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Highlights from Raffles Medical Group’s First Quarter Earnings

The largest private medical group practice in Singapore, Raffles Medical Group Limited (SGX: R01), or RMG, posted its first quarter results on Monday before the markets opened.

Founded in 1976, the medical outfit is a fully integrated healthcare organisation: It owns and operates a network of family medicine clinics and a tertiary private hospital; provides healthcare insurance services; and runs a healthcare-related consumer products division.

For the quarter, both revenue and net profit had went up by 8% year-on-year to S$87.6 million and S$14.6 million respectively. The Healthcare Services and Hospital Services divisions registered revenue growth of 14.3% and 4.8% respectively. The firm said that the rise in revenue was due to a number of reasons: 1) An increase in patient load from the expansion of its clinic network and from more corporate contracts secured in our city-state; 2) higher volume of healthcare insurance services; and 3) recruitment of new specialists to the group practice.

As of 31 March 2014, RMG had a cash hoard of S$98.3 million, a huge decrease from S$265.9 million just three months ago. The decrease in the company’s cash balance was mainly due to the acquisition of two pieces of real estate in North Bridge Road and Holland Village in Singapore.

The former would be for the expansion of Raffles Hospital as it’s located just beside the facility. Adding an additional 22,000 square feet of floor area, it will house a new radiotherapy centre, new medical centres, a healthcare training institute, clinical research centre as well as more hospital beds.

Meanwhile, the real estate in Holland Village is a 5-storey commercial building on the site of the former POSB Building. Construction to build the new property according to RMG’s specifications had already began earlier this month. Once the project is completed, approximately 9,000 square feet of floor space will be dedicated for the company’s medical and specialist services.

During the quarter, RMG generated S$15.8 million in net cash from operations, an uptick of 1.4% from the previous year.

Going forward, a brand new comprehensive medical centre at Marina Bay Financial Centre will be opened by June this year. It will be offering a wide range of services to patients in the new financial hub of Singapore. Meanwhile, the expansion plans for Raffles Hospital will “offer significant scope for the hospital’s expansion and growth over the next 10 years” once completed.

Shares of the healthcare organisation closed at $3.42 on Monday, unchanged from last Friday. This translates to a historical PE ratio of 22 and a dividend yield of 1.5%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.