Raffles Medical Group’s Latest Earnings: What Investors Need to Know

Raffles Medical Group (SGX: BSL) released its 2017 third quarter earnings results this morning. The financial period was from 1 July 2017 to 30 September 2017.

Here is a quick rundown of the financial figures from the latest quarter:

1. Revenue for the third quarter rose 0.3% year-on-year to S$119.6 million.

2. Net profit increased 1% to S$16.4 million.

3. Diluted earnings per share for the quarter was 0.92 cents, unchanged from a year ago.

4. As of 30 September 2017, Raffles Medical had S$114.9 million in cash and equivalents, and S$74.3 million in total borrowings. This translates to a net cash position of S$40.6 million. At the end of last year, the firm had S$81.5 million in net cash (S$111.9 million in cash and S$30.4 million in total borrowings).

5. For the quarter, operating cash flow ballooned 201% to S$24.5 million as compared to a year ago. With capital expenditure coming in at S$4.3 million, Raffles Medical’s free cash flow was at S$20.2 million. A year ago, the firm had a negative free cash flow of S$0.6 million.

For the third quarter, revenue from Hospital Services division grew 3.1%, while revenue from Healthcare Services division tumbled 4.2%.

Hospital Services division’s growth in revenue was mainly due to an increase in local patient load. On the other hand, the decline in revenue from Healthcare Services division was on the back of “lower renewal of international healthcare plans for expatriates”.

The increase in total borrowings, as mentioned under point four, was due to bank loans to pay for the construction of Raffles Hospital Extension and Raffles Medical Shanghai Hospital.

Raffles Hospital‘s extension is slated to open in the fourth quarter of the year. The healthcare outfit said that the extension would help to “serve more patients and corporate clients”.

Construction of RafflesHospital Chongqing and RafflesHospital Shanghai are progressing well. These hospitals are targeted to be operational by second half 2018 and second half 2019 respectively.

Raffles Medical will be opening new clinics at Changi Airport Terminal 4 and Transit 4 in the fourth quarter of this year. Two new in-house clinics in Dover and Tampines were opened in August, and Northpoint City’s clinic re-opened in September after the mall’s refurbishment.

Looking ahead, the firm said:

“Despite the economic slowdown and increasing competition from regional countries for foreign patients, the Group is prepared and ready to meet these challenging conditions. The Group will also continue to be vigilant and respond to new opportunities that may arise.

Based on the current economic outlook and barring unforeseen circumstances, the Directors expect the Group to remain profitable in 2017.”

Shares of Raffles Medical Group are going at S$1.13 now. This translates to a trailing price-to-earnings ratio of 28.3 and a 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. The Motley Fool Singapore has recommended shares of Raffles Medical Group Ltd. Motley Fool Singapore contributor Sudhan P owns shares in Raffles Medical Group Ltd.