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IHH Healthcare reverses into the red in 3Q on forex losses

PC Lee
PC Lee • 3 min read
IHH Healthcare reverses into the red in 3Q on forex losses
SINGAPORE (Nov 27): IHH Healthcare reported an attributable loss of RM104.1 million ($34.2 million) for the 3Q ended Sept, compared to earnings of RM82.1 million a year ago.
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SINGAPORE (Nov 27): IHH Healthcare reported an attributable loss of RM104.1 million ($34.2 million) for the 3Q ended Sept, compared to earnings of RM82.1 million a year ago.

This was mainly due to recognising foreign exchange losses of RM752.5 million on Acibadem Holding’s non-Turkish Lira denominated borrowings.

Excluding exceptional items, headline earnings would have more than doubled to RM309 million from a year ago as a result of the stronger operational performance and forex gains from a stronger US dollar on IHH’s USD-denominated cash balances

Revenue rose 1% to RM2.84 billion while EBITDA rose 10% to RM616.8 million on the sustained organic growth at existing operations and contribution from Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital, both of which opened in March 2017.

This was despite offsetting translational effect from a stronger Malaysian Ringgit against the currencies of other countries in which IHH operates. On a constant currency basis, revenue and EBITDA grew by strong double digits: 18% and 23% respectively.

Parkway Pantai, the group’s largest operating subsidiary, reported a 4% increase in revenue to RM 1.82 billion on sustained organic growth from its existing operations, the continued ramp-up of its hospitals in Malaysia and higher contribution from Gleneagles Hong Kong.

Parkway Pantai’s EBITDA came in 9% higher at RM 396.7 million supported by the lower startup costs for Gleneagles Hong Kong of RM49.4 million. On constant currency terms, revenue and EBITDA grew by 8% and 13% y-o-y respectively.

IHH says inpatient admissions at its Singapore hospitals were marginally down at 19,217 but average revenue per inpatient admission or revenue intensity grew 8.0% to RM31,375.

Acibadem, Turkey’s leading private healthcare provider in which IHH currently owns a 60% majority stake, saw revenue decline 3% to RM 922.5 million while EBITDA increased 16% to RM 140 million.

Excluding the effects of the strengthening ringgit on translation of Acibadem’ results, revenue and EBITDA were up 38% and 66% y-o-y as its existing hospitals and healthcare businesses continued to grow at a healthy pace operationally.

ParkwayLife REIT, with a portfolio of 50 healthcare-related properties as at Sept 30, saw its external revenue and EBITDA decreased by 1% to RM 33.6 million and 3% to RM 67.6 million respectively. On constant currency terms, revenue and EBITDA grew by 3% and 2% y-o-y respectively.

Dr Tan See Leng, IHH’s managing director and CEO, says, “We are encouraged by the operational resilience of our business, even when our net profit was affected by the forex volatility in Turkey.”

Tan says the group plans to optimise existing operations while continuing to position the group for growth.

“In India, we are excited to officially welcome Fortis Healthcare to the IHH family. Our immediate priority is to stabilise operations, improve operational metrics and ramp up performance to realise this transformational opportunity for the group. We are confident that we have put the blocks in place to ensure IHH balances current returns with a long growth runway,” adds Tan.

Year to date, shares in IHH are down 19.1% to close at $1.57 on Tuesday.

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