by PRIYA VASU / pic by MUHD AMIN NAHARUL
IHH Healthcare Bhd’s net profit rebounded in the third quarter (3Q) on the back of higher local patient volumes and higher admission numbers, while foreign patient numbers remained weak due to travel restrictions in place.
In a filing to the stock exchange yesterday, the private hospitals operator stated its net profit for the 3Q ended Sept 30, 2020, increased to RM309 million from RM236 million posted in the same quarter last year due to foreign-exchange (forex) gains and lower borrowing rates and loan quantum, its release yesterday revealed.
Its 3Q revenue, however, fell to RM3.52 billion from RM3.78 billion due to softer patient volume due to postponement of non-urgent treatment and visits to hospitals and healthcare facilities.
Foreign patient volume remains low since March 2020 due to the various travel restrictions implemented across the countries that it operates.
IHH expects local patient volumes and occupancy to recover to between 50% and 65%.
“Occupancies at the group’s hospitals in Malaysia, Singapore and Turkey recovered to about 70%-90% of pre-Covid-19 levels in the 3Q. Foreign patients are expected to return with the gradual opening of international borders,” IHH told the exchange yesterday.
Foreign patient revenues at the group’s hospitals in Turkey recovered to almost pre-Covid-19 levels in the quarter after Turkey reopened its borders on June 12, 2020.
“The group took proactive initiatives to partially mitigate the effects of lower patient volumes by improving case mix and diversifying into new revenue streams,” added IHH.
Its Covid-19 related services contributed about 10%, 3% and 21% of 3Q revenues of its operations in Singapore, Turkey and India respectively.
While the group is optimistic of progressive recovery, it expects continued impact from the Covid-19 pandemic for the rest of the year, especially if there are further disruptions from fresh outbreaks and renewed lockdown.
“Given the nature of hospital operations, some costs, such as staff costs and depreciation, remain relatively fixed despite lower patient volumes.
“The group continually maintains a tight rein on costs and has strict cash management, which includes deferment of non-critical purchases and non-critical capital expansion projects,” said IHH.
The group is confident its longer-term growth trajectory remains intact as it delivers on its refreshed strategy with the acquisition of Prince Court Medical Centre on Sept 1, 2020.
“It will be part of the Klang Valley cluster in Malaysia and will augment well in terms of the group’s pursuit for more efficient growth via its geographical cluster strategy,” said IHH.
The group has also entered into an agreement to dispose of its 50% interest in Apollo Gleneagles Hospital Ltd, a joint venture, and the disposal is expected to be completed by Dec 15, 2020.
The group further reduced its forex exposure on its unhedged non-lira gross debt to €92 million (RM450.8 million) in November 2020 and continues to explore avenues to further deleverage it.
With the group’s robust financial position, strong cashflow, operational resilience and continued focus on delivering its refreshed strategy, IHH believes it is well-prepared to ride out this pandemic in the short-term and deliver long-term growth.