HMI 4Q earnings fall 11% to $4.5 mil on higher costs from new centre

PC Lee

SINGAPORE (Aug 19): Regional healthcare provider Health Management International (HMI) on Monday night reported earnings fell 11% to RM13.5 million ($4.5 million), or 1.61 sen per share, for the 4Q19 ended June 30, down from RM15.2 million a year ago.

This was despite revenue rising 10% to RM131.1 million from a year ago mainly due to higher patient load and average bill sizes. The group's education business also registered a RM0.5 million decrease in revenue due to lower student headcount.

Gross profit margin decreased to 33% from 34.4% the year before due to StarMed Specialist Centre (SSC), its new ambulatory care centre in Singapore which started operations in 1Q19.

Other gains increased to RM2.9 million from RM0.9 million mainly due to higher foreign exchange gains of RM2.6 million recorded in 4Q19 compared to a year ago.

Distribution & marketing expenses in 4Q19 increased 64% RM 2.7 million due to higher marketing and branding efforts. Administrative expenses increased RM3.5 million to RM21.6 million mainly due to administrative expenses incurred by SSC and higher general operating costs in the group entities. Finance costs increased RM1.2 million to RM3.2 million mainly due to mortgage financing costs incurred by SSC.

With the latest results, HMI reported 19% lower full-year earnings of RM48.8 million from RM60.6 million previously. Full-year revenue was up 9% at RM509.4 million.

Excluding the impact of gestation costs from StarMed Specialist centre, EBITDA would have increased 8.9% year-on-year instead of 0.7%, said HMI. Core PATMI, which excludes non-operational and one-off items, would have increased 14.2% year-on-year, instead of falling 10%, it added.

In its outlook statement, HMI said it expects to incur start-up costs from SSC’s operations for potentially up to three years.

In July, HMI announced a proposed privatisation deal which would see it delisted from the Singapore Exchange after becoming a unit of PanAsia Health. On Aug 13, HMI said it has applied to court for leave to convene a shareholder meeting for approval of the privatisation bid, with the application scheduled to be heard on Aug 22.

As at 10.23am, shares in HMI are trading flat at 2.8 cents.