Raffles Medical Group Ltd’s Latest Earnings: Revenue Soars 23%, What’s Next?

Raffles Medical Group Ltd  (SGX: R01) reported its fiscal first-quarter earnings report earlier this morning. The reporting period was for 1 January 2016 to 31 March 2016.

The healthcare services provider has two major divisions. The Healthcare Services Division houses the company’s medical clinics, health insurance, and consultancy services. Elsewhere, the Hospital Services Division includes Raffles Medical’s specialist medical services and its namesake hospital.

You can catch the company’s previous earnings here. You can also read more about Raffles Medical Group in here.

Financial highlights

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

  1. For the first-quarter of 2016, revenue soared by 23% year-on-year to $116.9 million.
  2. Net profit attributable to shareholders lagged though, only inching up 3.7% compared to last year. Profit for the period was $15.5 million, up from the $15 million recorded in the first-quarter of 2015.
  3. Earnings per share (EPS) subsequently rose by 3% to 2.70 cents in the reporting quarter, up from 2.62 cents in the first-quarter of 2015.
  4. Cash flow from operations was strong, coming in at $34.4 million. This figure was just $16.1 million in the corresponding quarter last year. Capital expenditure was $1.3 million in the reporting quarter and it gave the healthcare provider a healthy $33.1 million in positive free cash flow. This is substantially higher than the $12.7 million in free cash flow recorded in the same quarter last year.
  5. As of 31 March 2016, Raffles Medical had $110.6 million in cash and equivalents and $32.2 million in debt. This is a decrease from the cash and equivalents of $120.9 million and debt of $6.7 million recorded at 31 March 2015.

In summary, Raffles Medical Group logged in a strong performance in sales. But, profit and earnings per share growth had lagged that of revenue. This was due mainly to higher staff costs in anticipation of the opening of new facilities.

Meanwhile, the company’s free cash flow was impressive given the growth and the balance sheet remained in a net-cash position.

Operational highlights

For the reporting quarter, revenue from the Healthcare Services and Hospital Services divisions grew by 36.3% and 15.2% respectively. The top-line growth was boosted, in part, by revenue from the newly acquired International SOS (MC Holdings) and its subsidiaries. If new acquisitions are excluded, Raffles Medical Group’s revenue growth would have been 11.6% year-on-year.

The management team had given the following commentary for their outlook on the rest of 2016:

“The more measured pace of economic growth in Singapore and the region may have a dampening effect on healthcare demand. However, the Group has positioned itself well for the future with the opening of Raffles Holland V and its regional expansion through the MCH clinics. The Group will continue to be vigilant and to proactively respond to new opportunities that may arise.

Barring unforeseen circumstances, the Directors expect that the Group to continue growing for the rest of the year.”

Speaking of the future, the company’s Raffles Hospital extension is “progressing according to schedule” and is expected to be completed in 2017. Elsewhere, the new Raffles Holland V property has obtained a temporary occupation permit and is on track to be open for business in June 2016.

At its opening price today of $4.59, Raffles Medical Group traded at around 38 times trailing earnings with a dividend yield of 1.3%.

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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 owns shares in Raffles Medical Group