Impairment, forex loss drags IHH Healthcare’s 1Q earnings into red

by SHAZNI ONG/ pic by TMR FILE

IHH Healthcare Bhd stated an impairment of RM400.5 million on goodwill for its Global Hospitals asset in India and a RM60 million foreign exchange (forex) translation loss relating to Khubchandani Hospitals in India upon liquidation hit if financial performance in the first quarter (1Q).

The healthcare group posted a net loss of RM319.79 million for the quarter ended March 31, 2020 as compared to a net profit of RM89.51 million made in the same period a year ago.

Revenue for the quarter dipped 2.4% year-on-year (YoY) to RM3.55 billion as the group had recorded a one-off trustee management fee income of RM28.5 million in 1Q19.

“We had a strong start to the year but the month of March was impacted by the effects of the COVID-19 pandemic,” the group said in a filing to the stock exchange.

A decrease in foreign patient volumes, especially from March 2020 onwards due to the Covid-19 pandemic induced travel restrictions implemented across the countries it operates in, further dragged the group’s performance.

The decrease in revenue as a result of lower patient volumes was partially mitigated by Covid-19-related services the group renders.

“Foreign patients, which makes up about 5%-25% of the revenues in the group’s various markets, were not able to travel overseas for treatment as travel restrictions were implemented across various countries.

“The group mitigated the decrease in patient volume and revenues by rendering various Covid-19-related services to the public healthcare sector,” it told Bursa Malaysia in a filing Monday.

IHH observed in particular, the Covid-19 infection curve has not peaked in certain markets like India.

“With the gradual easing of movement restrictions from June onwards, the group started to see local patient volumes recover.

“The group expects patient volumes to continue its progressive recovery, save for any disruptions from subsequent waves of Covid-19 outbreaks and renewed lockdowns,” it said.

IHH expects higher costs of operations from the disruption in supply chains due to the Covid-19 pandemic and wage inflation from continuing competition for skilled healthcare personnel in its home markets.

“While such cost pressures may potentially reduce the group’s profit and margins, the group expects to partially mitigate these effects through diversifying into new revenue streams, improvements in case mix and tight cost control.

“The group also continues to drive efficient growth, unlock intrinsic value and drive cost savings through global shared services and procurement,” it said.

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