Mediclinic International, which owns Abu Dhabi’s Al Noor Hospitals Group, said that its underlying earnings per share plunged by 19 per cent in the financial year that ended in March as the South African healthcare provider suffered from regulatory changes in the emirate.
The London-listed group said in a statement that its underlying earnings per share dropped to 29.8 pence from 36.7 pence. Its shares fell by 5.64 per cent to £8.2 in afternoon trading.
Abu Dhabi last year issued new insurance rules, where Emiratis were required to pay for a greater proportion of their private-sector treatment, starting from July, eroding earning potential of number of healthcare providers. But the emirate said this month it was reversing its policy for Emiratis in Abu Dhabi holding Thiqa health insurance cards, exempting them from paying 20 per cent of private treatment costs.
In the Middle East, revenue was down by 8 per cent year-on-year to Dh3.1 billion during the period on a pro forma basis. The group’s number of inpatients in the region fell by 4.8 per cent year-on-year to 69,000, while outpatient numbers were down by 9.7 per cent, to 3.17 million.
The revenue from the Abu Dhabi business declined by 19 per cent during the financial year compared with the previous year pro forma revenue.
Besides the changes in Thiqa, Mediclinic attributed the Abu Dhabi’s dismal performance to “a need to align Al Noor with the sustainable business and operational practices of the group, doctor vacancies, increased competition and the sale of several non-core assets”.
Abu Dhabi inpatient and outpatient volumes fell by 12 per cent and 14 per cent respectively from a year earlier. The decline in Thiqa patient volumes was greater than other insurance categories in Abu Dhabi, with the inpatient count down by 33 per cent and outpatient numbers down by 31 per cent, Mediclinic said.
The group operated six hospitals and 31 clinics with 714 beds and 6,375 employees in Dubai, Abu Dhabi and Al Ain. It is hiring 52 doctors in the UAE.
Mediclinic pins its hopes on the regulatory changes announced on April 26.
Co-payment for Thiqa patients at healthcare facilities outside Abu Dhabi is also expected to be reduced from 50 per cent to 10 per cent.
To improve its Middle East performance, the group has identified Dh42 million in assets and Dh9m in liabilities for divestment. Last July, it sold homecare and rehab services company Rochester Wellness, which has clinics in Dubai and Oman, to Emirates Health; in November it sold the Gulf International Cancer Centre to UK-based Proton Partners International. It also postponed building a new hospital in the Western Region.
Mediclinic’s rival in Abu Dhabi, NMC Health, said earlier this month it expects the removal of Thiqa co-payments for Emirati patients in Abu Dhabi to have a positive effect on its operating profit for the year ahead, with earnings for this year to come in around the top of its guidance.
Some analysts are sceptical of any fast improvement in the UAE.
“We believe the bulls anticipating a speedy recovery in the UAE are likely to be disappointed as the improvements are to take time,” said James Vane-Tempest, an analyst with investment bank Jefferies International in a note.
Despite the regulatory changes, Mediclinic went ahead with the opening of facilities such as the new 51-bed Mediclinic Al Jowhara Hospital (formerly Al Noor Hospital – Al Jowhara), in Al Ain, as well as three clinics in Abu Dhabi. In September last year, the group bought the remaining 25 per cent stake in Abu Dhabi-based Al Madar group of clinics.
It expects the Dubai business to remain stable despite increasing competition.
The Dubai operations increased their revenue by 5 per cent, including from the new City Hospital North Wing.
Follow The National's Business section on Twitter