IHH Healthcare Bhd’s Latest Earnings: On Track for Growth

IHH Healthcare Bhd (SGX: Q0F) announced its fiscal second-quarter results on Wednesday.

The company is one of the largest healthcare groups in the world by market capitalisation and it is dual-listed in both Singapore and Malaysia. IHH Healthcare has a wide geographical footprint, with businesses in countries like Singapore, Malaysia, Turkey, China, and India.

Let’s take a closer look at the firm’s latest numbers.

Financial and business highlights

For the second-quarter (the quarter ended 30 June 2015), IHH Healthcare’s revenue enjoyed a 12% year-on-year gain to RM2.09 billion. This had come on the back of organic growth in existing operations and the start of operations of Acibadem Atakent Hospital (opened in January 2014), Pantai Hospital Manjung (opened in May 2014), and Gleneagles Kota Kinabalu (opened in May 2015).

Meanwhile, a faster jump in expenses had resulted in IHH Healthcare’s profit after tax and minority interests (PATMI) for the quarter rising by only 9% to RM228.1 million.

IHH Healthcare’s management also looks at its Core Group performance which strips away contributions from exceptional items and its stake in Parkway Life REIT (SGX: C2PU). This is done because it gives one a better understanding of IHH Healthcare’s underlying hospitals’ operational performance on a stand-alone basis.

In the reporting quarter, Core Group revenue stepped up by 12% year-on-year to RM2.07 billion while Core Group PATMI (excluding exceptional items) surged by 22% to RM218.6 million.

The company’s cash flow picture looks mixed. Operating cash flow for the six months ended 30 June 2015 came in at RM969.4 million, up 30.7% year-on-year – this is healthy. But for the same reporting period, IHH Healthcare’s capital expenditures had spiked from RM359 million a year ago to RM632.5 million, thus resulting in free cash flow slipping slightly from RM382.6 million to RM336.9 million.

With regard to the balance sheet, IHH has seen its financial strength weaken compared to a year ago. The healthcare outfit ended 30 June 2015 with a net-debt position (total cash minus total borrowings) of RM2.62 billion versus RM2.03 billion as of 30 June 2014.

A future outlook

IHH Healthcare is on track to boost its capacity to 10,000 beds by 2017 (it has more than 7,000 licensed beds at the moment). Given the lack of trained healthcare personnel and the recent implementation of a 6% Goods and Service Tax (GST) in Malaysia, the company is expecting more cost inflation to come from its operations in the country.

IHH Healthcare is also actively looking to expand its global footprint, in particular the continents of Asia, Europe, Middle East, and North Africa. All told, IHH Healthcare remains positive about its future growth plans.

For more investing analyses and to keep up to date on the latest financial and stock market news, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead. Also, like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest,better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any companies mentioned above.