KUALA LUMPUR: IHH Healthcare Bhd’s net profit plunged 87.8 per cent to RM57.24 million in the first quarter (Q1) ended March 31, 2018 from RM470.05 million recorded in the same quarter a year ago.
In a statement, the healthcare group said the decrease in net profit recorded in Q1 was due to higher depreciation, amortisation and finance costs from the new hospitals opened in 2017, as well as with the recognition of foreign exchange losses arising from the group’s USD-denominated cash balances.
Its revenue in the same quarter increased 6.3 per cent to RM2.85 billion from RM2.68 billion, on sustained organic growth from existing operations and contribution from its two new hospitals – Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital, which opened in 2017.
The group maintained a strong financial position as at end-March 2018, with a cash balance of RM6.1 billion and net gearing of 0.03 times.
IHH managing director and chief executive officer Dr Tan See Leng said the group saw solid growth in inpatient admission and revenue intensity across its home markets, underpinned by favourable population demographics.
“Although the group’s earnings growth was impacted by the start-up costs of the new hospitals in Hong Kong and Turkey, we are confident these new hospitals will drive future growth.
“Looking ahead, we continue to be on the lookout for value-accretive opportunities to expand into all markets, as well as areas where we can leverage on technology to remain at the forefront of healthcare delivery in the future,” he said.
On prospects, IHH said the group continues to believe in the sustained demand for quality private healthcare in its home markets – Malaysia, Singapore, India and Turkey, and key growth market of Greater China.
“This is based on shifting favourable population demographics and a fast-growing middle and upper class in its home and key markets, as well as its centres of excellence in established medical hubs,” it said.
IHH said the group will continue to draw on its rapid growth over the past few years to enhance service offerings at existing hospitals.
It will also ramp up newer hospitals to further optimise operating leverage, consolidate acquired assets and prepare for the progressive opening of its slate of greenfield and expansion projects.
“IHH is confident that it is well-positioned to capture opportunities with its strong balance sheet and operating cash flow,” it said.