ISEC Healthcare Ltd’s Latest Earnings: Healthy Growth Seen With More Ahead?

ISEC Healthcare Ltd  (SGX: 40T) reported its earnings for the quarter and year ended 31 December 2015 yesterday night.

As a brief background for context later, ISEC Healthcare (where ISEC stands for “International Specialist Eye Centre”) provides specialist medical eye care services in Singapore and Malaysia. The company had listed on October 2014 and you  can read more about it here.

Financial highlights

The following’s a rundown on the latest financial figures:

  1. For the fourth-quarter, revenue fell by 8% year on year to $6.6 million. For 2015, revenue rose by 21% to $26.7 million.
  2. Net profit attributable to shareholders for the reporting quarter was $150,000, an improvement from the loss of $426,000 seen a year ago. Profit for the whole of 2015 finished at $2.76 million, up 40% from 2014.
  3. For 2015, ISEC Healthcare’s diluted earnings per share (EPS) came in at 0.56 cents, up 30% from the previous year.
  4. Cash flow from operations for the full year was $4.8 million with capital expenditure coming in at $673,000. As such, the eye care specialist generated $4.1 million in free cash flow. This is a big jump from 2014 when cash flow from operations was just S$2.49 million and capex was S$2.25 million.
  5. As of 31 December 2015, ISEC had $24.9 million in cash and equivalents & no debt. This compares with the cash and equivalents of $27.3 million and no debt that it had at the end of 2014.

In summary, ISEC Healthcare saw its top-line retreat for the quarter, but grow substantially for the full year. The eye care specialist also generated good and growing free cash flow and maintained a clean balance sheet.

The board of directors recommended a final dividend of 0.22 cents per share. Together with its interim dividend, the full year dividend adds up to 0.44 cents per share. There was a final dividend of 0.11 cents per share given in 2014.

Operational highlights

Revenue for Singapore rose from $1.7 million in 2014 to $5.8 million for 2015. This was mainly due to the inclusion of the full year revenue of ISEC Eye ($3.6 million), which was consolidated as part of a restructuring exercise. The Singapore operations, though, experienced a loss of $1.1 million for the year.

Meanwhile, ISEC Healthcare’s Malaysian operations saw an increase in revenue and profit (after tax) mainly due to an increase in the number of patient visits. ISEC Healthcare’s Malaysian business recorded $20.9 million and $3.9 million in revenue and profit (after tax), respectively.

In October 2015, the company had also closed its ISEC Singapore business and logged a total loss of S$2.6 million during the year as a result.

ISEC Healthcare had included the following commentary in the earnings release on its outlook:

“Notwithstanding the [closure of ISEC Singapore], the demand and outlook for ophthalmology services in Singapore and Malaysia remains positive mainly driven by the ageing population, increased awareness of eye disorders, increased uptake of private insurance and growth of medical tourism. In view of this, the Group plans to extend its comprehensive range of services to other major cities in the Peninsular of Malaysia and East Malaysia.

In line with the business strategy of the Group to expand into Asia Pacific Region, the Group will consider the acquisition of assets, business and companies in similar specialty or are complementary to the Group’s existing business. China, India, Indonesia, Myanmar, the Philippines, Taiwan and Vietnam, are amongst the countries that the Group has identified as markets with growth potential in private healthcare spending. The Group aims to expand its regional business to a size where there is a healthy and diverse mix of revenue streams from various geographical markets.

Throughout the past 12 months in FY2015 under review, the Ringgit Malaysia was observed to have depreciated against the Singapore Dollar. As the Group derives a portion of its revenue from Malaysia, the foreign exchange rate will affect the Group’s performance going forward. The Group will monitor closely the impact of the foreign exchange rate on the Group’s financial position.”

Foolish takeaway

At its closing price yesterday of $0.25, ISEC Healthcare traded at over 44 times trailing earnings and had a trailing dividend yield of 1.8%.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.