Mediclinic upbeat about Middle East turnaround

Hospital group also dodges potential tax hit in Switzerland
Thursday 20 Apr 2017 Author: Lisa-Marie Janes

Global private hospital group Mediclinic (MDC) is more optimistic about its struggling Middle East division. The firm has also dodged a proposed tax levy in Switzerland.

On 10 April the canton of Zurich, a federal state of Switzerland, rejected a proposed levy on the proportion of privately insured patients treated in listed hospitals, which included Mediclinic’s Klinik Hirslanden.

The Switzerland division represents approximately 50% of earnings and the annual CHF34m levy would have hit 2017 earnings by 10% according to analysts.

It’s welcome news for Mediclinic after its Middle East division suffered in 2016 thanks to regulatory changes. From 1 July 2016, United Arab Emirates citizens lost access to free healthcare in Abu Dhabi and had to make a 20% co-payment if they visited a private hospital. This saw full year March 2017 revenue from this part of the business fall by 8% year-on-year.

Investec analyst Cora McCallum also says a slower than expected ramp up in patients is taking its toll as new doctors are taking time to establish their reputation and build a practice.

Despite the challenging environment, management is upbeat about the division’s fortunes improving throughout its 2018 financial year. Margins are also anticipated to be ahead of previous guidance at up to 11.5%. (LMJ)

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