Mediclinic's revenues edge higher but regulatory issues hit Swiss business

Mediclinic International on Thursday reported a slight increase in annual revenue, though the business still returned a loss as regulatory changes impacted its Swiss Hirslanden business.

Revenue for the year ended 31 March came in at £2.9bn, an increase of 2% compared to the year before, while the private hospital group's loss before tax was slimmed from £479m to £137m amid a 26% reduction in administrative expenses to £1.0bn.

The FTSE 250-traded company's Swiss business, Hirslanden, enjoyed a 2% revenue increase but still returned "disappointing" results, with earnings before interest, tax, depreciation and amortisation down 10% after recent regulatory changes significantly impacted the tariff environment and inpatient insurance mix.

The Swiss business is Mediclinic's most significant, accounting for 47% of group revenue.

Ronnie van der Merwe, chief executive of Mediclinic, said: "Over the course of the last 18 months, all Swiss hospital operators have been affected by rapidly implemented regulatory changes related to outpatient tariff reductions and outmigration of care. We took actions to improve Hirslanden's performance, including accelerated cost-saving initiatives and the introduction of operational efficiencies. As these plans started to take effect, they moderated the financial impact of the regulatory changes in the second half of the year."

Meanwhile, revenue for the company's Middle Eastern operating segment jumped by 5% to £677m, while revenue from the Southern African segment remained unchanged at £886m.

Mediclinic's final dividend remained steady at 4.70p per share, with the total dividend payout for the year thus remaining at 7.90p per share.

For the ongoing financial year, Mediclinic said Hirslanden will be continue to be impacted by regulatory changes for a further nine months but is still expected to achieve "modest" revenue growth from an increase in average bed capacity.

The Middle Eastern business is expected to deliver revenue growth of around 10% due to the continued ramp-up of the new Mediclinic Parkview Hospital that opened in Dubai in September, while the Southern African segment is anticipated to achieve volume growth of around 1% reflecting the additional capacity from Intercare day case clinics that were consolidated after acquisition in November.

Mediclinic International's shares were down 0.97% at 328.10p at 1005 BST.