Buyers were out in force for international private healthcare group Mediclinic (MDC) on Friday after the company flagged a material recovery’ in profit margins. First half revenues also moved ahead of pre-pandemic levels, the company added, revealing a 12% increase in revenues, news that saw the share price jump 7.5% to 331.8p, close to their 2021 highs of 344.6p struck in June.

 

Mediclinic operates across three divisions having established the business in South Africa. Today the company operates 50 hospitals across Africa (including three in Namibia), the Middle East (seven) and in Switzerland, where it runs 17.

GROWTH ACROSS THE BOARD

A recovery in patient activity across all three divisions drove overall group revenues 12% higher year-on-year to £1.58 billion in the six months to 30 September eclipsing pre-pandemic revenues by 4%.

The standout performer was the South African division which saw revenues jump 34.5% with the company saying: It is encouraging to see that, as South Africa transitions out of the third wave, we are observing positive trends in non-COVID-19 activity.’

The group also managed to deliver an improvement in profitability with the EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin improving to 15.5% from 12.1% last year, although it is still short of the level achieved before the pandemic of 16.6%.

The company said that effective cost control remained a priority and that ‘various initiatives’ had been established to get margins back to pre Covid-19 levels.

STRONG CASH CONVERSION

Cash conversion continued to improve with 100% of EBITDA converted into cash, ahead of the 42% last year and in line with the targeted range of between 90%-and-100%.

Ongoing financial discipline and resilience resulted in cash and available facilities increasing16.4% to £770 million while the company ended the period with net debt of £2.2 billion. The company said it continued to have ‘headroom’ against banking covenants.

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Issue Date: 15 Oct 2021