Mediclinic forecasts double-digit revenue growth for Middle East unit in 2019

South African healthcare provider is expanding in the region

The company’s Middle East revenues jumped about 5 per cent to Dh1.5 billion on the back of “the characteristically quieter” first half. Reuters

South Africa’s healthcare provider Mediclinic International is forecasting double-digit revenue growth for its Middle East operations for financial year 2019, after the division helped lift earnings the previous year.

The London-listed company, which acquired Al Noor Hospitals Group in 2016, said adjusted earnings before interest, tax, depreciation and amortization (Ebitda) rose 3 per cent to £515 million (Dh2.5 billion) in the 2018 financial year that ended in March, it said in a statement on Thursday. The adjusted earnings were nearly in line with median estimate of  £513.2m from analysts polled by Bloomberg.

“In financial year 2019, the Middle East division is expected to deliver revenue growth (adjusted for the adoption of IFRS15) in the low double-digit percentage range reflecting the underlying operating performance of the business and additional bed capacity coming online in the second half of the year,” the company said in a statement on Thursday.

The Middle East division’s adjusted Ebitda for the 2018 financial year rose 9 per cent to Dh397m, while revenue increase 1 per cent to Dh3.13bn.

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Mediclinic is expanding its Middle Eastern business as governments increase spending on healthcare. The Arabian Gulf expenditure is forecast to rise to $104.6bn in 2022 from $76.1bn in 2017, rising at a compound annual growth rate of 6.6 per cent, Dubai-based investment bank Alpen Capital said in a March report.

A growing population, high prevalence of diseases such as diabetes, and rising cost of treatment are behind the growth forecast, it said.

“A key achievement was the strong second half performance in Abu Dhabi, which, combined with the continued strong delivery in Dubai and the exciting expansion opportunities ahead, is laying the foundations for further growth across the Middle East division,” said Danie Meintjes, outgoing chief executive of Medclinic.

At the end of March, Mediclinic Middle East operated 6 hospitals and 22 clinics with a total of 748 beds and 5,801 employees. The Middle East division, which has the majority of its operations in Dubai and Abu Dhabi, represented 22 per cent of group revenue in the 2018 financial year versus 24 per cent in the last year, while it accounted for 16 per cent of adjusted Ebitda compared with 15 per cent a year earlier.

For the 2019 financial year, Mediclinic Middle East expects to invest Dh455m and Dh84m on expansion and maintenance capex respectively, it said.