Mediclinic on the mend after Covid

• Revenue rise of 12% to £1.58bn puts it above the matching six months of 2019 as all three divisions resume higher-margin procedures

Mediclinic’s share price surged more than 11% on Friday, its best day in 15 months, after SA’s most valuable hospital operator said all three of its divisions are now in elective operations. The group, valued at R46.2bn on the JSE, operates in Switzerland, the Middle East and SA.

Mediclinic’s share price surged more than 11% on Friday, its best day in 15 months, after SA’s most valuable hospital operator said all three of its divisions are now doing elective operations.

The group, valued at R46.2bn on the JSE, operates in Switzerland, the Middle East and SA. Like other hospital operators it was hit by the pandemic, which resulted in additional staff and equipment costs, while nonurgent medical procedures were put off.

Revenue rose 12% to £1.58bn (R31.6bn) in the six months to end-September, Mediclinic said in a trading update, up 4.3% relative to the matching six months of 2019.

While core profit of about £245m was about 2% lower than before the pandemic, it was about 44% better year on year.

The share price jumped 11.39% to R69.84 to its highest close since March 2020, when SA entered its first nationwide lockdown.

Sasfin equity analyst Alec Abraham said Mediclinic’s revenue beat expectations, though the improvement in ebitda margin was expected. Earnings before interest, taxation, depreciation and amortisation, or ebitda, is also known as core profit and is a measure of the operational profitability of a business.

Mediclinic’s update follows one from peer Life Healthcare earlier in the week that also showed SA revenue growth a little better than expected, Abraham said.

“The overall assumption ... from these two updates is that the generally higher-margin elective surgery activity appears to be normalising,” he said.

SA, which accounts for just more than a quarter of Mediclinic’s revenue, had its biggest annualised recovery. Revenue rose more than a third year on year to R9.4bn, up 9.3% from before Covid-19.

Core profit of R1.7bn about tripled year on year but remains slightly down from levels before the pandemic.

“Mediclinic Southern Africa has continued to treat a significant number of Covid-19 patients, while addressing the demand for urgent and elective non-Covid-19 care,” said CEO Ronnie van der Merwe. “It is encouraging to see that, as SA transitions out of the third wave, we are observing positive trends in non-Covid-19 activity.”

Hirslanden, Mediclinic’s hospital group in Switzerland, had a 6.7% rise in revenue to Sf910m (R14.3bn), up 4.5% from its prepandemic level.

In the Middle East, revenue grew 13.6% to 2-billion Emirati dirhams (R8.2bn), up 23.8% from before the pandemic.

Mediclinic was established in SA in 1983. At the end of September, it had 74 hospitals, five subacute hospitals, two mental health facilities, 19 daycase clinics and 20 outpatient clinics. Hirslanden operated 17 hospitals and four day-case

CORE PROFIT OF R1.7BN ABOUT TRIPLED YEAR ON YEAR BUT REMAINS SLIGHTLY DOWN FROM LEVELS BEFORE THE PANDEMIC

clinics in Switzerland with about 1,900 inpatient beds.

Mediclinic SA operations include 50 hospitals, three of which are in Namibia, as well as five subacute hospitals, two mental health facilities and 13 day-case clinics, with about 8,600 inpatient beds.

Mediclinic Middle East operated seven hospitals, two daycase clinics and 20 outpatient clinics with about 1,000 inpatient beds in the United Arab Emirates. Under management contracts, Mediclinic operates one hospital in Abu Dhabi and will open a 200-bed hospital in Saudi Arabia in mid-2022.