HMI profits hit by forex and startup costs

Half yearly profits at SGX-listed but Malaysian-focused private healthcare provider Health Management International (HMI) have been hit by forex losses as well as startup costs for the group’s new specialist centre in Singapore.

For the second quarter, profits fell 28.4% to M$11.3 million (US$2.8 million) on revenues that were up 10.9% to M$128.6 million. For the first half of the year, profits were down 25.8% to M$21.9 million on revenues that gained 8.8% to M$253.5 million.

A weakening ringgit saw the group take a M$3 million forex hit, while EBITDA margin contracted to 22.5% as a result of gestation costs from HMI’s new ambulatory care centre in Singapore, StarMed Specialist Centre. In two tranches last year it took a 70% stake in the centre for S$43.6 million (US$32.1 million).

“With the new proposed investment into a network of primary care clinics in Singapore, we will be widening our healthcare network to support growth at StarMed,” said chief executive Wei Jia Chin. “This new ambulatory care centre presents a unique value proposition of providing quality and affordable healthcare at competitive pricing.”

HMI’s two established hospitals in Malaysia, Mahkota Medical Centre in Malacca and Regency Specialist Hospital in Iskandar Malaysia remain the bedrock of the business.

The group’s total patient load increased 6.8% to 122,392 in the second quarter while average outpatient bill sizes increased 4.8% M$233. Operational bed occupancy increased to 62.7% while the total number of operational beds remained stable at 437.

Expansion plans that were mooted last year, have begun with the construction of a new hospital extension block at Regency. This will more than double existing capacity with additional inpatient beds, clinical services, operating theatres and clinical suites for sale or rental to doctors. When completed in 2021, Regency will become a 380-bed tertiary hospital, with potential to expand capacity to 500 beds.

The group’s shares have declined more than 13% over the past year and are off their September high of S$0.68. After the results, they were trading at S$0.54.