NMC Health, the UAE’s biggest healthcare group, said its first-half revenue beat expectations despite coronavirus-induced headwinds, as costs and operational efficiencies amid the ongoing financial restructuring improved performance.
Gross revenue for the first six months of this year for the group’s UAE and Oman business was $611 million, 10 per cent more than the company's projection in its business plan for the period, NMC said on Wednesday.
First-half earnings before interest, taxes, depreciation and amortisation, or Ebitda, were $103.9m, 50 per cent more than the budgeted $69.3m for the period.
The company did not provide comparative revenue and Ebitda figures for the first six months of 2020.
NMC CEO
Savings on procurement and performance-improvement initiatives, including measures to improve workforce and operational efficiency, supported earnings.
“The first half of 2021 is like daylight compared to the dark nights of the first half of 2020,” said NMC chief executive Michael Davis.
“We have brought the company back from the brink of near total collapse to secure NMC’s future and to ensure that our ability to provide ... patient care is preserved.”
Over the past 18 months, the company has “worked with our stakeholders and partners to stabilise the group’s financial position and improved operations, saving over $2 billion of value in the process”, said Mr Davis.
NMC Health, which grew from a single clinic into the UAE's biggest healthcare provider, ran into trouble after a 2019 report by short seller Muddy Waters accused the company of inflating its assets and understating its debt.
An independent investigation uncovered more than $4.4bn of previously unreported debt, leading to the company being placed into administration in April last year.
The company has achieved significant progress in its ongoing restructuring this year. In April, it announced the sale of Eugin (Luarmia and Boston IVF) to Fresenius Helios for an enterprise value of €430m ($525m).
There are more NMC assets that could be sold off as the company seeks to off-load non-core businesses to focus on operations in the UAE and Oman, Ben Cairns, Alvarez & Marsal London-based managing director for restructuring, told a media call on Wednesday.
NMC is currently in talks to sell its interests in the UK-based Aspen Healthcare and its joint venture in Saudi Arabia.
"There are assets that are not coming to the block. They are on the block," Mr Cairns said.
NMC creditors in April also agreed to restructure the business, which will lead to debt worth $4bn being expunged in return for equity instruments under a legal process called Deeds of Company Arrangements, or Doca, said joint administrators Alvarez & Marsal in a June 7 statement.
Administrators are urging creditors to vote for the Doca plan, which will bring the group's debt pile down to $2.25bn. It involves a mechanism that allows NMC group companies to exit administration and continue to operate their core business.
NMC creditors are meeting on September 1 to vote on the proposed Doca plan. Once confirmed by the Abu Dhabi Global Market Courts, the enactment of these agreements is expected to take between three and five months. In order to pass each DOCA, 50 per cent of unsecured creditors by value must vote in its favour, the company said on Wednesday.
"We anticipate that we will past [all] 35 DOCAs on that date and we will sign [them] into effect," Mr Cairns said.
“We have worked closely with NMC Healthcare’s stakeholders on a long-term approach that will deliver maximum returns to creditors while ensuring NMC’s survival as value-generating going concern,” said Richard Fleming, managing director of Alvarez & Marsal Europe and joint administrator.
The Doca plan provides the best mechanism that allows the group to “continue its restructuring and performance-improvement programme”, he said.
NMC founder BR Shetty is separately seeking $7bn in damages from his company’s former banks, auditors and directors.
In a lawsuit filed in New York, he has accused former directors, two banks and the company’s former auditors of conspiring to “artificially inflate the financials of NMC” and other group companies.
The case by Mr Shetty and his pharmaceutical business, Neopharma, alleges that the eight defendants “conspired to create fictitious invoices for products and supplies purportedly sold by group companies to NMC in order to generate inflated sales and revenue figures for NMC’s financial statements” over a six-year period.
This led to shareholders suffering estimated losses of $10bn as the result of “massive financial fraud”, according to the lawsuit.
