Mediclinic revises down Middle East revenue forecast on slower first half

South African healthcare provider Mediclinic International, which owns Abu Dhabi's Al Noor Hospitals, has revised down its Middle East revenue growth forecast to a single-digit for the 2019 financial year due to a slower first half.

The company’s Middle East revenues jumped about 5 per cent to Dh1.5 billion on the back of “the characteristically quieter” first half of the financial year 2019, which ends in March next year, it said in a statement to the London Stock Exchange, where its shares are listed.

Adjusted earnings before interest, tax, depreciation and amortization (Ebitda) margin rose to 9.5 per cent in the first half of the current financial year, it added. The company had reported the Ebitda margin of 8.5 in first six months of the financial year 2018.

"Trading in the first half of the year experienced the customary seasonality in …. the Middle East. We delivered a gradual improvement in revenue and margin expansion ahead of the anticipated stronger growth in the second half of the year,” Ronnie van der Merwe, chief executive of Mediclinic said.

“In the Middle East, full year Ebitda delivery remains on track with revenue growth lower than previously expected.”

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Healthcare providers such as Mediclinic are expanding in the broader Middle East, especially in the six member Arabian Gulf region as governments of the energy-rich states increase spending on healthcare. The GCC expenditure on health care 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 report earlier this year.

Mediclinic, which also operates hospitals and clinics in South Africa, the UK and Switzerland, said the inpatient admissions in the Middle East were up 3.1 per cent, while outpatient volumes fell by 0.8 per cent.

Ongoing investment across existing and new facilities is supporting the long-term growth of the Middle East division. Mediclinic opened  at the end of September the 182-bed Mediclinic Parkview Hospital in Dubai which the company expects to gradually ramp up over the coming years.

The company has completed the acquisition of two Majid Al Futtaim clinics in Dubai in May. The investment projects at the two main Abu Dhabi hospitals, Mediclinic Airport Road Hospital and Mediclinic Al Noor Hospital are underway.

Mediclinic in May said it expects to invest Dh455m on expansion  and has allocated Dh84m for maintenance capex for the 2019 financial year.