1. What hospitals and brands are under IHH Healthcare?

IHH Healthcare (IHH) is an international healthcare services provider with a vision to become the world’s most trusted healthcare services network. Operating 80 hospitals across 10 countries, the group employs over 65,000 dedicated employees.

As a group, we offer patients a full spectrum of integrated healthcare services, from primary to highly specialised care and across a wide range of other acute medical services, via our international network of clinics and hospitals.

Our portfolio of brands — Acibadem, Fortis, Gleneagles, Mount Elizabeth, Parkway, Pantai and Prince Court — are among the most trusted in our key markets of Malaysia, Singapore, Turkey, India, and Greater China (including Hong Kong).

2. Describe IHH Healthcare’s financial performance over the past few years.

We have delivered robust and resilient financial performance despite unprecedented levels of macro uncertainty. We believe that the underlying strength of our business, underpinned by a clear strategy, as well as the agility of our team in adapting to the challenges were the key reasons for our resilience.

Having responded swiftly to the tightening Covid-19 measures, taking on Covid-19 support services and navigating the pandemic with strict cost controls, we have reported a sustained recovery since June 2020. In 2Q2021, we recorded our highest ebitda and net income over the past two years as more patients returned to our hospitals.

Our long-term growth trajectory remains solid, and we are well-prepared to ride out the pandemic as we stay guided by our purpose and vision, anchored by trust with all stakeholders.

3. Does the company have a dividend policy?

IHH adopts a dividend policy whereby not less than 20% of our group’s profit after tax and minority interests, excluding exceptional items (PATMI EI), is distributed to our shareholders.

For FY2020, because of our resilient performance, the board declared a dividend of 4 sen (1.29 Singapore cents) per ordinary share. This represented a payout ratio of 49%, higher than the 38% payout ratio in the previous year.

4. How has Covid-19 affected IHH Healthcare’s operating conditions? What measures have IHH Healthcare put in place to mitigate the impact?

Our operations — as with all other businesses — were most impacted at the height of the pandemic in April and May 2020, when national lockdowns resulted in local patients deferring non-urgent medical procedures and a drop in foreign patients.

We have successfully mitigated the impact — and continue to do so — by: • Proactively diversifying into new revenue streams in areas of diagnostics and laboratory services, improving case mix as well as partnering and supporting public health organisations, while maintaining tight cost and capital discipline; • Aligning our efforts to innovate and deliver healthcare digitally, such as introducing telemedicine; • Extracting synergies from our international network and enhancing efficiencies to become a oneIHH network; • Driving efficient growth through opportunities to expand into new or established clusters where it is value accretive to IHH.

As healthcare providers, our immediate and continuing priority lies in supporting governments across the world in their fight against Covid-19. This includes the provision of Covid-19 lab testing, allocation of beds for Covid-19 patients, and running vaccination centres. In fact, our laboratories have already conducted more than 7 million Covid-19-related tests since 2020.

5. Does the group have an investment and divestment strategy?

Our investment and divestment decisions should be seen in context of our refreshed strategy first announced in February 2020. This is focused on improving returns while delivering growth and achieving stronger synergies through pursuing a geographical cluster strategy for growth to achieve greater economies of scale, reviewing our asset portfolio and capital deployment to prioritise returns, and leveraging our international scale to achieve synergies, unlock intrinsic value and cost savings.

We continue to invest prudently, such as entering Serbia by acquiring Bel Medic in July 2021. This is in line with our strategy to grow in Eastern Europe and diversify Acibadem’s revenue base with Euro-hedged earnings. On the other end, we divested our Apollo Gleneagles Hospital Kolkata joint venture in April 2021, a non-core asset, to recycle capital.

6. Do you see medical tourism as one of the industry’s key drivers to return post Covid-19?

Covid-19 has undoubtedly curtailed global medical tourism as patients deferred non-urgent or elective treatments. But with the relaxation of travel restrictions, formation of more travel lanes and continued rollout of vaccination programmes worldwide, we are optimistic that medical tourism will pick up as there remains strong demand for quality private healthcare and the long-term prospects for this are unlikely to change in a post-Covid world.

For example, in Turkey where we operate and where travel restrictions have eased, we have seen a firm rebound in foreign patient contribution since around the second half of 2020.

7. What do you think are some key drivers for this industry?

Addressing near-term workforce challenges arising from Covid-19 — in particular, safeguarding frontline staff’s safety and well-being — while also building future workforce adaptability and resilience will require data driven, human-centric solutions that allow organisations to move quickly to support evolving employee needs.

The pandemic has accelerated technology adoption, with digitalisation playing a key role in increasing efficient delivery of healthcare services. It has also changed the way people live, work and play, as many are forced to adapt to a digital lifestyle. Healthcare too, cannot be “business as usual” as patient trends evolve towards “better, faster, easier, more cost-effective”.

Covid-19 has shown the importance of public-private partnerships and how having a holistic healthcare ecosystem will create opportunities for new healthcare behaviours, business and funding models and more effective stakeholder collaborations which can lead to novel combinations of products and services from incumbents and new entrants.

8. What are the key focus areas for IHH Healthcare in the next 2–3 years?

Over the near term, we will focus on three strategic pillars anchored on our purpose of touching lives and transforming care to be the world’s most trusted healthcare provider. They are: • To reduce losses from entities: We have achieved breakeven ebitda for Gleneagles Hong Kong Hospital in May 2021, and significantly reduced our Turkish lira exposure. • To drive operational excellence: Leveraging our international scale for synergies, efficiency, and best practices. • Capital efficient growth: Growing selectively in key metros, so we can provide higher-value services from a large patient population. For instance, we can significantly ramp up our laboratory and digital capabilities in Singapore, Malaysia, India, and Turkey.

9. What are some of the key ESG factors that are material to the group? How do you address these factors?

Our sustainability policy focuses on areas that maximise IHH’s value for long-term growth while ensuring minimal impact on the surrounding ecosystem.

We categorised 20 materiality matters according to our five pillars of sustainability — our patients, our people, our organisation, our environment, and our community. We are adopting a three- pronged strategy to guide the implementation of sustainability initiatives to support our overall business strategy: quality healthcare, eco-efficiency and sustainable growth.

10.What is IHH Healthcare’s value proposition to its shareholders and potential investors? What do you think investors may have overlooked about it?

IHH’s diversified footprint, leading healthcare brands and reach ensures that we are well-positioned for further growth in markets with high barriers of entry such as Singapore and Hong Kong and provides us with economies of scale in procurement and synergies which has led to cost savings.

IHH has an excellent execution track record, strong leadership team with diversified experience, and robust financial performance with strong operating cash flows and balance sheet. We have recorded resilient financial performance with positive net income since IPO.

We aim to further grow our business in diagnostics, ambulatory care, and data analytics while continuing to drive stronger financial performance, balance sheet and financial operations. Our refreshed strategy to double return on equity is already bearing fruit. In May 2021, Gleneagles Hong Kong operations achieved ebitda breakeven and we are also past the 90% mark for our target to achieve procurement savings of RM100 million.

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Candace Li is a research analyst with the Singapore Exchange

Global healthcare player IHH aiming for capital-efficient growth

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