SINGAPORE (Feb 24): Raffles Medical Group has posted a 14.1% drop in earnings to $58.1 million for FY2019 ended 31 December, from $67.7 million a year ago due to the start-up costs it incurred from the opening of Raffles Hospital Chongqing in January 2019.

This translates to earnings per share (EPS) of 3.32 cents for FY2019 on a fully diluted basis, compared to an EPS of 3.97 cents in FY2018.

This is in spite of a 6.7% increase in revenue to $522 million (from $489.1 million in FY2018), that comes from contributions in its healthcare and hospital services divisions. Income from its healthcare services was up 9% following an increase in corporate clients and a greater scope of services for insurance contracts. Meanwhile, its hospital services division grew 5.9% on higher patient load.

Even so, Raffles Medical’s bottom-line was hit by an 8.4% increase in staff costs to $266.9 million, a 61.0% increase in depreciation of property, plant and equipment to $27.7 million, and a 46.3% increase in amortisation of intangible assets to $1.6 million.

Overall, net profit was down 15.2% to $60.3 million in FY2019, from $71.1 million in the year earlier ago period.

The group was also hit by gestation losses of $9.2 million from its Raffles Hospital Chongqing facility – without which its earnings before interests, taxes, depreciation and amortisation would have been up 11.8% on year.

As at end-December, cash and cash equivalents stood at $150.7 million.

To this end, the directors of the company have recommended a final dividend of 2 cents per share, subject to shareholders’ approval at an Annual General Meeting to be convened on 24 April. 

Including an interim dividend of 0.5 cents paid last August, the group’s total dividend for FY2019 is 2.5 cents a share.

Looking ahead, the group expects to remain profitable this year, barring any unforeseen circumstances such as the prolongation of the novel coronavirus (Covid-19).

It has already stepped up its ante, increasing its healthcare screening centres to five in Singapore.

It is also promoting its RafflesConnect platform here – which enables patients to avoid public spaces through tele-consultations and have their medications delivered to their homes thereafter.

In China, RafflesHospital Chongqing is operating in full swing and has obtained approval to be a designated hospital allowing local Chinese patients to claim medical expenditures under the republic’s social health insurance scheme.

Its RafflesHospital Shanghai is ready for operations, and will open its doors once the pandemonium from Covid-19 abates and the city returns to normalcy.

Analysts from OCBC note that the group’s quicker than expected ramp up of the two hospitals in China give room for lower gestation losses, higher regional patient volumes and stronger revenues.

However, they warn of potential containment and regulatory risks there.

To this end, they maintain a ‘hold’ call, given “fair valuations and time needed for the expansion plans in China to play out”.

As at 11.57am shares at Raffles Medical group were trading 1.98% higher at $1.03.