly leverage technology to increase productivity and enhance its clinical service offerings, including the adoption of more advanced medical treatment for our patients to improve clinical outcomes.